SA fintechs likely to converge into ‘super app’

South Africa’s payments, banking and fintech environments will likely converge into a future ‘super app’ – a cloud-based open banking environment where users can carry out all financial transactions within one closed ecosystem.

This is according to Mark Wang, Solution Architect at Huawei Cloud’s southern African region, who expects South Africa to follow similar global trends of fintech eco-developments where the payment options are becoming more convenient for consumers.

Wang believes consolidation and integration are likely to emerge in South Africa, built around traditional banking models and driven to a large degree by consumer demand for convenience.

With over 1 000 fintechs and fintech start-ups in South Africa, most focus on payments and lending and many are relatively small.

Across the rest of Africa, fintech growth momentum is building, with FT Partners' Fintech Industry Research released in January this year noting that half the world’s registered mobile money customers are in Africa, and sub-Saharan Africa accounted for around 70% of all global mobile money transactions in 2021.

There remains significant room for growth, however, with McKinsey reporting that less than 10% of transactions in Africa are via electronic or digital channels. Becoming part of a larger ecosystem could open new opportunities and expand the reach of participating fintechs.

However, many fintechs currently face challenges in achieving the maturity and scale they would need to become significant players in future banking ecosystems.

Wang says key challenges facing African fintechs include achieving scale and profitability, navigating an uncertain environment, customer acquisition and building robust governance, compliance and security across multiple countries.

“Cloud computing addresses these challenges,” he says. “Whether fintechs harness the public cloud, private clouds or hybrid models, cloud enables scalability, can cut costs and can support improved security and compliance.”

Wang highlights Huawei’s extensive capabilities, which support more than 2 500 financial customers in over 60 countries and regions, including 50 of the world's top 100 banks. Huawei Cloud is trusted by the likes of China's largest commercial bank, ICBC, Nigeria’s OPay and Kenya’s M-PESA. Huawei Cloud delivers scalability, resource efficiency and finance sector-specific solutions for secure, compliant financial systems. Huawei also recently announced its ‘Non-Stop Banking’ initiative for Africa, to facilitate a digital future of non-stop services, non-stop development and non-stop innovation.

Says Wang: “Huawei has extensive experience in addressing banking and fintech needs and supporting their stringent security and compliance requirements. With over 120 security certifications from around the world, we also offer guidelines and best practice recommendations to make our fintech customers more secure, with end-to-end cloud security.

“We lead in cloud-native development, with unique solutions and extended choice for containers. Our ubiquitous cloud solution simplifies provisioning and management, and we can scale to over 3 000 containers in milliseconds. We also stand out in the market as the only cloud that also has enterprise, carrier and consumer businesses, which gives our customers access to broad expertise and reach.” He notes, for example, that Huawei’s consumer business reaches over 8.5 million people in South Africa alone. Through Huawei Ads, fintechs can target millions of consumers and boost customer acquisition.

“Huawei Cloud has the distinction of being far more than an expert cloud service provider – we are also a strategic business partner for our fintech customers,” Wang concludes. To learn more about Huawei Cloud fintech solutions: https://www.huaweicloud.com/intl/en-us/solution/finance/.