As South Africa is already the financial hub of Africa and has a vibrant tech sector, it is a logical progression for the nation to also develop into Africa’s leading centre for fintech.

One of the most closely followed developments in the global financial industry today is the massive boom in fintech. Fintech, which stands for financial technology, refers to a new emerging tech sector that focuses on delivering better products and services than traditional financial institutions, by making financial services more customer-friendly and by reducing costs to the consumer.

Fintech start-ups to watch

Sectors such as mobile payments, remittance and alternative finance have been massive growth areas for South African fintech start-ups. But also online trading, wealth management and insurance are witnessing new start-ups with disruptive technologies that are creating competition for traditional financial institutions in those sectors.

In the mobile payments space there are start-ups such as Peach Payments and SimbaPay, which are both part of Barclay’s Rise accelerator programme and are receiving excellent traction from costumers.

Peach Payments offers mobile payments solutions for ecommerce and mobile businesses, while SimbaPay allows its customers to send money cheaply across Africa directly into family members’ mobile wallets and enables its users to open a bank account using its app.

In the alternative finance space there are peer-to-peer lender RainFin, which offers loans to individuals and small and medium sized South African businesses, and LulaLend, which offers SME loans through their online platform to companies who are finding it difficult to receive funding from banks.

In the remittance space there is HelloPaisa, which is a start-up focused on low cost remittance services and allows its users to send money within minutes to one another all over the world. There is also GeoPay, which offers a mobile application that lets people transfer money cross-border instantly.

New fintech hubs are boosting innovation

In December of last year Barclays Bank opened a fintech hub and accelerator called Rise in Cape Town to boost innovation and encourage collaboration within South Africa’s fintech scene, while in January 2016 Rand Merchant Insurance also launched a new fintech hub in Cape Town, called AlphaCode, to play their part in supporting and collaborating with the local fintech start-up scene.

Barclays Bank Chief Information Officer Ashley Veasey said on the launch of Rise, “the financial services industry is undergoing a paradigm shift and new tech start-ups are challenging traditional business models. What we’re offering companies is a seat within a best-in-class accelerator programme, which in turn affords access to data, technology and intensive mentoring from industry experts and key decision makers.”

Regarding the launch of AlphaCode, Rand Merchant Insurance stated that, “the concept is modelled on the leading fintech development hub, Level39 in London’s Canary Wharf, which has become a successful catalyst for emerging fintech players. With this in mind, AlphaCode provides a vehicle to identify strategic key investments in the financial services industry and is a catalyst for the development of fintech in Africa.”

Given the opportunities in Africa, with its large underbanked rural population and its growing middle class, fintech will likely continue to flourish in Africa. South Africa will be spearheading this development, as it is becoming the continent’s leading fintech hub.

It should also be stated that fintech has not just hit South Africa in the last few months. Numerous international fintech companies have already entered the South African market several years ago recogniSing its potential.

For example, in 2011, UK-based ETX Capital, which offers a spread betting and forex trading platform for retail traders and high net north individuals, expanded its operations into South Africa as it considers it a growth area for its business.