Fintech has grown over the past few years from a niche to a mainstream tech player, with over 26,000 companies globally and half a billion people employed in them. At least 96% of global customers know of at least one Fintech company.
The future looks promising for Fintech, especially after the emergence of the pandemic, which has greatly shifted customer behavior, with 30 % of banking consumers now using app banking and up to 64 % of these using one or more Fintech platforms.
Fintech’s growth saw it record the highest funding on record, with $31 billion in the last quarter of 2021 alone. A few years back, that amount would have been for the whole year.
There were a further 43 Fintech companies in the third quarter of 2021, taking the total Fintech companies to 206 globally, almost double of 105 in 2020. Revolut and Chime, two major Fintech players, raised $800 m and $ 760 m respectively.
Mergers and acquisitions (M&A) remains a primary way of exiting Fintech investments rather than Initial Public Offerings (IPO) or special purpose acquisition companies (SPAC). Payment companies such as PayU, Visa, and Mastercard are among the 95 % of Fintech companies to have exited through M&A.
Fintech in Africa was one of 2021’s biggest stories, with funding for Fintech in Africa increasing to $ 2 billion from half a billion in 2020.
Ethersekt, Jumo, Yoco, and Ozow have raised significant funding from offshore investors, as have Flutterwave and MFS Africa from big US investors.
South Africa is an important part of Fintech, as the above companies are based there.
With COVID having accelerated adoption of digital financial processes, this is going to be another year of aggressive capital funding and Fintech growth.
The theme for the COP Summit, ‘building back better’ opens up opportunities such as parametric insurance.
Parametric insurance is the automatic payout of insurance immediately after the event happens. This reduces the time for claims and works great as an Environmental, social, and governance practice.
Wellness has been critical during the pandemic and Vitality has emerged as a leader of this space, encouraging changing of behavior for physical wellness and management of chronic diseases. Others are startups in insurance and banking, like Paceline (U.S), Sweatcoin (Europe), and Betterfly (Latin America).
Mobile Network Operators (MNOs) have also been on the rise, alongside the likes of Vodacom and MTN. Vodacom has been promoting Vodapay while both companies plan to list their Fintech units separately. MNOs could grow to the mainstream in 2022 and open an opportunity to dominate the payment space across Africa.
Buy Now, Pay Later (BNPL) will also be big in 2022 due to its great value proposition, especially since it eliminates chances of fraud – no entering credit details online. So, the ground is set for the likes of Flutterwave to take over from Payflex and Klarna.
Niche challenger banks will also be of great interest as they focus more on niche customer bases. So this could be Daylight (U.S) and Pride (Brazil), which focus on LGBTQI, or Monesa (U.K) which focus on migrant communities. In Africa, Kuda focuses on the unbanked. They could take over from Monzo and Revolut.
The internet of things will also be mainstream in 2022 and this year could be the tipping point for telematics. Indeed, every insurance company in SA offers a telematics program and customers are more willing to engage with it.
Cryptocurrency prices may have taken a tumble but Luno’s logo dominating the Cape Town skylines is a sign that crypto remains a major player. AlphaCode was an early investor in Luno with the platform flourishing with more than 9 million customers in 40 countries.
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