The fintech industry is on the cusp of a new era of growth and disruption, according to a recent report by Boston Consulting Group (BCG) and QED Investors. The report, titled “Fintech’s Next Chapter: Scaled Winners and Emerging Disruptors,” highlights the industry’s robust fundamentals and its potential for further evolution through breakthrough technologies, disciplined growth strategies, and expanded market reach.
In 2024, fintech revenues experienced a significant 21% growth, outpacing the financial services sector as a whole. This surge in revenue was driven largely by a new class of scaled players generating over $500 million in annual revenue, accounting for approximately 60% of total fintech revenues. Notably, 69% of public fintech companies are now profitable, with an average EBITDA margin of 16%.
While the Middle East and Africa currently represent less than 1% of global scaled fintech revenues, the African fintech sector is rapidly expanding. Markets like South Africa, Nigeria, Egypt, and Kenya are attracting the majority of fintech investments on the continent. These regions are experiencing growth due to a combination of economic development, high demand for financial services, and innovative solutions that address gaps in access and affordability.
Mobile-driven fintech solutions are gaining momentum in Africa, with a focus on payments, banking, and lending services. Companies like M-PESA and Orange Money are leading the way in providing secure and convenient payment solutions for unbanked and underbanked populations. Additionally, innovative lending platforms like Moove and PayJustNow are empowering individuals and businesses with access to credit and financing options.
The report also highlights the urgent need for innovation in cross-border payments and remittances, particularly in regions like Africa where high fees and lengthy settlement times are prevalent. Blockchain and cryptocurrency solutions have the potential to reduce costs and enhance interoperability in the remittance value chain.
Looking ahead, the report emphasizes the importance of continued innovation, regulatory support, and interoperability in sustaining the momentum of the African fintech sector. By leveraging AI, expanding digital payment solutions, and strengthening merchant payment value chains, fintech companies can drive financial inclusion, economic growth, and entrepreneurship on the continent.
Overall, the fintech industry is poised for further growth and disruption, with opportunities for new market penetration and expansion. As fintech companies continue to innovate and evolve, they will play a crucial role in shaping the future of financial services in Africa and beyond.
