The Fin-Tech Take Over
What exactly is Fin-Tech?
Banks have gone head to head, outdoing each other with innovation. It started with online banking, then mobile loans and now every other financial institution wants in on financial technology (Fintech). Advancements like remote payments, app-based stock trades, and automated insurance claims became commonplace, which have all built onto the Fintech explosion.
Fintech refers to the application of innovation and the application of technological solutions to the products and services offered in the finance sector. The speed at which the take-over of FinTech has swept over the globe has been surprising for one reason; new innovations are usually met with resistance and slow uptake. So why did Financial Technology become so popular?
Why is FinTech so popular?
The answer is simple; Fintech solutions are faster and more cost effective for both the customer and the banking solution in a sector that was for a long time fraught with delays and unpredictable hitches. Fintech relieves the client of some of the strain associated with in-person banking and document verification.
But even before the consumer realized they needed Fin-Tech, financial institutions must have done some heavy lifting because the rise of fintech has been marked by two key pointers:
Expertise: Banks did not take the ‘trial-and error’ method. Instead, they had clear cut goals of exactly what they wanted to achieve such as improving a specific product or extending their distribution channels. What banks then did was to acquire existing technologies and incorporating them into their systems, as opposed to starting from scratch building their own tech solutions. Solutions targeted at the consumer’s pain points. The front-end and back-end of Technology
Where’s Africa’s piece of the pie?
For over sixty years through the evolution of Fintech, the US has been the leading innovator in the financial services sector. Over the last decade however, China has taken the lead on account of its smart phone dominance. Over the last couple of years, Africa has been slowly up-turning the market, and Venture Capitalists have been trooping in scouting for FinTech investments ever since.
To put it in perspective, Kenya is the second largest consumer of Fintech, after Nigeria, which is whose population is almost 4 times that of Kenya. Mpesa, has played a key role towards adoption of Financial Technology in Kenya, which The Economist* estimates that 25% of the country’s GDP is channeled through Mpesa transactions.
Equitel is another key player that has created a niche for itself for financial inclusion. Equitel is a mobile virtual network operator competing with Safaricom’s M-Pesa, and offers a full suite of banking services on mobile devices, by combining banking services with telecommunications services.
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