Fintech isn’t disrupting Africa’s financial industry—it’s building it

Saturday, August 6, 2016

African fintech is not disrupting the existing financial service providers. This is because, in many areas of the continent, there is nothing to disrupt, with large swathes of the low and lower middle income segments unserved or under-served when it comes to formal financial services.

Across most of the continent, there is no formal banking or financial infrastructure in rural areas, due to the high cost of rolling out banking infrastructure. Even those in urban areas are priced out of more developed financial services such as credit and insurance.
This is in sharp contrast to developed economies, where traditional banks and institutions have a broad presence, and the majority of consumers are able to get loans or purchase insurance. There, fintech is about disrupting these markets to offer better services at lower cost. In most of Africa, it is disrupting nothing at all at this point, because financial services still remain inaccessible to many in the lower and middle-income segments.

Source: Quartz (link opens in a new window)

Base of the Pyramid, fintech