African economies will embrace digital wallets as the continent’s fintechs drive innovation to move further towards zero cost, according to 2023 technology trends forecast by fintech firm, Ukheshe.

Clayton Hayward, CEO of South African fintech player, Ukheshe, who identifies six key trends that will shape the payments technology landscape across Africa says that fintechs will play critical roles in advancing innovation that drives growth across the continent.

“Despite some general negative sentiment around fintech companies,” the Ukheshe CEO says, “there is massive opportunity within the digital financial services ecosystem as incumbent banks have come to the realisation that they need to work with fintechs.”

“Despite some general negative sentiment around fintech companies,” the Ukheshe CEO says, “there is massive opportunity within the digital financial services ecosystem as incumbent banks have come to the realisation that they need to work with fintechs.”

The South African Reserve Bank has established the Intergovernmental Fintech Working Group (IFWG) to review South Africa’s position on crypto assets and develop an appropriate policy and regulatory framework, he says underscoring changes underway on the regulatory front.

“It’s no longer just banks who have a seat at the table in setting rules and giving input into new payment streams, it’s promising that fintechs and even retailers are being brought into these industry-changing discussions,” Hayward says.

“Looking at mobile money markets, like Kenya,” Hayward says that “it is clear that regulators are taking a stringent approach toward fintechs and mobile money operators, particularly where they deliver services that are not clear from a regulatory perspective. Regulatory and governance issues around fintechs are being assessed and due diligence in all aspects has ramped up.”

For the Ukheshe CEO, “Fintechs now find themselves in one of two situations – either they’re well positioned with a footprint in several countries with the necessary licenses and proper partnerships, or they’re vulnerable because they lack those licenses and partnerships. This will make the power and value of partnerships even more important than ever with ample opportunity to collaborate with other fintech enablers like Ukheshe.”

Fintechs like Ukheshe, the company’s CEO says will play defining roles across Africa’s “emerging markets as the increase in mobile penetration has created a new frontier of possibility for fintech innovation to empower businesses to provide their customers with the tools for economic independence beyond the formal banking system.”

Fintechs: Six trends to watch in 2023

The Ukheshe CEO identifies the following six key developing trends that will shape the African fintechs landscape to include:

• Big Data: while not new, it will play more of a role in the payments space in terms of the big data that emanates from a financial transaction. Depending on the type of transaction, we will reach a point where it will be possible to determine what kind of mood a person is in when they perform that transaction, illustrating the opportunities for financial services providers to get to know their customers on a personal level.

• Connecting people through payments: Payments will become more like social media, and more people will connect through transactions which will become additional opportunities to gather more insight on these connections, simply by virtue of there being more data in a digital connection than a face-to-face connection.

• Shifting perceptions on digital wallets: With card penetration on the rise, African and emerging markets are still expecting to see a massive increase in mobile and digital wallets as well as virtual card adoption. The payments space is in a race to zero cost, paving the way for embedding value-added services to consumer wallets and applications. While developed markets remain heavily carded, emerging economies are embracing wallets which are expected to experience the fastest growth in revenues, particularly in countries like Egypt, Morocco, and South Africa. The role of fintechs will be to surprise and delight with innovative payment experiences, bringing products or functionality to market that boosts competitiveness.

• Embedded finance: This will continue to be a major trend in 2023, bringing payments and transactions together where they should be. It is these seamless, convenient experiences that will rapidly reshape the banking, business, and fintech landscapes, enabling the integration of previously-unrelated industries, and producing new opportunities for revenue growth, while vastly improving customer experience.

• Enabling eco-awareness through transactions: Banks have started to offer products that allow consumers to track their environmental impact based on payment information. While the environmental impact is not predominantly being tracked in the payments landscape, it will play a bigger role in the coming years.
• Blockchain and cryptocurrency:  Will come into the limelight as we clarify how fintechs will monetise those rails and how governments and regulators will work with fintechs to deregulate those environments, given their potential to rapidly launch payment products applicable in multiple countries simultaneously.