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South African Fintech Adoption Expected To Be No. 3 In The World

South African Fintech Adoption Expected To Be No. 3 In The World

South Africa’s fintech adoption rate is expected to experience a surge in the near future, with the country’s uptake of fintech services set to be greater than the global average.

Africa’s most industrialised economy is forecast to enjoy a future fintech adoption rate of around 71 percent in the coming years, which is far higher than the average global growth rate of 52 percent, according to Ernst and Young.

The global accounting and consulting firm released the second edition of the EY Fintech Adoption Index, with the 2017 study looking at the last 18 months in order to predict future growth in the fintech industry.

In terms of increased adoption of fintech services, South Africa is very high on the global scale, placing third behind India and China respectively, according to ITWeb.

Sectors such as mobile payments, remittance and alternative finance have been significant growth areas for South African fintech startups.

Other sectors such as online trading, wealth management and insurance are also enjoying the emergence of disruptive fintech startups that are challenging the dominance of traditional financial institutions in those sectors.

Impressive fintech adoption expected

Ashwin Goolab, Ernst and Young’s financial services Africa director, explains that South Africa’s fintech growth trajectory is based on the fact that established fintech firms in the country are benefiting from higher customer acceptance.

“Adoption is expected to grow in the next few years by 71 percent. This adoption will be across all the categories,” said Goolab, according to ITWeb.

South Africa’s current fintech adoption rate is at 35 percent, above the global average of 33 percent.

The global average is 33 percent so SA is higher than the global average of those other 19 markets,” he said.

“The findings of the 2017 study show fintech firms have reached a tipping point, and are poised for mainstream adoption across our 20 markets. Building upon the strength of their core characteristics of focusing on the customer proposition and leveraging technology in novel ways, fintech companies are gaining traction in the market,” Goolab added.

“In the process, they are blurring boundaries between financial products and lifestyle propositions, as well as defining new standards within financial services,” he said.

He further explained that fintech usage is currently age-dependent, as far as the stats from over 22,000 digitally active people in 20 markets show.

“As people age, their affinity for fintechs diminish. That’s not because of them not being tech savvy but rather because they have formed relationships with major institutions and are not willing to break those relationships in the later years. The trick for fintechs is to get people early and that is what they target,” he said, as reported by Moneyweb.