Overview of the Fintech Industry
Though the word, fintech, is now popularly used for startups with innovative technologies delivering access to financial services, fintech actually means Financial Technology. The fintech industry encompasses new and well-established technology companies that provide software, systems, infrastructure for financial services and institutions. It also includes supporting companies with technologies that make financial transactions possible.
Fintech services include digital payment, money transfer, savings, remittance, wealth management, investments and loans, financial advisory and spending analytics. These can be delivered as applications for individuals and businesses and as agencies and mobile money services to individuals who may not have direct access to digital devices.
Ancillary services include identity management, trading, agent banking, and monitoring and compliance solutions for financial transactions. It also encompasses digital solutions for backend management of accounting processes in organisations and smartphones used by consumers.
The fintech industry has evolved to become an ecosystem of technologies—used for access and delivery of financial services. Though the industry today has seen an emergence of innovators and startups disrupting the traditional financial service sectors, incumbents such as Banks are also active players in the fintech industry. They use digital and mobile services to extend the touchpoint of their current offerings and introduce new products to the market. They also collaborate with startups who can leverage their licenses, customer base and branch network to roll out services to underserved and financially excluded customers.
A UBS report stated that the global Fintech sector would grow from $150 billion in 2018 to $500 billion by 2030—making fintech one of the global fastest-growing industries. It will rise due to the younger generation preference—access to financial services via their smartphones rather than visiting a bank branch. The global fintech market had $128 billion in reported investments in 2018. It is to grow to reach $310 billion by 2022 at a 25% growth rate.
Despite the high number of jobs expected to be displaced by fintech, the industry has become one of the fastest-growing in job creation. Cities like London, Lagos, and Toronto have many young graduates that enter the financial sector through the fintech industry.
For places with available data such as the UK, job creation within the fintech space increased by 61% in London and an 18% uplift in job creation in other regions since 2018, making it the fastest-growing industry in the economy. It is not only traditional financial organisations and fintech startups that hire talents in the industry. Legal, insurance and sales organisations also actively recruit fintech talents.
The Fintech industry in Africa solves the need for financial inclusion that has seen mobile money and agency banking driven by telcos and banks lead the way. Africa today has more than 500 fintech players – more than half of these are active startups. Fintech startups now compete with banks in offering innovative services to financially excluded and underserved customers who provide a variety of digitally delivered financial services.
In East Africa, Kenya has led the way in fintech with mobile money and agency banking. South Africa boast some of the leading financial institutions that have rolled out digital financial solutions to customers and fintech providing payment solutions—in Africa.
Nigeria has become home to two fintech unicorns with plans for pan-African growth. They are making rapid progress in financial inclusion on home soil through Agency banking.
Leaders in the growth of fintech in North Africa are Egypt— where fintechs are looking beyond payments to offer innovative lifestyle financial solutions. And also, Morocco with companies providing software solutions for incumbent financial institutions.
Fintech is the most funded category of tech startups in Africa. The contribution of fintech to the economic output in sub-Saharan Africa is to increase by at least $40 billion to $150 billion by 2022. This projection is according to a development-finance organisation, Financial Sector Deepening Africa. As of 2018, the fintech industry employs about 3 million people directly and indirectly in Africa.
In Ghana, mobile money is a payment service operated under the regulatory authority of the Bank of Ghana. Consumers can use their mobile devices to pay for goods and services instead of cash, check, or credit cards. Ghana has the fastest-growing mobile money market and the second-highest data penetration rate in sub–Saharan Africa. This has dramatically enhanced financial inclusion. Three of the four telecommunications companies in Ghana offer mobile payment services. MTN has the largest market share. Registered mobile money accounts reached 30 million. Additionally, mobile money transactions exceeded $36 billion. In 2020, the total mobile money transactions exceeded the value of check transactions.
Technology is central in opening new channels between banks and their customers. However, the most significant technology trend in recent years is the reduction in internet banking as more customers switch to an array of mobile banking options. According to the Bank of Ghana (BoG), registered internet banking customers declined by 12% in 2018, from 936,965 to 815,904.
The World Bank’s Global Findex Database found that of the nearly 60% of Ghanaians with bank accounts in 2017, approximately 40% had mobile money accounts.
Improving the technical framework underpinning mobile money is driving its expansion. In 2018 the BoG launched its Mobile Money Interoperability Project. This connects mobile money platforms with the National Switch and Biometric Smart Card Payment System. Customers can now transfer mobile money across networks and between their mobile money wallets and their bank accounts. According to the BoG, registered mobile money accounts increased to 32.6m as of 2018, compared to 23.9m in 2017 and 7.2m in 2014. This is an opportunity for banks to expand credit. For example, the transparent financial histories of small businesses using cashless transactions will allow banks to extend credit to them more easily. In addition, following the passage of the Electronic Transfer Act 2022 in April (Act 1075), the Ghana Revenue Authority (GRA) implemented a 1.5% e-levy on mobile money electronic transfers on May 1, 2022.
FinTech innovations have followed skyrocketing mobile penetration rates, with subscriptions surpassing the total population amount by 12%. According to Statista, the Kenyan fintech industry was projected to have a total transaction value of US$7,062.00m in 2022 in its largest segment—Digital Payments.
The Fintech industry started booming in 2007 when Safaricom, a telecommunications giant contributing 5% of the country’s GDP, led the push in 2007 with its M-Pesa money transfer service. M-Pesa functions much like a limited mobile bank without the need for an Internet connection. M-Pesa using Safaricom’s mobile infrastructure has an agent model, and customers can conduct transactions with one of their 110,000 agents throughout the country. M-Pesa has expanded to seven countries.
Equitel is Safaricom’s M-Pesa competitor and is pushing boundaries for financial inclusion by offering a full suite of mobile banking services.
The average transaction value per user in the Alternative Lending segment is projected to amount to US$26.76k in 2022. The Digital Assets segment is expected to show a revenue growth of 31.3% in 2023. In the Digital Payments segment, the number of users is expected to increase to 35.59m by 2026.
The need for financial inclusion and delivering better financial services to the underserved in the most populated nation in Africa—has been a key driver in its emergence as a fintech leader in Africa. Nigeria today is home to more than 200 fintech companies. The majority of them are startups, two becoming unicorns and recording one of the first acquisitions of an African fintech company by a global fintech giant. Fintech activities in Nigeria are inclusive of all services from payments, savings, lending to investments. The fintech landscape has the active participation of both startups, incumbent financial institutions and mobile network operators. They have frantically rolled out digital banking apps and payment solutions available on all digital channels, including USSD, to make financial services accessible to the unbanked.
Nigerian fintech companies have raised more than $800 million in funding between 2014 and 2021, attracting around 25% of African tech startups funding in 2019—according to a McKinsey & Company report. The report also suggests that digital financial services can contribute $88 Billion to the GDP by 2025. In terms of impact, fintech has been one of the fastest-growing job creators for young Nigerians in the formal and informal sector. In the organised sector, career opportunities—in app development, digital marketing and product management—have opened up. While in the informal sector, agent bankers have been on the rise to facilitate trade where banks lack a physical presence. Around 40% of the Nigerian population is unbanked. With the pan-African ambitions of Nigerian financial service providers and an ecosystem of young talents, it seems the Nigerian fintech dominance is just getting started.
It is the largest financial centre in Africa. South Africa has one of the earliest, most diversified and most matured fintech industries in Africa. It has provided an ecosystem of accelerators, incubators, investors, and hubs in Cape Town and Johannesburg.
South Africa is second only to Nigeria in the number of fintech startups operating. Fintech has a high adoption rate in South Africa—with growth now being sought in banking the unbanked.
According to research by Tellimer, fintech in South Africa have only a 4% market share of the overall financial services industry as of 2020. Payments have been an early focal point for the fintech industry. However, alongside lending, it now accounts for just 49% of startup activities, with others focusing on InvesTech, InsurTech, and exchange firms. Banks and other companies have also released platforms for payments and money transfers. Other growth areas include lending, crowdfunding, initial coin offers and cryptocurrency exchanges.
- Regulatory sandboxes: This is an initiative launched by apex banks and other government regulators to drive fintech innovation. It makes it possible for startups to launch innovative fintech services without regulatory constraints. Governments can adjust regulations without disrupting these innovations as they mature.
- Challenger Banks: These are fintech startups that offer a wide range of banking services such as savings, loans, investments and card services without having physical branches. Their services and customer services are accessible online. Banks are also spinning off such initiatives to bank a new generation of customers.
- Open Banking: These are financial technologies and standards that helps third-party developers extend or build on services—provided by traditional financial institutions via APIs. Under the permit of customers, their data is accessible to approved service providers.
- Virtual Accounts: these are non-physical bank accounts that Banks offer corporate clients or businesses to transact with their customers—while the corporate account acts as a super account. Fintech startups are leveraging these virtual accounts to provide innovative services to both individuals and businesses.
- Remittance: This is the cross-border transfer of funds across countries. It is a crucial revenue source for developing countries that export their human capital abroad. Startups are disrupting spaces traditionally dominated by legacy firms such as Western Union and MoneyGram. They dominate with innovative features such as same-day transfer and the use of cryptocurrencies.
- Chatbots: Traditional financial institutions and a new generation of startups use chat-like interfaces to offer payments, a wide range of banking services, and customer support. It can be an independent mobile app or available on existing channels such as Facebook and WhatsApp. Some use artificial intelligence to make them smarter.
- Cryptocurrencies: Though not yet widely accepted, increasingly gaining recognition, and can be divisive, fintech startups are making it possible to use cryptocurrencies such as bitcoin for payment, remittance and trading, while some of the largest investment banks are opening up desks for cryptocurrencies.
- Agency Banking: Agency banks offer a cheaper way to deliver banking services. Bank ATMs and physical branches financially exclude some people. Agents can use POS or any other machine to provide withdrawal, deposit and transfer services to customers. Agency banking has seen success in several African countries with a huge informal market—and a far higher ratio of people to ATMs.
- Personalisation of Banking Services: fintech services make it possible for traditional Banks to offer their customers tailored solutions with big data and machine learning algorithms. It is in addition to the improved user experience that personalisation delivers.
- Democratised trading: hedge fund and investment banks dominated the trading of financial instruments. It has now opened up to millions of smartphone users. It is now possible to trade foreign stocks and bonds without consulting expert traders. These have also come with their downsides.
These include fintech technologies, business models, risk indicators, regulations and socioeconomic impact; adoption and use of fintech; role of digital and mobile technologies,
Others include digital access to financial services such as lending, savings, investments, and wealth management; cross-border payments and transfers,
Fintech technologies such as blockchain, peer2peer, service-oriented architecture, microservices, and bank-issued digital currencies.
Fintech challenges such as data and identity management; governance of digital infrastructures; and management of fraud, cyber and internet crimes.
- SDG 8 – Decent Work and Economic Growth: Access to financial services irrespective of gender spurn economic growth. Fintechs have made it possible to extend financial solutions to the unbanked through mobile money and agency banking. It has helped provide financial services available in the informal sector—where more than half of the economic activities of several African countries are. The industry has also created jobs widening the entry nets of young people into the financial sector.
- SDG 9 – Industry, Innovation and Infrastructure: Fintechs are increasing the access of small and medium enterprises (SMEs) to financial services such as affordable credit lines tailored to their value chains of operation. SMEs—the backbone of several economies that employ millions—can now access essential financial tools to manage their operations better and grow.
- SDG 10 – Reduce inequality within and among countries: Fintechs are democratising access to financial services. Financial services are accessible to all irrespective of gender, geographies and class. Fintechs leverage internet connectivity and mobile devices to ensure that. These include services such as investments and trading that used to be for a privileged few.
Identity management: a challenge to banking the unbanked is meeting Know Your Customer (KYC) requirements which barely meet the standard of regulators. Some regulators have created bands/tiers which limit the transactions customers can make rather than shutting them out entirely. Some have created unique identification numbers that usable across financial services.
Last mile internet access: a significant population of Africans live in rural areas, surpassing more than half of the residents in some countries. Poor interconnectivity in these areas limits the use of digital banking applications. Nevertheless, fintechs have created alternative transaction channels such as USSD that does not require internet connectivity.
Institutional Barriers to Entry: fintech players in the financial sector struggle to get licenses and approvals to operate process payments or take deposits crucial to fintechs. Requirements for obtaining these licenses can be steep— required years of management experience may not be feasible for fintech founders or both. Fintech startups are navigating these barriers by partnering and leveraging on financial institutions with licenses and structures.
Regulatory Uncertainty: The financial sector itself is highly regulated to protect consumers and stabilise the economy. However, fintechs are leading and embracing innovations at a speed that is making the regulator play catchup. The regulatory sandboxes introduced by the apex bank of several African countries; have facilitated the off-take of fintech startups. However, changing regulations have made it difficult for matured fintech companies to plan for the long term.
Internet Fraud/Cybersecurity: The meteoric rise of fintech has aggravated financial crime by bad actors who may take advantage of the technological loopholes. They deliberately exploit vulnerabilities and manipulating victims with social engineering techniques or both. Unfortunately, attempting to mitigate these can lead to cumbersome user experiences for most fintechs.
The industry is open to digitally inclined graduates from all disciplines—providing technical roles for career disciplines in Information Technology, Finance, and Design & Engineering. Technical roles in the industry include:
- app development/software engineering
- Cloud technologies/DevOps
- user experience design
- digital marketing/growth
- data/financial/business analyst
- data analysis and science
- data/information security/cybersecurity
- risk and compliance officer
- customer support
Other relevant career disciplines in the industry are Marketing, Sales & Services, Administration & Management, Media & Communications, Finance, Media & Communications, and People Management.
The highest-paying jobs in the industry are software development/engineering, financial analysis & modelling. Also, data science, product management, SAP consulting, blockchain, cybersecurity, compliance and risk management.
- Communication & Persuasion: Fintechs operate in a competitive market with several options more becoming available to customers. Communication on offers must be clear and convincing to customers for startups who need to earn customer trust.
- Initiative & Enterprise: The fintech industry requires bringing ideas to execution. Speed can make a huge difference. It also requires an entrepreneurial drive to perform independently without access to the level of support that traditional financial institutions may offer. You would also have a higher degree of autonomy.
- Numeracy & Financial Literacy: Fintech is an industry of numbers—typical of the financial sector. The more comfortable you are with numbers and financial terminologies, the more likely your success—in the industry.
- Networking & Teamwork: Fintechs collaborate with other players in the financial sector to deliver the best experiences to customers. These may include payment processors, traditional banks and working with regulators for compliance. Conventional financial institutions are now seeing fintech startups as collaborators rather than competitors.
- Continual Learning & Adaptation: Technologies evolve— the regulatory landscape changes. Fintechs must adapt to changing technologies to meet their customers where they are while ensuring they remain compliant with regulations as they innovate.
One of the things which makes the fintech industry stand out is the less barrier to entry. It is an industry that puts more on skills and experience over qualifications. However, graduates with technology and finance-related degrees such as computer science/engineering, software engineering, accounting, and business have a leeway into taking up technical roles in the industry.
Several online courses are focused on fintech. However, there are no standardised certifications specific to the industry—probably due to the difference in technology stacks and regulations across geographies. However, IT certifications in areas such as software development, cybersecurity, service delivery/management, digital marketing, and Agile/SCRUM project management will be considered relevant by most fintech companies.
Experience in the IT industry and the financial sector valuable. There are emerging relevant postgraduate programmes such as masters in finance and technology, financial technology, fintech, and financial innovation.
The bottom line, irrespective of discipline, important are digital inclination, hands-on technical skills in coding, digital marketing or finance.
Legacy and well-funded fintech companies may have graduate recruitment programmes. However, a majority of FinTech startups lack a formally structured recruitment process.
The industry provides several entry options, which include both well-established financial startups. Several institutions offer graduate schemes where you can select the technology track. Due to a lack of structured recruitment processes and graduate programmes for startups—you may need to network your way into the industry.
Early-stage fintech startups operate from tech hubs which can be an ideal place to visit regularly to network your way into the industry. Several startups participate in events within the ecosystem. These can be a meeting point with individuals working in the fintech space. Non-technical roles which offer easy entry into the industry are in customer service, social media communications and digital marketing in general communications.
The industry values hands-on experience; showcasing your work on online portfolio sites such as Github for developers and Behance for designers can provide opportunities to work with fintech companies. You can work on independent projects such as open banking that many traditional financial institutions are now embracing.
Interviews can be chatty and may involve showcasing your work or talking about the latest trends and the industry future. Interviews can provide the opportunity to show your enthusiasm about the industry, radiate your energy and prove you will be a good fit into the culture of a fintech company.
For success in fintech entrepreneurship, experience seems to increase the odds of success. It helps to network with other stakeholders in the financial sector and become familiar with the business and regulatory environment crucial to succeeding in the fintech industry. A founder relying on the experience of others on the team can help in closing this gap.
Unlike other industries in the financial sector, such as banking and insurance that are more formalised and structured, working in the fintech industry offers more flexibility. Dressing to work is less formal, many fintechs offer remote working options, and most graduate roles are hands-on and less administrative or managerial in function.
Most fintechs operate as relatively small startup teams or functional units in a well-established organisation—this brings work closer to home for each team member.
From onboarding new customers, rolling out new features, to fixing customer issues, working in the industry can be very demanding. The work is round the clock due to the dependence of individuals and businesses on financial transactions. And also the need for fintechs to build trust. Another reason for this is that early adopters of fintech solutions are typically millennials and Gen-Zs who have high expectations of the experience a fintech platform should offer.
Internally, Fintech startups are under pressure to meet growth targets set by investors or attract investors.
The fintech industry is very dynamic. Due to the small team size, less structured operations, and competition— they continually rollout features to improve their products. However, competitors can copy these features. It is why several startups leverage partnerships to make their ecosystem of services more attractive to customers. Another reason for this dynamism is the uncertainty in the regulatory environment.
As a rapidly growing industry, several countries have not yet formulated comprehensive policies for the industry. It makes long-term planning difficult for fintechs and the need to be responsive to changes in government policies.
Benefits such as health insurance, training opportunities, and pension typically provided by well-established financial institutions may not be available in fintechs. However, early-stage fintechs offer employee stock options vested in over a period working with the startup and credits for learning the latest technologies online. The industry provides exposure to multiple areas in the financial sector due to the flexibility of different roles.
The financial industry has also been a hotbed of entrepreneurship. Several fintech companies have employees that have started their own companies in the same or other sectors. They leverage the work experience, visibility and networking opportunities with key players in the industry that a fintech career offers. It is also beneficial in seeking career progression.
There has been a rise in Fintech Associations and hubs around the world to bolster the fintech ecosystem and rally support for startups:
- Africa Fintech Network
- African Women in FinTech & Payments (AWFP)
- MENA Fintech Association
Blockchain Society Ghana, Ghana Chamber of Technology (Fintech Council)
Institute of Certified Public Accountants, The Kenya Fintech Association, Digital Lenders Association of Kenya.
Fintech Association of Nigeria
Payments Association of South Africa (PASA)
- Karim Jouini
- Aretha Gonyora
- Chilufya Mutale
Derrydean Dadzie, Curtis Vanderpuije, Andrew Takyi-Appiah, Archie Hesse, Clara Arthur, Andrew Takyi-Appiah, Kwame Oppong
Tesh Mbaabu, Lyn Megich, Nancy Gathungu, Patrick Njoroge, Eric Muli
Abddesalam Alaoui Smaili, Mitchell Elegbe, Sola Akinlade.
Sharon Kinyanjui, Nicky Swartz, Andrew Watkins-Ball, Katlego Maphai.
The Fintech Industry follows regulations by existing financial agencies that regulate banks.
FinTech and Innovation Office (Bank of Ghana), Ministry of Finance
The National Treasury and Planning, Central Bank of Kenya, The Kenya Revenue Authority
Nigeria Inter-Bank Settlement System Plc (NIBSS), Central Bank of Nigeria (CBN)
South African Reserve Bank (SARB)
Startups have been the most popular players in the fintech industry. However, software providers, financial institutions, mobile network operators and other technology companies provide software, networks and infrastructure nationally and globally to facilitate digital financial transactions.
They also offer core banking solutions for financial institutions and other ancillary service providers. These solutions include credit rating and identity management for Know Your Customer (KYC) services.
Paypal, Monzo, Capital One, MasterCard, Visa, The Lending Club, Worldremit, Mint, Ant Financial, Better Mortgage, Affirm, Stripe, Oscar, Coinbase, Square, Grab, Robinhood, SoFi, Xero, Klarna, Oracle, Infosys, Temenos, TransferWise, Adyen, Qidian, Lufax, Avant, LendingClub, Binance, Avant, Credit Karma, Lufax, Qudian.
DPO Group, SnapScan, JUMO, Hellopaisa, EasyEquities, Sunexchange, PayU, Yoco, Pineapple, EasyEquities, Stitch, Nomanini, Adumo, Franc, GetBucks, Wealth Migrate, 10X investments, Lulalend, Mama Money, Prodigy Finance, TaxTim, Luno, Stash, PayFast, MFS Africa, Instaloan, Bright On, Retail Capital, Uprise Africa, 22Secen, Sygnia, Thundafund, StokFella, InvestSure, Centbee, Kryptoro, SAFCoin, Ovex, Artis Turra, Govchain, Finchatbot, Entersekt, and Ukheshe.
Other African Companies/Startups
Bitpesa, Safaricom MPESA, Mukuru, Carepay, PayPOS, and Deepera.ai.
Cube Robotic Limited, BezoMoney Technologies Limited, iPay Solutions, Zeepay Ghana Limited, ExpressPay, Ozé, Kwidex, Nvocia, Hubtel, BitSika, PennySmart, Inclusive Financial Technologies, Logiciel Ghana, Bloom Impact, PaySwitch, BlueSPACE Africa, IT Consortium, Clydestone, Ghana Interbank Payment and Settlement Systems(GhiPSS), DigiTeller, PaySail, Damansah, DreamOval Limited, Ezipay, Nsano, AZA Finance (Pan-African – not in Ghana), iPay, Paybox.
Turaco, Direct Pay Online Group, Pezesha, Digiduka, Tulaa, Cherehani Africa, Mobile Decisioning, Pesa Kit, Saada, Alternative Circle, The Kueq Limited, Wayawaya, Kiba, Shield, Blockchain Cybertech Limited, Orion Image Capital Communication, Afrigroups, Umba, Zanifu, Superfluids labs, Tanda, Abacus, iFarm360, Paytree, Eastpesa, Professional digital Systems Limited, Chamasoft, Chama Pesa, Moripesh, Ocharge, Ryanada Limited, AfriKash, Afya Plan, my Ngovo, Pesa Talk, Impala Coin, Once sync Limited, Paysap, Valuraha, Zoa tech limited, Repay Africa, Quoxient limited, Sokohela, Regaia International (k) Limited Market force, Popote
Interswitch, Paystack (now part of Stripe), Flutterwave, PiggyVest, Branch, Carbon, Aella Credit, Opay, Paga, Lydia, OneFi, TeamApt, Mines, Quidax, Wealth.ng, Systemspec, Sparkle, Mono, Okra, Kuda bank, Inlaks, SureRemit, TeasyMobile, Paypad, Buycoin, Kudi, Tanjalo, Nairaex, Riby, Kolopay, Cowrywise, Amplified Payments, Voucher Pay, Voguepay. Kuda Bank, Bleyt, Fair Money, Kobocoin, Bankly, ChipperCash, Appzone, mKobo, Riby, Credpal, Onefi, Cassava SmartTech, mKono, Amplify, Kora, E-Tranzact, Terrapay, Cellulant, Mines, and Unified Payments.
DPO Group, SnapScan, JUMO, Hellopaisa, EasyEquities, Sunexchange, PayU, Yoco, Pineapple, EasyEquities, Stitch, Nomanini, Adumo, Franc, GetBucks, Wealth Migrate, 10X investments, Lulalend, Mama Money, Prodigy Finance, TaxTim, Luno, Stash, PayFast, MFS Africa, Instaloan, Bright On, Retail Capital, Uprise Africa, 22Secen, Sygnia, Thundafund, StokFella, InvestSure, Centbee, Kryptoro, SAFCoin, Ovex, Artis Turra, Govchain, Finchatbot, Entersekt, Ukheshe.
- Breaking Banks
- Africa Fintech Rising Podcasts
- Fintech Insider
- Breaking Banks
- Exchanges at Goldman Sachs
- Breaking Banks: The Innovators, Rogues, and Strategists Rebooting Banking
- The Age of Cryptocurrency by Paul Vigna and Michael Casey
- The PayPal Wars: by Eric M. Jackson
- Publications; Finextra and Pymnts,
- Silicon Valley (Series)
- FinTech Made in Switzerland
- The Hummingbird Project
- Rogue Trader
- The Social Network
- African Fintech Foundry
- Lagos Fintech Week
- Africa FinTech Festival (AFF)
- Digital Payments and the New Economy