The fintech industry in Africa is still young, and many foreign investors have classified the region as a “unicorn” investment continent. There has been a huge growth in the industry, with experts stating that the surface has just been scratched as exponential growth is expected over the next decade.
The Covid-19 pandemic has led to a change in consumer behaviour, increasing digitalisation and the use of fintech platforms. The global funding of fintech has more than quadrupled, and the number of fintech companies has more than doubled since 2020. African fintech funding increased from half a billion dollars in 2020 to 2 billion dollars in 2021. Let’s look at the top 5 fintech trends & predictions according to BDO, an international firm providing accounting, tax and business advisory services.
The new BDO Fintech In Africa report provides short bites of fintech news related to North, South, East and West Africa to give an overview of what is happening and to provide some clarity on an evolving and growing industry.
Here are the top 5 fintech trends & predictions for Africa in 2023.
Given that a large portion of African people are still unbanked, there is a large market to tap into, and many fintechs and banks are trying to solve this problem and tap into this market. Fintechs in Africa will continue to provide solutions to the continent to create seamless, borderless transactions. Furthermore, many banks will continue to partner with new fintechs to solve this problem, as well as many others.
Highest funding ever
Globally, funding has exponentially increased; in Africa, it is the same as funding increased YoY. According to data from The Big Deal, African startups raised over $4 billion in the third quarter of 2022 alone, the fastest the continent has seen in the past three years since they surpassed $1 billion in funding. The funding is also impressive because it comes in a period when over 100 startups in Africa have raised their first $1 million+ round this year. Fintech is proving to be the main driver of investment on the continent, and experts predict 2023 to be an even better year.
Mobile Network Operators (MNOs) will become more active
MNOs are key to watch in the space. The banking sphere is competitive, and should the MNOs be granted a mobile money license; competition will become even tighter. There has been a vast amount of research indicating that West Africa will be focusing on growth within mobile and online banking instead of traditional banking institutes as this is of lower cost to the average consumer. With the steady growth of smartphone users, Africa will experience growth in more accessible financial solutions.
Crypto adoption will rise further
The crypto scene has been incredibly turbulent in recent times. However, with the rise of fintechs and the growth of companies such as Luno, more mainstream usage and adoption of cryptocurrencies is expected. We predict a huge growth in crypto adoption in Africa in 2023, and leading cryptocurrency exchanges are making efforts to support this trend.
As technology improves exponentially, an array of new innovative solutions will arise. We expect to see new, exciting changes in the fintech sphere through IoT technology, Artificial intelligence, Big Data, and numerous other types of emerging technology and trends.