FinTechs are proving huge competition in a number of industries traditionally bogged down by red tape and management structures and silos. Globally, Forbes notes that India is leading the charge in the industry, with a market size of US$50-billion in 2021, which is estimated to reach $150-billion by 2025.
So, what exactly is a FinTech, and why should SMEs and start-ups be paying attention? Andrew Maren, founder and CEO of FinTech ProfitShare Partners says: “The term comes from the words ‘financial’ and ‘technology’, and describes any business that uses technology to transform, augment or automate financial services for businesses or consumers.
“While it has been suggested that FinTechs could replace traditional banking services, we believe that – certainly in PSP’s case – they can enhance them and offer agility which creates a win-win partnership.” Maren says.
“The real value of technology in the financial sector in Africa centres around the millions on the continent who make cross-border payments to families and businesses in other countries,” he continues. “In days gone by, many of Africa’s citizens were ‘unbanked’ altogether, meaning the trials of getting money to families in rural or semi-rural areas were vast.”
Convenience at lower cost
Using technology – including mobile devices and apps – sending money anywhere in the world has become an everyday occurrence in most of Africa. “In the case of ProfitShare Partners, we enable potential clients to gain access to funding where all transactions from application to money deposited in their accounts are done online, via our app,” Maren notes. “It is this kind of less costly convenience that has seen a huge rise in FinTechs in the last five years or so,” says Maren.
With PSP carving its place as an ally for SMEs and start-ups, the company is able to assist SMEs to create their own agility and ability to make financial decisions, backed by solid financial experience.
According to McKinsey & Company, the global management consulting firm that serves leading businesses, governments, NGOs and not-for-profits, between 2020 and 2021, the number of tech start-ups in Africa tripled to around 5,200 companies. With cash still being used in around 90% of transactions in Africa, McKinsey says this opens the door for huge potential to grow FinTech revenues.
“Among the top FinTech trends tipped to shape 2023, embedded finance such as store-branded debit cards and alternative lending like that from loan investors will be the most remarkable,” Maren asserts. “If you have the ‘next big idea’ that requires access to funds, contact ProfitShare Partners and you too could move from SME to disruptor in your sector. The time for FinTech success is now.”