Fintechs have had a significant impact on the banking industry across the world and has been considered to be one of the strengths for the banks. Fintechs have been known for its innovative and customer friendly solutions and the level of flexibility that the traditional institutions struggle to provide. Financial technology is rapidly transforming the financial sector.
Financial Institutions have faced fierce competition from fintech firms for some years and have now realised that innovation is critical if they are to retain their market-leading position. Their specialized focus and unique value propositions have put a lot of pressure on the banking institutions in order to be able to retain their customers and have also forced the industry as a whole to innovate. As the demands of the consumers continue to grow, it will become increasingly difficult for banks to cater to all customer needs. Hence, to be able to create the best environment to nurture and launch new technological offerings, many banking institutions are now considering collaboration rather than competition. Banks must assess which sections of their business they would like to retain, and in which areas partnerships would deliver better value to the clients. The Fintech culture and its role as a disruptor can be used as an advantage for the banks as fintechs will provide a necessary gateway for innovation. Aside from providing financial services to the consumers, several Fintechs’ business models are leading towards improving the financial infrastructure in the Sub Saharan Region. By using the agile approach and along with the latest technologies, such as data analytics, Fintechs have already made a great impact in Sub Saharan Africa’s financial services landscape.
Sub Saharan Africa, a region with an under-developed financial sector which renders around 60% of the entire adult population having no access to the traditional means of financial services, has already started to explore this opportunity. The percentage of the unbanked and underbanked population combined with a substantial mobile penetration rate of 44% have laid a fertile foundation for the expansion of Fintechs. Fintechs are one of the main drivers for financial inclusion in Sub Saharan Africa. An example of the significant impact of Fintechs can be observed in Kenya, whereby a large mobile payment provider has transformed the way the nation is making payments to such an extent that 45% of the entire nation’s GDP was processed through its infrastructure. The increasing potential of the expanding payments sector has been emphasized by the expectation that the total number of mobile phone connections will exceed 1 billion by 2025 within a population of approximately 1.3 billion.
Fintechs have become an important topic for financial institutions in Africa, and have grown their footprint considerably in the past few years. This sector has the potential to strengthen and accelerate important gains in financial development achieved in sub-Saharan Africa over the last two decades. Factors such as Financial liberalization, reform of monetary policy frameworks and instruments, and improvements in the institutional environment contributed to a significant expansion of banking activities and financial products.
Partnering with NanoBNK
Existing Banks in Africa are exploring how they can use fintech. Banks can partner with NanoBNK to transform their profile and provide innovative services and products. And therefore, aiming to improve the customer experience by providing enhanced products and services. NanoBNK can also help banks improve their internal processes.