Will fintech change everyday lives in Africa and Asia?

The modern world is constantly changing, offering more to societies across the globe than before. The recent technological development has proven to be unprecedented and revolutionary, changing the lives of millions in different corners of the world. The financial industry is one of the most affected sectors that is experiencing a major transformation due to a number of different factors. As a result, we now witness a diverse range of services in forms never seen before. 

Changing world order 

As mentioned above, the financial industry is feeling the positive hit the most. The overall wealth of the globe is on a steep rise, primarily because of the fast development pace of emerging economies on almost all inhabited continents. China, once one of the poorest nations, has become the second-largest economy in the world. This global superpower is now changing the economic forecast for numerous major economies highly dependant on it. 

Following the footsteps of China, the south-eastern Asian nation of India is also aiming to become something similar. It already is reporting higher growth rates than any other major economies, including China, which has been experiencing heavy turmoil amid the trade war with the United States. In the meantime, India is attempting to create a welcoming environment for businesses, attracting billions in foreign direct investments (FDI). 

However, in both China and India, the heavy manufacturing industry is not as easy to maintain anymore. The human development index shows the immense growth in these nations, thus, the workforce requires a lot more than just a decade ago. This factor is crucial for fast economic development since major corporations overseas are setting up branches in developing countries because of low maintenance costs. This is why India, unlike China, is now trying to turn its focus onto technology and higher education of its citizens. The country is eager to become an exporter of innovation. 

On the other hand, the continent of Africa is rising after decades of severe poverty and social exclusion. Countries like South Africa, Ethiopia and Nigeria are investing billions in technology and smart manufacturing. Surprisingly, the continent is one of the machine learning hubs globally. AI research facilities are spread all across Africa, set up by influential corporations, such as The International Business Machines Corporation (IBM) and Google. These education and research centers aim to make the region a leading destination for technology enthusiasts from all around the world. 

All in all, global wealth is growing due to the aforementioned regions and their plans and actions for the future. Africa and Asia alone account for almost 3/4 of the global population. Thus, they together represent a major target market for any company, particularly for financial institutions and commercial banks. Citizens of emerging economies have fast increasing demands for financial services, however, there is an evident lack of such in almost all of such nations. 

Fintech - the future is now

Despite the fast growth, the vast majority of people in developing and underdeveloped nations lack access to means of financial instruments. The main reason is non-existing infrastructure, which is much needed to cover vast areas in some of the largest countries in the world. 

Physical branches of commercial banks are not within reach for tens of millions of people residing in rural areas or some of the least developed urban agglomerations on earth. Thus, these people have no opportunity to use services provided by the limited number of financial institutions within their nations. 

Access to finances is more important than many might think. Despite difficult economic backgrounds in many countries, people still need to take loans or save up for the future. However, without a well-streamlined commercial banking system, many people struggle to receive them. As a result, local business stops developing, as well as small and medium-sized enterprises (SMEs). They are absolutely crucial for a bigger economic picture. Without such companies, the country becomes heavily dependant on foreign investments, which rarely occur in many underdeveloped nations. 

So, is fintech a universal solution? Many think, that because of the economic background of emerging markets, fintech does not have a future there in the short term. The widespread idea is, that digital services are only worth offering to customers in developed countries. However, this not essentially is entirely true. 

Yes, a certain major infrastructure is needed to support provision of financial services through digital means. However, investments needed for it is significantly lower than the amount required to introduce physical financial and banking institutions within the reach of the entire population. 

Moreover, there already are positive examples of nations that managed to dominate their markets with digital banks. One such is India, home to over 1.3 billion, where the vast majority of people now use at least one means of fintech services. Indians pay utilities and perform other financial transactions through digital platforms, which has helped the economy importantly in the past decade. More people have access to money in the country than ever before. As a result, a soaring number of businesses are popping up all across the nation. This process is changing the lives of millions in the long run as India is gradually creating its own economic ecosystem. 

Another one is Kenya, which is the absolute frontrunner not only in Africa but globally. Roughly 82% of the nation’s 50 million people have an access to at least one financial product thanks to fintech innovation. Kenya’s local neo and digital banks are attracting millions in some of the most rural areas of the nation. Its economy is estimated to grow at a rate of 6% in 2020, and the access to finances contributed to this number importantly. 

Will fintech change the lives of people in Africa and Asia? The answer is yes. In fact, it already is making a positive change for millions, proving that the potential for fintech in the future is simply immense.