Robert easily sends money to his family in Nigeria using a financial technology app on his smartphone. Africa's financial services sector has grown tremendously from medieval trade systems to modern reforms and now widespread fintech adoption. The continent is poised for rapid growth in its financial services due to a growing population, increased internet and smartphone access, and the large unbanked population. Major future growth areas include mobile money, payments transformation, and digital banking modernization. Mobile money accounts now outnumber bank accounts, demonstrating fintech's impact on accessibility and transactions values. Traditional banks are also adapting to fintech disruption through digital transformations. Overall, Africa's financial services future is bright with opportunities to expand access through innovative business models.

1. Africa’s Financial Services: A Burgeoning Reality
“Alright, I’ll send the money now…”
Robert had just received a call from his mother, asking for more money to supplement the upkeep for
his family back home. He brought out his smartphone – a Samsung S8 – unlocked it, proceeded to
pone of the numerous Financial Technology (FinTech) applications on his phone, and the last thing he
did was click on “Send Money” after which he got an automated response “Transferred Successfully”.
This is the story of many youths thronging the streets of Lagos, Nigeria – the foremost commercial hub
in West Africa. And all thanks to the financial services industry, the process of money management has
been made extremely easy for this vibrant and tech savvy demographic and the entire populace at
large.
From the medieval trade by barter system, to the implementation of financial sector reforms in the
1980s, Africa’s financial services sector has seen tremendous growth; and now, with the advent and
drastic advancement of FinTech, Africa is strategically positioned on the brink of rapid growth in its
financial services sector.
Africa’s population is projected to reach 2.5 billion in 2050, up from an estimated 1.34 billion in 2020
with the youth population projected to reach over 830 million by same 2050. The internet penetration
on the continent increased from 4.5 million people in 2000 to over 590 million in 2020 (only 20 years
after); smartphone penetration was not also left out on the list of medallists, as the number of
smartphone users is expected to reach 80% i.e., around 800 million by 2050 in Sub-Saharan Africa
alone. All these are important strategic growth markers that singles out Africa as an attractive market
poised for massive growth in the coming years. Even the World bank estimates that Sub-Saharan Africa
has a significant share of the about 1.7 billion unbanked and financially excluded people in the world.
What does the future hold?
We see the major areas for future growth and rapid development being mobile money, transformation
of the payments market and modernizing banking.
The number of mobile money accounts currently out-paces the number of bank accounts on the African
continent. For context, according to GSMA, the number of active mobile money accounts in Africa
increased by 18% to 161 million in 2020 from 2019, while the value of mobile money transactions in the
same period increased by 23% to US$ 495 billion. Of these numbers, the Sub-Saharan African region
leads with 159 million active accounts and a transaction value of US$ 490 billion in 2020. And these
numbers are expected to increase as a result of the growth markers listed above. Attractive, right?
Like Robert, many Africans have been beneficiaries of the rapid transformation being recorded in the
payments industry in the last decade. Perhaps, a worthy testament of such transformation is the recent
acquisition of Paystack by Stripe for US$ 200 million, and the attainment of a unicorn status by
Flutterwave – a foremost payment provider operating out of Nigeria.
The traditional banking sector has not been left immune to the disruptive wave sweeping through the
financial services sector, with the spring up of digital banks, a playground that has become attractive
even to the traditional banking institutions. I mean, what is not to like?
In all, the future of the African financial services sector is attractively bright, and much of the
opportunities will be seen via new and existing companies expanding their services to the unbanked
and underserved population and unveiling innovative business models.
May 2021.