What is FinTech?
Financial Technology (FinTech) is the integration of technology in offering financial services that aims to enhance and automate their services and delivery to their customers. The main aim of fintech is to streamline and automate financial operations for businesses and customers which ensures effectiveness and efficiency.
FinTech in South Africa
The SARB's Fintech Unit
The SARB’s Fintech Unit was created in August 2017 with the primary goal of evaluating the effects of Fintech on policies and regulations, as well as helping to align these policies and regulations with new technologies. This unit focuses on the following: 1. Policies and regulations. 2. Practical insight into Fintech through data collection and analysis. 3. Innovative and collaborative initiatives. This unit continues to make substantial contributions to the Fintech industry both in South Africa and on a global scale.
Additional contributions encompass ongoing initiatives in machine learning, artificial intelligence, open banking, and central bank-issued digital currencies.
Leading FinTech companies The South African FinTech sector has experienced substantial growth, attracting significant investments that are poised to position it as a leader in Africa and potentially on the global stage. As of 2023, South Africa is home to over 140 FinTech start-ups, which collectively secure more than 21% of the market share in Africa. This achievement makes South Africa the second-largest country in terms of FinTech start-ups, following Nigeria. Some of South Africa's fastest growing FinTech companies are the following: 1. TymeBank - This is South Africa's first digital bank and one of the fastest-growing fintech companies globally. TymeBank is founded on the principles of transparency, simplicity, and affordability, with a mission to make digital banking accessible to all South Africans. Since its inception in 2019, TymeBank reported its first profit in December 2023 and reached a milestone of over 10 million customers by October 2024. Recently, the bank successfully raised US$250 million, achieving unicorn status with a valuation of US$1.5 billion. TymeBank's impact is significant, as it continues to transform lives by making banking more accessible and affordable.
2. Jumo - Jumo, a ten-year-old company, is recognized as one of the leading fintech firms utilizing artificial intelligence to deliver financial services. The company has experienced significant growth, expanding its presence to countries such as Ghana, Kenya, Tanzania, Uganda, Zambia, Ivory Coast, and South Africa. Key highlights of Jumo's growth include facilitating over US$6 billion in loans since its inception, serving more than 25 million customers and small businesses, and raising approximately US$200 million in funding.
3. Onafriq - This company enables cross-border and domestic digital payments throughout the continent, establishing a presence in over 40 African markets and connecting more than 500 million digital wallets, 200 million bank accounts, and over 4,000 agents in Nigeria. Onfriq has successfully raised a total of US$200 million in capital to date, with the most recent funding round occurring in June 2022. The company remains committed to expanding its services across Africa and into Asia.
4. Yoco - This is a leading fintech company dedicated to empowering small business owners in South Africa by facilitating payments, managing finances, and fostering operational growth. Yoco offers tailored funding solutions for small businesses, having successfully served over 400,000 clients and processed transactions exceeding US$2 billion annually on its platform. Due to its significant advancements, Yoco has earned recognition as one of CNBC's 2024 250 Most Innovative Fintech Companies and has been featured in the Financial Times as one of the fastest-growing companies in Africa. The agile fintech firm has raised a total of US$170 million in capital, including an additional US$83 million secured in July 2021 to further expand its operations. Yoco continues to experience rapid growth within South Africa's informal markets, assisting small business owners in effectively managing their operations.
5. Lula - Lula provides immediate access to funding, comprehensive banking solutions, and financial analysis tools tailored for small and medium enterprises (SMEs) in South Africa. In February 2024, Lula successfully raised US$35 million to facilitate the expansion of its operations across multiple channels.
6. Ozow - Ozow provides secure, cost-effective, and efficient EFT solutions. The company last raised approximately US$48 million in funding in 2021 to expand its operations. Since its establishment in 2014, Ozow has successfully processed over US$100 million in monthly transactions.
7. Peach Payments - Since its inception in 2012, Peach Payments has established itself as one of the leading online payment facilitators in South Africa and has expanded its operations into Kenya and Mauritius. The company has successfully raised US$30 million to further accelerate its growth and enhance its operational capabilities.
8. Entersekt - Entersekt is a leading customer and payment authentication company that offers innovative financial solutions for fraud prevention. Our services empower financial institutions to mitigate fraud losses, enhance revenue growth, ensure regulatory compliance, and deliver an improved customer experience. With a robust network of over 250 million cardholders, 450,000 merchants, and 85 banks across nearly 70 countries, Entersekt processes more than 2.5 billion transactions annually.
9. VALR - Valr is a cryptocurrency exchange platform established in 2018. Since its inception, Valr has successfully acquired over 1,000 corporate clients and more than 500,000 users worldwide. The company has expanded its operations to Poland and Dubai, and it continues to pursue opportunities for growth in additional markets, including Mauritius, among others.
10. Pineapple - This fintech start-up is a pioneer in the digital insurance sector. As a fully digital enterprise, it has developed a platform that enables users to obtain insurance quotes and access various insurance-related solutions without the need for intermediaries. Its strategic partnership with Old Mutual has facilitated the provision of streamlined and efficient car insurance solutions. By the end of 2023, the start-up reported a successful fundraising round, securing approximately US$22 million, which it asserted was the largest insurtech fundraising in Africa at that time.
Visit Fintech news to read more on South African Start Ups: https://fintechnews.africa
FinTech globally
There has been significant growth in FinTech companies globally, especially during and following the Covid-19 pandemic. These are some of the highly ranked FinTech companies from around the world, in no particular order: 1. Ant Group - This Chinese conglomerate is valued at approximately US$78.5 billion and is recognized as the facilitator of China's largest payment platform: Alipay. This innovative QR code scanning payment system eliminates the need for customers to use a bank card or cash.
2. Chime - This San Francisco-based conglomerate is valued at an impressive US$25 billion, positioning it as one of the most recognized FinTech companies worldwide. It is renowned for its zero ATM fee debit card, which is accepted at over 600,000 ATMs globally. Chime continues to demonstrate significant growth potential.
3. Rapyd - This company is valued at US$15 billion and operates in over 100 countries. Rapyd's main objective is to make international transactions seamless and cost effective. 4. GoodLeap - This sustainability-focused leader is valued at US$12 billion and provides a flexible payment solution for home products and sustainable initiatives. One of the standout features of this company's platform is its ability to connect users with contractors who can efficiently complete the necessary work.
5. Checkout.com - Checkout.com is a UK-based company valued at US$40 billion. It provides exceptionally fast transactions in over 150 currencies, along with support for more than 25 settlement currencies. By leveraging artificial intelligence, Checkout.com empowers its users to enhance their control over payment processes.
For the sequential list of the top 10 most valued FinTech companies, visit: https://courses.cfte.education/ranking-of-largest-fintech-companies/
Author's input The digitalization of the global financial system is experiencing continuous growth, with increasing opportunities emerging in Africa. As Vusi Thembekwayo aptly states, "Africa is the future," and I wholeheartedly concur. The progress being made in the African FinTech sector is remarkable, particularly with Nigeria at the forefront. This development signifies a beacon of hope for the African economy, despite its existing challenges and potential drawbacks. Moreover, South Africa is also on the rise as a contender in the FinTech arena, exemplified by Tyme's achievement of unicorn status, which serves as an inspiring model for other FinTech start-ups across the nation. It is my aspiration to witness Africa's emergence as a global leader in the FinTech sector. While this may not be immediate, I remain optimistic that it will come to fruition in the future.
Thank you for reading and see you next week Thursday!
Comments