Mobile money, cross-border payments and ‘buy now, pay later’ (BNPL) are transforming the financial sector for the better, particularly in emerging markets, says Ukheshe business development Africa president Mark Dankworth.

The financial sector experienced an unprecedented rate of change last year, with significant growth in the use of digital financial services.

A report by CB Insights, ‘State of Fintech’, revealed 2021 as a record year for global fintech deals, which more than doubled to a record $132-billion, as private market deal activity soared across sectors and geographies.

According to the report, fintech accounted for $1 in every $5 of global venture funding.

“[The year] 2022 is looking like more of the same,” Dankworth says, noting that fintech continues to drive financial inclusion, assisting in the creation of an accessible and sustainable digital economy for all, particularly across developing nations.

Africa’s large unbanked and underbanked population, together with the increase in mobile penetration, creates fertile ground for fintech innovation, providing much-needed economic independence to those outside the formal banking system.”

Some of the biggest fintech trends set to make an impact in the financial sector this year include mobile money, cross-border payments and BNPL platforms.

Citing data from GSMA, he says that the number of registered mobile money accounts increased 12.7% globally to 1.21-billion in 2021, with sub-Saharan Africa accounting for 548-million of those accounts.

“With mobile subscriber penetration across Africa predicted to increase by four percentage points to hit 615-million by 2025, an upsurge in mobile transacting is certain,” Dankworth comments.

Small, medium-sized and microenterprises, which account for more than 90% of businesses and almost 80% of employment in Africa, are the fastest adopters of mobile payments.

“Traditionally dealing only in cash, the ease of use, affordability and accessibility of digital wallets, mobile point-of-sale solutions and QR code payments, such as those offered through Ukheshe’s Eclipse API, are changing the way these merchants transact, giving them access to loans, insurance and other vital financial services previously out of their reach.”

Further, chat banking and the integration of digital financial services into the messaging experience, which allows users to do their banking on their preferred chat platform, is on the rise.

“By combining the ease and enjoyment of messaging apps like WhatsApp with the convenience of online banking, users have a fast and personalised way to manage their finances.

Banks and mobile network operators are partnering with fintech enablers such as Ukheshe to bring this service to market and become players in the mobile network operator space,” he continues.

Meanwhile, a key focus for Ukheshe this year will be the acceleration of remittances in Africa and beyond, through boostXB, its joint venture with ForexPeople, which enables the company to assist customers in accelerating cross-border remittances seamlessly.

In 2021, remittance inflows in sub-Saharan Africa amounted to over $45-billion, a figure which is expected to more than double in the next two years.

“A large proportion of the technology supporting these cross-border payment systems remains on legacy platforms, but this is set to change this year, thanks to innovations focused on revolutionising the time-consuming, unsecure and expensive remittance industry.”

Further, the BNPL movement is gaining momentum after emerging during the Covid-19 economic crisis when companies sought to help customers struggling to pay their bills.

“This method of deferred payment allows buyers to increase their cash flow and budget more easily by splitting payments into four or six instalments, interest free, and is expected to drive the growth of e-commerce further as more retailers get on board,” Dankworth explains.

BNPL is predicted to increase by 66.9% a year in South Africa, with other African countries closely following suit.

Globally, this figure is expected to surge from $176.2-million in 2020 to $1.67-billion by 2028.

“A study by PYMNTS.com shows that 48% of BNPL platform users will not buy from a merchant if they do not offer BNPL, and a recent survey revealed that almost 80% of shoppers would not have made their most recent online purchase if it was not for the BNPL service.”

With consumer interest being this high, banks are looking to partner with fintechs to help accelerate their technology development and bring BNPL products to the market faster, he concludes.