There is no doubt that fintechs are the drivers behind the financial sector’s major transformation. Innovative platforms and ecosystems created by these startups are changing the way consumers manage their finances, making it more accessible, convenient, cost-effective and at the same time addressing a huge problem across Africa – financial inclusion. The COVID-19 pandemic triggered further digitalisation and many customers have now become accustomed to meeting all their financial needs online.
This ever-changing environment lends itself to strategic collaboration. While banks tend to be slow to pick up and act on changes in the market with all the red tape and legacy systems in place, smaller fintechs are able to adapt quickly to market demands, presenting customer-centric channels for accepting and making payments in an extremely agile way.
The future of banking lies in partnerships between these two service providers. By partnering with startups, banks can get innovative solutions to market quicker without being involved in their development, and fintechs earn the credibility of being associated with a mainstream institution, are able to use the institution’s existing customer base, and have access to capital to help further develop their services.
All of this ultimately benefits the consumer, more of whom now have access to customer-oriented and user-friendly digital banking services, and their willingness to use fintech services is seen in the numbers. The EY FinTech Adoption Index shows that the average adoption of fintech services by consumers has increased globally from 15% in 2015 to 64% in 2019, with South Africa, in particular, up a staggering 82%.
Going forward, large brick-and-mortar financial institutions will be looking at new banking mindsets, with no branches, no infrastructure and a massive shift to mobile phone banking. This will boost financial inclusion on a continent where a huge portion of people are poorly served, and mobile phones far outnumber bank accounts. When institutions perceive fintechs as key collaborators, there are no limits to what mobile digital banking can achieve.