Fintechs : a real 21st Century phenomenon.

Fintechs have given birth to digital payments which come in all shapes and sizes including blockchain and virtual currencies, alternative lending platforms, investments, APIs, big data analytics, financial planning etc. These technologies are underpinned by machine learning, biometrics, cryptography, IoT, cloud computing, smart contracts and Artificial Intelligence. But what is this animal called Fintech that has surely relegated banks to shadows of their former selves. According to the paper, Fintech and Regtech in a nutshell, “Fintech or Financial technology refers to the use of technology to deliver financial solutions”. It’s not like all along nothing was happening in this space or their impact was not celebrated but it is the success stories, the number of new players and the level of thinking in the face of rapidly advancing technology which is refreshing.

The evolution of Fintechs has inevitably spurred development in similar technologies underpinned by information technology such as Regtech and Suptech just to mention a few. The proliferation of IT services firms and startups has given character to the era of Fintechs. The Fintech era has scored many success stories in world markets including Europe with the

PSD2, China with the Alipay, Wechat also liking to call themselves Techfins,

USA with Amazon and IPhone pay, India with the Indian stack and Aadhaar and

lastly in Africa we have Kenya’s Mpesa and Zimbabwe’s Ecocash. The level of integration and convergence is this sector has seen the intersection of payments, commerce

and banking going seamless.

Established technology companies, social media entities, new startups and communications

companies have been in the forefront in delivering digital financial services worldwide. These profit driven organisations explore opportunities in new less attractive or too costly to invest markets and have driven incumbents to innovate. Globalization has given these companies a leeway to establish themselves in multiple markets.

In Africa, Telco based mobile money operators are the key players acting as Fintechs or

Fintech providers. The number of success stories and mobile money deployments is testament to that. The MNOs have existing assets and distribution points to leverage on in Sub Saharan Africa. Countries such as Kenya, Tanzania, Zimbabwe, Zambia etc evolved fast to launch with relevant use cases and building of agent networks. The landscape in Africa offers a number of opportunities because of the financial inclusion agenda which is top priority. There is still room for more unique offerings and providers to cover much at the bottom of the pyramid as they are still unbanked and underbanked. Earlier Fintech offerings like ATMs did not do much in the area of financial inclusion but current developments seem to be inclusive and interoperable.

Many professionals in this industry were left counting their losses because the era is demanding new skills. Banks were severely shaken and their profit margins restricted thus many of them have resorted to getting into partnerships with some Fintechs so that they can also have a slice of the cake. Banks have awaken to the fact that they have to pay attention to changing trends and invest in technology to survive. The customer experience has been taken by Fintechs who

have got better front end offerings and are being trusted more compared to them.

The story of Fintechs cannot end without talking about regulation. Regulation is the key enabler for the success achieved so far. In some markets regulation was the risk and ended up restraining growth, increasing compliance costs and diminishing the competitive advantage but in most markets it actually catapulted the momentum talk of the Chinese DFS sector.

They say money makes the world go round but actually Fintechs are the pivot in which all

money movements depend on. The rise of Money Transfers Agencies in this remittances ages is being driven by Fintechs. The dominance of blockchain technologies is being driven by Fintechs and so is the technologies run by aggregators and PSPs. Financial authorities are now harnessing the power of Fintechs by implementing new technological approaches in terms of Regtech and Suptech. They understand that in a world of cybersecurity and data protection risks existing systems are no longer adequate to address this fast changing space. The current mobile native offerings are enjoying much prominence thanks to Fintechs support. Thus having Fintechs in this space is one of the best things to happen in Digital Financial service provision and into the future.