The invention and growth of digital financial services have led to an increase in the number of people who can access financial services. Today, Africa is one of the homes with the most digital financial services deployments region in the world. Mobile money solutions and agent banking now offer affordable, instant, and reliable transactions, savings, credit, and even insurance opportunities in rural villages and urban neighbourhoods where no bank had ever established a branch.
Mobile money has gained considerable attention in Sub-Saharan Africa over the past decade due to its ability to expand access and usage. However, mobile money is not the only story, particularly in economies where mobile money adoption has happened amidst already higher-than-average account ownership at banks or in parallel with increased bank account ownership.
The financial inclusion landscape across the region is diverse, with varying growth patterns influenced by a range of factors. Over the past five years, 9 out of 36 surveyed economies experienced double-digit account ownership growth, driven in most places by mobile money adoption. These include Senegal and South Africa, each of which saw growth of around 15 percentage points.
In contrast, some economies, including Kenya, showed no growth in account ownership at that time, and some saw declines. These variations reflect supply-side and demand-side variables, potentially including geopolitical stability, financial sector policy and regulation, competition among financial providers, the broader financial ecosystem, effects of the COVID-19 pandemic, and so on. This highlights the importance of addressing both supply-side and demand-side variables to foster broader, more consistent financial inclusion across diverse economies.
The impact, however, extends beyond the individual. What makes a difference for a small-scale entrepreneur or a smallholder farmer translates into broader gains for society. Ten years after the breakthrough of digital financial services in Sub-Saharan Africa, we are seeing evidence of this.
Field studies show that digital access to mobile money services has increased daily per capita consumption levels of households, lifting them out of extreme poverty. Mobile money services have changed lives – for example, helping women to move from subsistence farming to business occupations and more sustainable forms of livelihood. In total, partnerships with 14 African financial services providers from 2012 till date have resulted in 7.2 million new digital financial services users on the continent (a 250 per cent increase from the baseline), 45,000 new banking agents, and $300 million in monthly transactions.
Fintechs have had a considerable impact on the financial industry across the world and have proven to be a force to be reckoned with by established financial institutions. FinTechs have innovative and customer-friendly solutions and a level of flexibility that traditional institutions struggle to provide.
Their specialised focus and unique value propositions have made financial institutions retain customers and have forced an entire industry to innovate. But what potential could FinTechs have in a market devoid of these established financial institutions? This potential has been explored in East Africa, a region with an underdeveloped financial sector, rendering around 60%1 of the entire adult population without access to traditional means of financial services. This demonstrates that even in underdeveloped financial sectors, FinTechs can drive innovation and significantly enhance financial inclusion, offering a model for similar markets in Africa.
The proportion of unbanked and underbanked citizens combined with a substantial mobile penetration rate of 44%2 have laid a fertile foundation for the expansion of FinTechs. These financial institutions are already one of the main drivers for financial inclusion in Africa. An example of the significant impact FinTechs have was seen in Kenya, where a major mobile payment provider has transformed the country’s payment system, processing 45% of the nation’s GDP through its infrastructure.
The growth potential of the expanding payments sector is emphasised by the expectation that the total number of mobile phone connections will exceed 1 billion by 2025 within a population of approximately 1.3 billion. Aside from providing financial services to the end consumer, many FinTechs’ business models are geared towards improving the economic infrastructure in the region. Their customers are typically other FinTechs, SMEs, and other corporates, enabling them to offer financial services to end consumers.
FinTechs, with their agile approach and latest technologies such as data analytics, have already made a profound impact on SSA’s financial services landscape. This, combined with favourable demographics, an underrepresented banking sector, and a lack of financial infrastructure, shows that the conditions for growth are promising.
The key point here is to understand the needs of customers in the growing African market and provide those with the greatest potential to benefit from economic growth with the financial tools they need to realise these benefits.
Consumer behaviour and needs have evolved significantly over the decades. The early consumer need theory was grounded in utility theory, which assumed that consumer behaviour followed the patterns of a rational economic man. This theory assumed that consumers made purchasing decisions solely to maximise their satisfaction or utility, weighing the costs and benefits of each choice logically and unemotionally.
However, the complexities of their behaviours have continued to be studied. In Africa, this has evolved to include the cognitive processes that the consumer goes through and no longer only includes the act of the purchase.
The first strategy fintech must adopt to tailor their services to ensure financial inclusion and customer-centric sales is the customised Product Design. Fintechs must prioritise simplicity and relevance in their offerings. Products should be able to address specific points rather than providing generic solutions. Fintechs aiming to enhance financial inclusion and customer-centric sales must adopt this key strategy, including customised product design, data-driven personalisation, inclusive interfaces, affordability, and strategic partnerships.
Product offerings must be simple and relevant to address specific customer needs rather than general solutions. Leveraging data analytics enables tailored products based on user behaviour and financial goals, such as credit-scoring systems using alternative data. Inclusive user interfaces featuring local languages and voice-guided options ensure accessibility for individuals with limited literacy. Affordability through flexible payment models, like pay-as-you-go schemes, further aids low-income earners.
Lastly, partnerships with local organisations, such as women’s savings groups, help FinTechs extend their reach to underserved communities, fostering empowerment and financial inclusion. In regions with low literacy rates or limited digital literacy, intuitive and inclusive interfaces are essential. Voice-guided options, visual tutorials, and interfaces available in local languages make financial products accessible to a broader audience.
For example, fintech platforms like Wave in Senegal prioritise simplicity by eliminating jargon and offering user-friendly navigation. In addition, cost remains a critical factor for customers in Africa. Fintechs can tailor payment structures to fit irregular income patterns, a common characteristic in many informal economies. Pay-as-you-go models and daily micro-savings schemes have proven successful in enabling low-income earners to access services without financial strain.
All efforts to increase financial access and usage must be undertaken in a way that accounts for the financial capabilities and needs of the customer. The growth in financial access has brought millions of adults into the formal financial system. Yet many less experienced users are vulnerable to fraud and account misuse. Consumer protection policies such as programmes that improve consumer awareness and financial capability can go a long way to protecting new financial consumers and helping them leverage financial services to enhance their well-being.