South Africa’s thriving financial technology industry is making waves and contributing significantly to the country’s economic growth. South African fintech is shifting its attention to savings, investments, and loans as 2023 progresses, reflecting a broader industry trend toward expanding access to credit.
Success in Financial Technology in South Africa
South Africa’s financial technology industry has emerged as a global leader in recent years. Companies like Floatpays, Lipa, Tall Order, and Stitch have garnered media attention after announcing sizable investment rounds, indicating strong investor interest both at home and abroad.
UBU’s Managing Director and a driving force behind the development of prenup, a platform for micro-savings, Tony Mallam, emphasises the significance of this breakthrough. Mallam’s role as an angel investor in firms like Clickatell, which raised over $91 million in funding not long ago, exemplifies the thriving ecosystem for software development in South Africa. Google’s Africa Developer Report found that South Africa has the most developers per capita on the African continent.
The financial industry in South Africa is well-known for its stability and cutting-edge developments. Mallam says, “In South Africa, we’ve been banking from our mobile phones while other countries are still writing out cheques,” highlighting the country’s pioneering role in the development of mobile payment systems, payment apps, and digital currencies.
Innovation and Regulatory Agencies
The South African Reserve Bank (SARB) has been forward-thinking in its acknowledgment of the potential of the fintech sector. To better understand, develop, and innovate in the fintech sector, SARB established the Intergovernmental Fintech Working Group in 2016 and the Fintech Unit in 2017.
How Fintech Is Changing Banking
By making banking and saving more accessible and affordable, fintech companies like Tyme Bank are already posing a threat to South Africa’s “big four” traditional banks. Small companies can now accept digital and card payments in addition to cash thanks to Yoco’s affordable card machines.
The Future of Banking, Investing, and Financing
Mallam foresees a shift towards savings, investments, and loans as existing fintech fields begin to reach saturation. “Micro-savings and investment products, which allow consumers to put away small amounts of money, are perfectly suited to the South African context where savings rates are low,” he says. Naspers-backed startups like Floatpays show the way for this new area of interest. Floatpays allow workers to access a portion of their earned but unpaid money whenever they need it throughout the month.
The Promise of Financial Technology for the Underbanked
South Africa’s financial technology sector isn’t only about making payments easier; it’s also about expanding access to banking services. Mallam elaborates that having a bank account is not sufficient for financial inclusion. It’s about being able to insure your goods, put money down for retirement, get a loan for your kid’s college tuition, or to start a business. By the end of 2023, the South African fintech industry is predicted to have significantly improved savings, investment, and credit options, as well as introduced novel potential for financial inclusion.
About The Author:
Thabo Matlala is a fintech journalist with Africa Nova. A finance graduate, Thabo has an eye for exciting trends and startups disrupting the traditional South African landscape.
