Financial Technology (FinTech) is quickly becoming a staple for nearly every facet of Africa’s banking industry. Other segments of the financial sector have embraced the trend with a large number of new enterprises integrating FinTech into their activities.
African start-ups have raised a record breaking $560 million in 2017, an increase of 53% from the previous year.
According to Standard Chartered Bank CEO for Africa & Middle East, Sunil Kaushal, African governments have welcomed technology into the continent, hoping to inspire a revolution across all industries and sectors. Some of the brightest minds are determined to rewrite the rules of the game by harnessing technology to tackle some of the continent’s greatest challenges, with one of them being the distinct lack of access to banking services for large parts of the population.
Kaushal notes that only 4 years ago, an astounding 66% of Sub-Saharan Africans did not have a bank account. Now, Africa has been described as a “leapfrogger” with the application of a technology driven economic model to reach the unbanked.
In light of these developments, Kaushal has encouraged industry stakeholders to think exponentially, not incrementally. In a statement issued this week, he explained how the rules of the game are changing in Africa’s banking sector, bringing with them, an abundance of opportunities.
“We are fortunate to witness a period of monumental progress in Africa. The changes are visible across all sectors,” said Kaushal.
FinTech remains to be the most appealing industry for investors as African start-ups look to bridge the financial gap. Several of the largest deals in 2018 involved African FinTech companies: Kenyan-based Cellulant raised close to $50 million from investors this year, while microfinance company Branch received another $20 million investment to continue funding their mission to bring digital financial services to the Sub-Saharan continent.
“While some banks may feel threatened, an abundance of opportunities are hidden within this transformation, most of which come down to partnering with the disruptors. There is a clear chance to leverage existing customer relationships and a deep understanding of the sector in the form of a forward-looking collaboration, which can fundamentally improve ways of doing business on both sides,” Kaushal explained.
According to the Standard Chartered Bank chief, the financial industry is experiencing disruptions on all fronts. One of the most important principles to master this evolution is to move from managing people and processes to managing purposes and principles with an entrepreneurial mindset.
An impressively large number of companies as well as individuals are investing in research, innovation and ideas for execution to keep up with the ever-changing demands of African consumers. Just in the first half of 2018, nearly 120 deals between investors and start-ups were signed.
According to Kaushal, the time when start-ups were considered small, insignificant companies is long over: in fact, with their entrepreneurial spirit and unconventional approaches, they have the power and ability to shape the future of the continent.
“It can even be said that the people leading these small enterprises hold the key to growth by prioritising the greater good over personal goals. This is perfectly aligned with our bank’s mantra ‘Good enough will never change the world’,” he elaborated.
Halfway through 2018, total funding for start-ups in Africa has increased by nearly four-fold compared to the first half of last year.
“Digital entrepreneurs are changing the Sub-Saharan continent, and we have an opportunity be part of this monumental transformation. However, it requires all of us to embrace both exponential thinking and the latest technology to the fullest,” added Kaushal.
The banking sector has taken promising first steps in the right direction with a rage to think differently to support client needs in Africa.
“Our ‘Women-In-Technology’ incubator program in Kenya and the launch of our first truly digital Bank in Ivory Coast give me confidence we are on the right path. I am proud to see unhindered obsession and exponential thinking come to life despite the challenging hurdles of a global banking operation,” Kaushal continued.
“We must do everything we can to harness technology and champion the next generation of entrepreneurs in Africa. We must put our faith in people who are on a mission to accelerate the continent’s development,” he said.