The number fintech companies in Africa has nearly tripled since 2020, significantly improving access to finance for individuals and businesses across the continent, says the latest 2024 report.
The report indicates that Africa’s fintech sector is thriving, with digital finance expanding more rapidly than traditional banking. The number of African companies providing innovative financial services rose from 450 in 2020 to 1,263 by early 2024.
“Fintechs are fundamentally redefining the landscape of financial services in Africa, with a wide variety of innovative financial services and products on offer – especially relating to mobile money, digital payments, remittances, digital lending, buy-now-pay-later, insurance and virtual assets,” says the report.
“The traditional brick and-mortar banking model is being challenged by mobile banking, online banking, mobile wallets, contactless services, digital payments for remittances via online platforms, mobile networks and blockchain-powered digital money.”
Citing a McKinsey fintech report (2022) the European Investment Bank (EIB) indicated that fintech companies in Africa are offering financial services estimated as being up to 80% cheaper than traditional bank services, and offering interest on savings up to three times higher.
Other non-price factors contributing to fintech growth include:
- Increasing affordability of smartphones and mobile phone penetration
- Increasing penetration of internet connectivity, including 4G and 5G
- An increasing pool of talented technicians
- A tech-savvy young population with a huge appetite for tech-related services
- Urbanisation
- The shift from an informal to a formal economy
The fintech ecosystem is estimated to account for a considerable slice of the financial sector – at least 10-12% in revenue terms.
According to a banking sector survey by EIB, banks are seeing strong incentives to partner with the increasing fintech companies.
The main benefits banks perceive from partnering with fintech companies are:
- Improving the customer experience reported by 100% of banks surveyed
- Accessing innovative technology (95%)
- Expanding the customer base (91%), and
- Cost savings (87%)
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