Fintechs are leading other segments of the tech ecosystem, such as agritech, edutech, healthtech etc, in attracting investors.
A startup and venture capitalist ecosystem report released earlier this month, which assessed the African tech startup funding activities for Q1 and Q2 2018, uncovered that fintech closed the highest number of deals beating other tech startups.
Fintechs cornered 25 deals with 9 of them coming out of Nigeria, while 6 were based out of South Africa, said the report.
The sector attracted a total of $95 million, followed by Healthtech, Agritech and Ecommerce with 13, 10 and 9 deals respectively.
The fintech revolution is majorly driven by the fact that a large number of Nigerians and Africans are financially excluded as many of then do not have bank accounts, a market, which fintechs are coming to serve.
To this end, fintech players have strategically position themselves to take the bull by the horn and reap the reward.
According to Fidelity Bank, about 43 percent of Nigeria’s estimated 180 million people are currently unbanked. This means that 77.4 million Nigerians cannot access banking services. In 2017, the Central Bank Nigeria (CBN) had in its custody less 30 million unique bank account customers.
This glaring gap is the opportunity for the fintechs and they have been taking advantage of it attracting viable investments from venture capitalists, crowd funding and other sources.
The fintech ecosystem is waxing stronger and giving the banks some stiff competition especially at the retail segment.
Fintechs, according to analysts, are adapting to changes in technology, going beyond back office systems and trading platforms.
The players have extended to customers, retailers both online and offline interact with financial services. And with those changes come new opportunities, which are like honey to investors.
The problems the fintechs address are fundamental and complex, said Stephen Deng, investment officer at DFS lab, an early-stage incubator part funded by the Gates Foundation.
“It’s all about taking the advantage smartphones proliferating and advanced feature phones permeating every market in the world, said Deng, adding, «access to financial services can be such a catalytic force for economic empowerment and digital business models are emerging where financial services can be delivered for-profit and at low cost.”
The current growth of the fintech ecosystem appears to be a tip of the iceberg. Fintech in Africa is predicted to grow from $200 million to $3 billion by 2020, according to Nshuti Lucy Mbabazi, assistant vice president, push payments at Ecobank Group.
«Africa is now at the forefront of fintech with 57.6 percent of the wor- ld’s 174 million active registered mo- bile money accounts (100.1 million) in Sub-Saharan Africa,» she said.
The anticipated boom in the Fintech space is driven by the increasing demand for payment transactions and lending services which are attracting investment from different players, all thriving to position themselves across the African landscape.
«These new initiatives also achieve inclusive goals set by inter- national development finance institutions, which have been joining multiple fund raisings over the last twelve months,» said Joseph d’Arrast, EMEA editor at TMT Finance.