By David Akinmola
As the fastest-growing start-up industry in Africa, African fintech raised over $1.3 trillion in 2021 alone, with the success being fuelled by several trends, including increasing smartphone ownership, declining Internet costs, expanded network coverage, and a young, fast-growing, and rapidly urbanizing population.
According to McKinsey & Company, African fintech has a significant impact on day-to-day life on the continent and with its current upward trend, it can be perfectly poised to rapidly advance Africa’s global competitiveness with an increase in the exporting of fintech services globally.
However, McKinsey & Company said these fertile grounds do have challenges. It noted that regulatory uncertainties and differences between countries are a bottleneck, throttling the expansion of financial inclusion in Africa, adding that this has led to the continent’s fintech’s calling for a Pan-African regulatory body to define comprehensive regulatory policies for regions rather than countries.
It revealed that currently, certain governments and the private business sector continuously work on providing regulatory policy frameworks for businesses, customers, and economies with the current focus on Regulations – digital-only banks and fintech are influenced by but independently regulated from the traditional financial system regulations; Anti Money Laundering Scrutiny – more regulatory bodies are insisting on compliance herewith, worldwide there is a clamp down on non-compliant companies. It said this requires the verification of information received from the client to avoid fraudulent, terrorist, or other illegal activities being facilitated, supported by other processes such as Know Your Customer.
Others are consumer centrism – fintech must be vigilant in consumer education, especially the consequences of services and products that did not exist before, protecting the consumer from being exploited; protection of privacy and security of data – stored personal consumer information is susceptible to cyberattacks. Fintech companies must comply and have the necessary security systems and protocols to secure sensitive data.
McKinsey & Company said the Global fintech Index of 2020 lists the top 100 fintech ecosystems, four sub-Saharan African cities features, that are leading this sector namely Johannesburg, Nairobi, Lagos, and Cape Town, and account for most of the continent’s fintech start-up funding.
According to it, the countries represented by the four cities above have taken significant strides toward regulatory systems designed to protect stakeholders. Each country’s approach to regulations shares similarities, while others are unique to the challenges faced in their market. What is definite is that these regulations evolve rapidly as access to technology empowers this market to scale significantly.
Regardless of the size of the fintech, McKinsey & Company said these changes become prohibitive to the success of fintech due to the cost and/or inconvenience caused since they impact all areas of the customer relationship lifecycle.
It noted that Bizzamm comes from South Africa, home to 2 of the 4 African cities represented in the top 100 Global Fintech Index. Bizzamm is a user-friendly, intuitive, affordable tool that empowers its clients to automate their business processes and addresses many (if not all) of the current regulatory requirements.
