15 °c
London
Friday, April 23, 2021
No Result
View All Result
FurtherAsia FurtherArabia FurtherBrazil FurtherRussia
FurtherAfrica
  • Countries
    • Angola
    • Botswana
    • Cape Verde
    • DRC
    • Eswatini
    • Ethiopia
    • Kenya
    • Malawi
    • Mauritius
    • Mozambique
    • Namibia
    • Nigeria
    • Rwanda
    • South Africa
    • Tanzania
    • Uganda
    • Zambia
    • Zimbabwe
  • OpenTalk
  • Understanding
  • Videos
  • Weekend
  • About
FurtherAfrica
  • Countries
    • Angola
    • Botswana
    • Cape Verde
    • DRC
    • Eswatini
    • Ethiopia
    • Kenya
    • Malawi
    • Mauritius
    • Mozambique
    • Namibia
    • Nigeria
    • Rwanda
    • South Africa
    • Tanzania
    • Uganda
    • Zambia
    • Zimbabwe
  • OpenTalk
  • Understanding
  • Videos
  • Weekend
  • About
No Result
View All Result
FurtherAfrica
No Result
View All Result
Home Africa

What European fintechs should learn from Africa

Staff by Staff
February 1, 2021
in Africa, Digital Inclusion, Finance, Financial Inclusion, Fintech, Opinion, Startup
Reading Time: 4 mins read
0
Share via QRWhatsappShare on FacebookShare on TwitterLinkedInPinteresteMail

Written by Jean-Paul Mergeai – President of APAC and EMEA, Temenos

There is a radical transformation taking place in financial services and a rapid rise in digital banking – a worldwide trend only accelerated by COVID-19. Yet according to a McKinsey study released in September last year, the European fintech sector faces an “existential crisis”.

It is fair to say that European fintech had a tough 2020. Recent results have demonstrated – like many had suspected – that fintechs are struggling to monetize their scale to turn a profit. Now COVID-19 has slowed ventured capital funding and is exposing business model vulnerabilities. Dealroom figures shows that investment into the sector dropped by 30 per cent in the first half of 2020. That is compared to 10 per cent globally. Fintechs also find themselves exempt from Government loan bailout schemes due to their pre-profit status.

To survive, fintechs must ensure a path to profitability and create long-term sustainable business models. They could learn a lesson or two from an unlikely source – Africa. And as the world’s second largest continent by population which is projected to reach 2 billion by 2050, fintechs have capitalised on this huge financial opportunity in a continent where still only one in five people have a bank account.

Of course, the European and African markets are completely different in myriad, largely obvious ways. But what connects them is true of any business in any location: the importance of identifying customer needs and innovating to solve them.

Nowhere is this spirit of customer focus and innovation more evident. The African banking industry has demonstrated a visionary approach to retail banking. So much so that in an Economist Intelligence Report for Temenos, 60 percent of African banking executives agreed that cash will drop below 5 per cent of retail transactions by 2024 – a staggering statistic demonstrating the rapid rate of innovation in the sector.

The African fintech market has spawned creative technological solutions that are helping millions. Through placing the needs of the customer at the heart of their offering, many fintechs in the region are succeeding and most importantly, doing so whilst turning a profit.

Also read: US$30M Series B round for African fintech Chipper Cash, backed by Jeff Bezos fund

First, the fintech industry in Africa has focused its efforts on building products that everyone, not just the city-dwelling millennials can use. With 80 percent of Africans without access to a bank account, fintechs have come to the rescue.

Digital banks in the region have spurred on what is known as the telecoms banking revolution. Through partnerships with mobile telecoms companies, digital banks have provided access to micro-finance for millions of people. What we have witnessed is an explosion in access to financial services.

Take M-Pesa in Kenya as an example. Africa’s leading mobile money service kick-started the movement in 2007 and has utilised the customer reach of the Vodafone group to provide mobile financial services to over 60 million customers currently through their mobile phones.

The affordability of smartphones is of course a key driver in the new development of building mobile-only banks but technological solutions have also been adopted to enable those without smartphones to access financial services. For instance, Barko Financial Services caters to customers relying on cellular phones by establishing an SMS system, which can provide lending to customers after just three or four text messages. The significance of this innovation, in a part of the world where just years ago a farmer would have to walk many miles to access their local bank branch, cannot be overstated. It has democratised banking services making them accessible to all.

Fintechs in Africa are devoted to solving societal problems. Using technology, they have provided customers with the services they require. Their target market is not the young white-collar workers in the city, but those who are struggling to access the services they require to live a dignified life. Orange Bank Africa, for example, runs natively in the cloud using Software-as-a-Service (SaaS) to meet the surge in digital banking adoption on the continent and provide innovative digital banking services in West Africa.

Also read: Safaricom/Vodacom: Joint venture to expand M-PESA in Africa

Secondly, African fintechs are leading the world in focusing on the broader lifestyle needs of their customers rather than limiting themselves too narrowly to banking services. The extension of banking into lifestyle businesses and the emergence of cross-selling various products from the outset has opened significant revenue streams. Whilst European fintechs have had to be reliant on funding rounds due to their narrow focus on current account banking, African fintechs are focusing on the money-making features first.

Vodacom’s plans to roll out a “super app” is just one of many examples. Being released in South Africa, the app bundles messaging, digital banking, digital media content and e-commerce into one tidy package. The app will allow customers to do everything from pay for a morning coffee, listen to podcasts, send money to their entire family, pay utility bills or shop online in one transaction. All from one mobile app. It will provide a marketplace of goods and services tailored to each customer’s own needs which is updated in real time. It also assists businesses – providing medium-sized enterprises access to lending, insurance, and advertising services all within the app.

This broader focus allows the collection of financial and customer data, which can drive a better experience for customers. Fintechs in the region are now microtargeting customers with hyper-personalized digital banking and lifestyle experiences.

The innovative mindset amongst the fintech community in Africa is remarkable. The industry is driven by the needs of their customers. Through innovative technological solutions, they have transformed the financial wellbeing of millions. European fintechs would be wise to take a leaf out of their book: put the customer at the centre of your offering.

Source: Global Banking & Finance Review

Related

Tags: africaAfrican fintechAfrican startupsfintechStartupsTechWhat European fintechs should learn from Africaафрикаأفريقياアフリカ非洲
ScanSendShare320Tweet200Share56Pin73Send
Previous Post

Zimbabwe has US$100M to buy COVID-19 vaccines, paper says

Next Post

What next for Tanzania’s LNG after Equinor cut its annual balance sheet?

Staff

Staff

Related Posts

Angola

Angola to cut 20% of diamond production

by Staff
April 23, 2021
e-Commerce

Following Twitter choosing Ghana, Amazon opts for South Africa for its first African office

by Staff
April 23, 2021
Africa

Mozambique: ExxonMobil FID likely to come in 2023 – Fitch Solutions

by Rafael Carvalho
April 23, 2021
Rwanda invites African tech startups to apply for the Smart Cities Innovation Programme 2021
Startup

Rwanda invites African tech startups to apply for the Smart Cities Innovation Programme 2021

by TechGist Africa
April 23, 2021
Angola

How Angola is planning to revive its oil industry, jumpstart economy

by The Exchange
April 23, 2021
Next Post
Tanzania Total oil pipeline

What next for Tanzania’s LNG after Equinor cut its annual balance sheet?

AfDB World Business Angels Investment Forum

S&P Global affirms African Development Bank’s AAA rating with stable outlook

‘Black Panther’ director developing Wakanda TV series for Disney+

'Black Panther' director developing Wakanda TV series for Disney+

Leave a Reply Cancel reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

2021 AFSIC
2022 Indaba Mining

FurtherAfrica Partners

The Exchange Club of Mozambique Taarifa Rwanda
CrudeMix Africa TechGist Africa Farmers Review Africa
Botswana unplugged Financial Insights Zambia Africa Oil & Power
Harambee Africa Novafrica  

Subscribe to FurtherAfrica

Enter your email address to receive notifications of new articles on your email.

Join 73,051 other subscribers.

FurtherAfrica

© 2021 FurtherMarkets

FurtherAfrica is a FurtherMarkets Limited platform

  • Countries
  • OpenTalk
  • Understanding
  • Videos
  • Weekend
  • About

Follow Us

No Result
View All Result
  • Countries
    • Angola
    • Botswana
    • Cape Verde
    • DRC
    • Eswatini
    • Ethiopia
    • Kenya
    • Malawi
    • Mauritius
    • Mozambique
    • Namibia
    • Nigeria
    • Rwanda
    • South Africa
    • Tanzania
    • Uganda
    • Zambia
    • Zimbabwe
  • OpenTalk
  • Understanding
  • Videos
  • Weekend
  • About

© 2021 FurtherMarkets

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?