In this article we will take a closer look at how emerging financial technologies are set to disrupt banking and finance as we know these key sectors of the global economy forever. These multi-trillion dollar sectors are critical and touch all our lives daily.
Fintech is portmanteau of the terms “finance” and “technology” and refers to any business that uses technology to enhance or automate financial services and processes. The term is a broad and rapidly growing industry serving both consumers and businesses.
Fintech is rapidly addressing the problem of a lack of financial inclusion, particularly in under-developed regions like Africa, where consumers have embraced financial technologies which enable payments via mobile devices. The clearest and most obvious use case for Fintech’s is in the payments space (including cross border remittances)
“The lack of financial inclusion is inhibiting growth in Africa” and other under-developed regions of the World
- The remittance market is inefficient and is ripe for disruption by ‘The blockchain’ and Fintech
- Cost to users is still too high (on average pay 18% commission to MTO’s),
- Bank account is still required – $60 average transaction (informal channels thriving as a result)
- Too many middlemen, delays in delivery (2-5 days) and lack of security and privacy
Fintech companies are building a digital services market place on the African continent leveraging off significant mobile penetration which has grown over the past 25 years to over 70%. The Blockchain will further enhance the ability for consumers to make payments and transact seamlessly from peer to peer, without the need for a trusted third party to facilitate transactions across borders (globally) 24 hours day, 7 days a week.
According to World Bank estimates, remittances totalled US$573 billion in 2019 globally, of which US$422 billion went to developing countries that involved 250 million migrant workers.
It’s clear for all to see how Fintech’s through networks like the Blockchain will completely dis-intermediate many existing financial services providers enabling faster, cheaper and more secure movement of money from person to person and company to person’s globally. The image below clear illustrates the depth of the disruption that will occur in the various sectors within financial services.
The Fintech ecosystem is one of the fastest developing sectors globally receiving significant venture capital funding and is illustrated in the image below.
