Mobile payments, digital wallets, and other forms of financial technology fintech have seen widespread adoption in the West, but fintech has a whole new meaning for the developing world.Because of the largely unbanked populations in emerging markets, fintech companies serving those markets are facing a unique opportunity and challenge to entirely skip a whole generation of financial services i.e., banks, cards and rethink the payments ecosystem as it moves away from cash.Take Africa, for example.
India will see a fintech boom, following in China s footstepsChina was the first emerging market to experience rapid fintech growth in the last five years and quickly reached adoption levels that are, in many segments, higher than those we see in North America and Europe.
For example, KPMG s 100 Leading Global Fintech Innovators Report 2015 lists two China-based companies in the top five — ZhongAn, an innovative online insurance player backed by Alibaba and Tencent, and Qufenqi, a large online installment plan provider.To understand the rise of Chinese fintech players, we need to look at the key enablers.
There is clearly a large latent demand for financial services and a big push from the central government to increase financial inclusion.
However, almost 60 percent of these accounts show negligible or no transactions, so there is clearly a significant opportunity for fintech companies to build consumer and business applications on top of this infrastructure.If India follows China s innovation pattern, we will likely see successful businesses in the following categories:Looking beyond India, the next big opportunity for fintech companies is surely in Africa, with the primary focus on the large markets of South Africa, Nigeria, and Egypt, which account for about half of the continent s economy.
Governments are making financial inclusion a key priority, and big banks are finally partnering with fintech companies after years of very passive reception.In the long run, African fintech solutions and services will look completely different from their Western counterparts and will play a crucial role in the future economic growth of the continent.