The rise in technology that has occurred over the past decade has changed how we conduct business. It has also presented new challenges for how we protect our sensitive information online. One of the areas where the marketplace is most prime for fintech is Africa.
Countries in Africa are rapidly emerging as a modern fintech marketplace. However, companies must ensure that they do not grow too quickly and that they make efforts to protect their financial information while meeting regulations set forth by local governments.
Why Is Africa Prime For Modern Fintech?
There are a few reasons why Africa is rapidly emerging as a modern fintech marketplace. First and foremost, there is ample opportunity throughout the region. Much of the area, especially Sub-Saharan Africa, has financial infrastructure that is severely underdeveloped. Approximately 60 percent of the population is unbanked. People not holding money in banks means that fintech can change the current economic landscape drastically, making it much more inclusive.
Another indicator of the need for fintech in Africa is the fact that up to 90 percent of retail payments are made using cash. This number is significantly higher than the rates in other countries. For instance, the rate of cash retail payments in Europe is 50 percent. Think of modern technologies like Square, Apple Pay, and Visa Pay. The use of NFC for payment in Africa is lacking severely, creating a ripe opportunity for fintech.
One of the most natural counters to this point is a lack of technology as a whole. If a majority of the population is unbanked, isn’t technology lacking as a whole? Not quite. Sub-Saharan Africa has one of the highest levels of mobile phone penetration in the world. The abundance of people with cell phones and the lack of brick-and-mortar financial institutions has paved the way for modern fintech to revolutionize Africa.
For instance, in South Africa and Nigeria, as much as 90 percent of the population owns cell phones. These rates are as high as they are in the United States. However, only a third of the people who own cell phones use them for financial transactions. A clear market void exists.
The Status Of African Fintech To Date
Over the past decade, fintech in Africa has increased by nearly 25 percent. However, up until this point, much of the fintech had yet to reach underdeveloped countries. To date, most of the fintech was concentrated in three countries:
• South Africa
In the coming years, experts expect fintech to penetrate more into underdeveloped areas. Doing so will serve as an opportunity to change the African financial landscape radically. However, companies must be sure that they exhibit caution when doing so.
Security Problems With Fintech
Whenever financial transactions occur online, there is a high risk of illegal activity and money laundering. One of the most significant dangers of fintech expansion into Africa is the rise in potentially fraudulent activity. Whenever there is a rapid spike in volume, there is in an increased risk of people using the mechanisms illegally.
When introducing fintech, companies must make sure that they do so slowly and appropriately. They should ensure that they have the proper systems in place, such as KYC technology and ID verification, to help protect them and their customers. Although the market is ripe, introducing technology too quickly could set back the market for years to come. Financial institutions must make sure they add new technology appropriately.
Keeping Financial Institutions Safe
When implementing fintech in Africa, one of the first things that companies must remember is that there is no “one size fits all” strategy. What may have worked in the United States or Europe may not necessarily work in Africa. Financial institutions must be accommodating and flexible when implementing fintech security measures if they wish to keep themselves safe.
At AU10TIX, we help simplify the onboarding process. We are well-versed when it comes to financial security and KYC regulation and will help make sure that companies meet their regulatory needs. We’ve created on onboarding process for our technology that fits the needs of every customer we work with, no matter where they’re located.
Financial institutions can trust our technology because we are the only provider of 2nd-generation ID authentication and onboarding automation. We employ the most advanced techniques and ID algorithms, resulting in a rapid customer onboarding process. On average, our ID authentication and processing takes less than five seconds.
This provides financial institutions with an incredible opportunity. Not only can they take advantage of the rapidly-expanding fintech market in Africa, but they can also do so safely and securely. At AU10TIX, we push the boundaries of volume processing, but make it a point to never compromise on the quality of our authentication methods.