The African Fintech Success Story: Can it be Duplicated in Asia?
Both Africa and Asia face some similar socio-economic and geographical challenges. Improving national economies and equalizing access to financial services is key to paving the way for the countries of the two continents to join the league of developed nations.
Africa, however, has experienced a fintech success story that has financially empowered thousands of previously underbanked consumers. Microlenders, payment apps, and mobile wallets have opened the doors to critical financial services and products for thousands of Africans. There is a lot that Asia can learn from the African experience.
Fintech has Entered Every Segment of the African Economy
Capitalizing on the popularity of mobile devices, global fintech and mobile phone carriers have moved into Africa and entered just about every part of its economy. Small startup initiatives are not the only companies are getting involved. Both Visa and Facebook have launched digital platforms in Africa.
A study conducted by Irrational Innovations found that at least 20 fintech and mobile-phone companies have set up operations in sub-Saharan Africa alone. Consumers can now use their phones to access insurance products, healthcare hotlines, and even pay for alternative energy infrastructure, such as solar panels.
Mobile wallets and microfinance platforms M-Pesa and Tigo Cash have transformed microfinance in Africa. Virtually all loan payments in Tanzania and Kenya are being made through mobile wallet apps.
Can the African Model be Used in Asia?
Asia will have to overcome obstacles related to infrastructure and regulations. BaaS-platforms would be one way to move Asia’s population into the financial technology mainstream. At the same time, work must be done to create a more favorable regulatory climate.
Asia cannot afford to ignore the positive impact that the development of fintech can have on its underbanked population. A 2016 McKinsey study found that over a period of only ten years, a nation’s GDP can grow by almost $3.7 trillion thanks to the availability of mobile financial services. Therefore, Asia must do all it can to make its developing states a more welcome place for fintech investment and development.