Mark Dankworth, President Business Development Africa at Ukheshe, shares his thoughts on how mobile money, cross-border payments and ‘buy now, pay later’ are transforming the financial sector, particularly in emerging markets, for the better.

Last year saw an unprecedented rate of change in the financial sector, with huge growth in the use of digital financial services. A report by CB Insights entitled ‘State of Fintech’ revealed that the third quarter of 2021 was the second highest on record for fintech financing, up by 147 percent year-on-year, and 2022 is looking like more of the same.

Fintechs will continue to drive financial inclusion, assisting in the creation of an accessible and sustainable digital economy for all, particularly across developing nations. Africa’s large unbanked and underbanked population, together with the increase in mobile penetration creates fertile ground for fintech innovation, providing much-needed economic independence to those outside the formal banking system.

Some of the biggest fintech trends poised to make an impact in the financial sector this year include:

Mobile money

According to the Global System for Mobile Communications (GSMA), the number of registered mobile money accounts grew by 12.7 percent globally in 2021 to 1.21 billion, with sub-Saharan Africa making up 548 million of those accounts. With mobile subscriber penetration across Africa predicted to increase by four percentage points to hit 615 million by 2025, an upsurge in mobile transacting is certain.

The fastest adopters of mobile payments are small, medium and micro enterprises (SMMEs), which, according to the African Development Bank (AfDB), account for more than 90 percent of businesses and almost 80 percent of employment in Africa. Traditionally dealing only in cash, the ease of use, affordability and accessibility of digital wallets, mobile POS solutions and QR code payments, such as those offered through Ukheshe’s Eclipse API, are changing the way these merchants transact, giving them access to loans, insurance and other vital financial services previously out of their reach.

Taking it further and integrating digital financial services into the messaging experience, chat banking is fast becoming the next big thing, allowing users to do their banking on their favourite chat platform. By combining the ease and enjoyment of messaging apps like WhatsApp with the convenience of online banking, users have a fast and personalised way to manage their finances. Banks and mobile network operators are partnering with fintech enablers such as Ukheshe to bring this service to market and become players in the mobile network operator space.

Cross-border payments

In 2021, remittance inflows in sub-Saharan Africa amounted to over USD$45 billion, a figure which is expected to more than double in the next two years. A large proportion of the technology supporting these cross-border payment systems remains on legacy platforms, but this is set to change this year, thanks to innovations focused on revolutionising the time-consuming, unsecure and expensive remittance industry.

A key focus for Ukheshe this year will be the acceleration of remittances in Africa and beyond. Its joint venture with ForexPeople – boostXB – assists our customers in the acceleration of cross border remittance. Through boostXB, Ukheshe enables seamless cross border remittance services for the likes of Chipper Cash, Sasai and many more.

Buy now pay later

The buy now, pay later (BNPL) movement is gaining momentum after kicking off during the COVID-19 economic crisis when companies sought to help customers struggling to pay their bills. This method of deferred payment allows buyers to increase their cash flow and budget more easily by splitting payments into four or six instalments – interest free – and is expected to drive the growth of ecommerce further as more retailers get on board.

BNPL is predicted to increase by 66.9 percent annually in South Africa, with other African countries closely following suit. Globally, this figure is expected to move from US$176.2 million in 2020 to US$ 1,673.7 million by 2028. A study by PYMNTS.com shows that 48 percent of BNPL platform users will not buy from a merchant if they don’t offer BNPL and a recent survey revealed that almost 80 percent of shoppers would not have made their most recent online purchase if not for the BNPL service. With consumer interest being this high, banks are looking to partner with fintechs to help accelerate their technology development and bring BNPL products to the market faster. 

At the heart of these trends is the willingness to collaborate, create partnerships and engage with innovation – all of which Ukheshe continues to drive by working closely with players in the payments space to create solutions that are seamless and efficient.