Whether you realise it or not, there’s a good chance your company is using a financial technology (fintech) product. And even if by some slim chance it isn’t, chances are it will be in the near future. That’s as true in Africa as it is anywhere else in the world. In fact, it may be more so.
By Hayley Hopwood, head of revenue at Paystack
The continent has, after all, experienced a fintech explosion in the past few years. In fact, the number of fintech startups on the continent tripled between 2020 and 2021. The sector as a whole, meanwhile, is expected to see $30-billion-plus revenues by 2025 and $65-billion by 2030.
That’s to say nothing of the international fintech players operating on the continent or the growth in fintech offerings by traditional financial services organisations. Of course, not all of those offerings are aimed at businesses, with many fintechs focused solely on consumers.
Others, however, have seen how much potential there is in building products and solutions for African businesses. The African business-to-business (B2B) payments sector, for instance, is worth north of US$1.5 trillion. It should hardly be surprising, then, that there are a growing number of fintechs looking to disrupt the space.
Given the benefits that good fintech products and services offer in terms of enhanced efficiency, convenience, scalability, and customer experience (among other things), companies would be foolish to ignore them. But that doesn’t mean that organisations should implement fintech blindly. However, what should they be thinking about before any implementation?
Widespread use in challenging business environments
Before answering that question, it’s important to reiterate how widespread fintech’s impact is and will continue to be, especially in business environments as challenging as those faced by many African companies.
From insurance to education to healthcare or retail, fintech’s use cases apply to virtually every business sector on the continent. Fintech is and will be needed by both the Instagram creatives selling bespoke wares from their home, and the established corporates looking to seamlessly collect cross-border payments from the different payment methods customers use in different countries.
Many of these businesses operate in challenging business environments too. It’s notable, for example, that just two African countries (Mauritius and Rwanda) feature in the top 50 countries in the World Bank’s Ease of Doing Business Index. The index covers a number of factors, including the time taken to start a business, getting credit, dealing with construction permits, getting electricity, trading across borders, registering property and enforcing contracts. While fintech products can’t help with all of those things, they can provide assistance in some areas, such as getting credit.
It’s also worth noting that in many countries, large portions of the population lack access to formal financial services. In fact, figures released in 2021 showed that as many as 45% of people in sub-Saharan Africa were unbanked. Fintech products don’t just provide an important bridge for those people, they also make it easier for them to interact with businesses, particularly when it comes to digital payments.
Know what to look for
It should then be clear that fintech products have the potential to be major enablers of business in Africa. In order for that to happen, businesses must take the right approach when implementing fintech products and solutions.
A good first step is to ensure that it has picked a solution that is easy to implement. At Paystack, for instance, we offer no-code tools that make it easier for small businesses to start operating online. Bigger companies, meanwhile, can expect bespoke solutions that integrate global and regional payment channels such as Masterpass, EFT, and Snapscan.
Businesses should also get a good sense of the team behind a fintech solution. That team should be consultative and take the time to understand the businesses’ needs. From there, it should be able to demonstrate how that business can use technology to drive growth as a competitive advantage.
Beyond that, the company behind the fintech solution should have a demonstrably positive track record in Africa. That means it’ll have first-hand knowledge of how African companies use fintech to help solve problems across the continent. Any business that uses that fintech company’s products and solutions will undoubtedly benefit from its knowledge and expertise.
Finally, the solutions it offers should be able to, for instance, help a South African company find and serve customers in Kenya, Ghana, Nigeria, and anywhere else in the world.
Making full use of fintech
Ultimately, the opportunities for growth and efficiency offered by the best fintech solutions are too big to ignore. That’s especially true for African businesses looking to overcome some of the most pressing challenges they face.
But in order to realise those benefits to their fullest extent, African businesses must ensure that they work with products and solutions that are easy to implement and that are backed by consultative teams that will help the business grow and scale. Critically, the solutions should also be tailored not just to African requirements but also to those of the individual countries and sectors in which each business operates.