Aisha lives in the village. She buys and sells tomato in the market. Sending money to her mother who is sick has been a major challenge. Aisha travels long distance to the bank in the neighbouring village.
Most people who live in rural areas are either unbanked or underbanked. This is because major financial institutions are located in urban cities where commercial activities are prevalent. People had to save money through thrifts and just like Aisha, travel long distances to banks.
Imagine how difficult it was for people to make payments in crowded banking halls filled with people from different places. This was before the rise of fintechs in Africa.
Financial technology, also known as fintech is technology aimed at complementing the efforts of traditional financial institutions by easing transactions even for people in rural communities. Today, mobile payments solutions are available to those without traditional bank accounts.
Someone may ask, will this fintechs replace traditional banking? No, they proffer solutions that bridge the gap between the banked and unbanked population in Africa. According to GSMA 2016 report, more than 500 million Africans currently use mobile phones and the number is expected to hit 725 million by 2020.
They help companies, business owners and customer better manage their financial operations, processes and lives. Their services includes lending and borrowing, retail banking, fundraising, money transfers, investment management and more.
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Thanks to these fintechs, payments can be done via mobile phones without you having to go to the bank; the digital payment system saves time. Business owners can even access loans amounting to huge sums of money within 24 hours if found creditworthy by the fintech company.
Take Paga for instance,they have numerous outlets in rural areas where agents are stationed to help customers deposit and save money, purchase prepaid credit, and pay utility bills. Customers send money with a mobile phone either by themselves if they own a Paga account or through the help of the Paga Agent.
Since the rise of fintechs in Africa, payments have become seamless. The do more than process payments, they harness technologies like artificial intelligence, big data and superior analytics to provide financial solutions. Some prominent fintechs in Africa are Wallet, Paga, ThisIsMe, Numida, Cellulant, M-PESA and Flutterwave.
Their efforts have not gone without recognition. In 2018 for instance, Cellulant, Wallet.ng and ThisIsMe were listed among the top 2018 global Fintech100 companies prepared by H2 Ventures and KPMG. According to Techpoint’s Startup Funding Report, Nigerian fintechs alone attracted over $86 million in funding. These fintech operators continue to create core products and services that serve different markets, offer local solutions, and raise the welfare of the people.
Banking halls are no longer overcrowded like they used to, you can now transact all you want — regardless of your location, as long as you are connected to the internet (some even function without the internet!).
The proliferation of fintechs in Africa has increased competition, effected convenient remittances, reduced customer expenditure, and provided more financial services to the previously unbanked. They plug gaps in financial services in Africa and have become one of the most vibrant investment options in the continent. Africa is gradually moving towards a cashless society as more fintechs continue to bridge the digital banking horizon.
More on TechGist Africa:
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- Oracle Cloud Application to Drive Digital Transformation for MTN
- FSD Africa, Equity Bank Congo Partner to Boost Financial Inclusion
- Huawei To Drive Digital Inclusion in Nigeria
- RiseUp and ITU to Organize a Digital Financial Inclusion Hackathon in Cairo
