According to Worldometer, Africa is home to almost 1.5 billion people, with an average age of just 18.8 years.
With such a young population, it’s no wonder that the adoption of digital technologies on the continent has reached such extraordinary levels, with at least one quarter of the population having access to the internet. Cell phone technology is providing more people with access to information, greater participation in the global economy as well as access to more financial services.
We are a young continent, and we are both embracing and driving change in the financial services sector.
Perhaps because of the wide dispersal of Africans living far from home, Africa has become the leader in peer-to-peer finance, transacting, and sending and receiving money to and from the diaspora on digital platforms. When it comes to crypto currency ownership, South Africa ranks as fifth in the world.
And it is the technical and digital innovation in the financial services sector that is enabling this change to happen. In order for growing numbers of consumers to engage in online shopping, and for e-commerce stores to be able to offer their goods and services to a global market, and for money to change hands across geographical borders, technology has had to fill the gap previously occupied by traditional brick and mortar banks and exchange bureaus. Before, making cross-border payments involved filling in forms, incurring hefty bank and exchange rate fees in a slow and inefficient process.
Today, thanks to technology, cross-border payments are fast, seamless, secure and convenient, and above all, accessible.
So how has this rapid transformation come about?
Tech driven solutions
Fintech innovators have revolutionised the mechanism for cross-border payments and remittances. Blockchain technology, digital wallets, AI and machine learning all contribute to the streamlining of payment processes, reducing costs and improving speed and security.
Without the surge in demand for digital payment options and the need to make on online user experience a priority, the rise of digital payment options would not have been so rapid. With so many mobile payment apps and online shopping platforms to choose from, it is the number of options that are on offer that differentiates one e-commerce site from another. One tricky process, one failed payment, and carts are abandoned at check out. This makes online shopping sites that offer seamless, error free remittance systems more likely to succeed than those that don’t.
Focus on financial inclusion
The accessibility and availability of online payment platforms mean that anyone with a smart device and airtime can buy and sell, to and from, any part of the world. Thanks to technical partnerships between banks, mobile network operators and other institutions that have moved online, more people have access to financial services that are offered by non-traditional financial institutions, buying health, home and life insurance at the click of a button.
Regulatory landscape
The complexities of making and receiving payments across borders include a range of regulatory and compliance issues across political and geographical borders. Fintech companies have had to work hard to incorporate mechanisms that manage legislation into their payment processes and to work with governments to eradicate fraud, money laundering and the financing of illegal operations. By making complex cross-border payments straightforward for consumers, fintech companies have effectively managed this issue.
Integration of cryptocurrency
Cryptocurrency is increasingly becoming part of the cross-border payment ecosystem. Cryptocurrency circulates independently from centralised banks, meaning that in countries where currencies have been weakened and devalued by political unrest, it offers a secure option to continue trading across borders.
Africa’s young population and the high number of smart device owners with access to the internet has led to the continent’s fintech companies to blaze a trail in providing seamless, safe and secure cross-border payment solutions that meet consumer user expectations, while managing regulatory and compliance issues.
