Fintech may belong to players in financial services today, but all that could change in a few years. The space is opening up to new competitors that are not core financial institutions, rather posses more sophisticated technology and seemingly endless financial power.
Google, WhatsApp, Opera, Uber, Samsung, Apple and most recently Adobe, in recent times have unveiled plans to participate in different ways in the burgeoning global fintechmarket.
A number of them have also identified Africa as their frontier should they eventually roll out their products in the space.
Fintech, which stands for financial technology, in ordinary terms refers to technologies used and applied in the financial services sector, chiefly used by financial institutions themselves on the back-end of their businesses. If we are to go by that definition fintech will be the exclusive item of banks, microfinance banks and other institutions that along this line.
However, fintech is being used to define technologies that are disrupting traditional financial services, including mobile payments, money transfers, loans, fundraising, and asset management. This definition is the reason for start-ups such as Paystack, Paga, Flutterwave, CowryWise, Riby Finance, Paylater, Aella Credit and many others.
It is also the reason non-financial industry players like mobile operators in countries such as Kenya has been able to participate in fintech. M-pesa, which is arguably the most popularfintech product in Africa, was created by a mobile phone operator, Vodacom.
While the history of fintech is replete with banks’ efforts to transform services to customers using new technologies, it is the start-ups that are responsible for the popularity fintech has gained so far.
Fintech start-ups directly compete with banks in most areas of the financial sector to sell financial services and solutions to customers. And given that the number of people not accessing bank services for various reasons keeps increasing, the fintech start-ups have been able to find a ready-made market eager to embrace their offerings that are largely built for convenience, simplicity, speed and efficiency. A lot of them are succeeding where banks are not.
In contrast, many of the start-ups are also being bought up or taking over by ambitious banks which are responding aggressively to the threat. The banks in Nigeria are some of the highest investors in fintech services.
Nonetheless, many experts agree that fintech is still in its early days.
The entrants of non-financial services players like Google, Uber, Adobe, Opera, WhatsApp, Samsung brings a new twist that will give banks and fintech startups a run for their innovation and money.
To start with, one of the major advantage banks have had so far over the start-ups is ready-made funding. The start-ups have to rely on a network of investors and in some cases family and friends to survive.
The new players are much more sophisticated financially. Companies like Google and Samsung sit on the table of the most valuable companies in the world. Their financial powers are enormous, so is their technology innovation stash.
The entrance of these big players could lead to mergers of three or more fintech start-ups, or acquisitions.
