Neobanks and FinTech : A Deep Dive into New Age Finance

Africa Outlook takes deep dive into the growth of FinTech and neobanks across Africa, and how these were affected by the technology boom.

Contents

NEW AGE FINANCE AFRICAN GROWTH AND NEOBANKS THE FUTURE OF FINTECH KIPPA AT THE CORE

NEW AGE FINANCE

Between 2007 and 2009, the world underwent the Great Recession, the worst financial crisis since the decade-long Great Depression in the 1920s and 1930s.

The impacts of such a period of millennial stagnation and decline were varied and far reaching, with many workers across multiple industries losing jobs and businesses falling through. In the financial sector itself, the loss paved the way for development when it came to FinTech, and the earliest notions of alternative financial institutions, such as neobanks.

Neobanks, also known as “challenger banks”, operate exclusively online and cut out the presence of physical branch networks, highlighting a new age of banking.

It is not hard to see why so many neobanks have emerged since. With the incredible boom in technological accessibility worldwide, the digital age demands online products and services in every aspect of life, and with the explosive rise in e-commerce, online banking has become not only the norm, but also a need.

This necessity is not simply based on want, however. Careers and businesses are taking to digital and sacrificing physical assets for virtual realms, in many cases completely, utilising remote or hybrid working teams, and the best and latest workplace and communication software. Alongside this, the presence of revolutionary digital banks helps seamlessly and easily integrate banking into businesses or people’s lives, allowing individuals to access, use and control their assets whenever and wherever they please.

AFRICAN GROWTH AND NEOBANKS

The global influence of neobanks has not stopped in Africa. The continent’s financial potential is being recognised all over the globe, with domestic and foreign investors alike seeking to tap into the new age of banking in such an expansive and ever-growing market.

Africa’s potential is very clear to see; it is a continent encompassing over 20 percent of the globe’s landmass and home to almost 17 percent of the world’s population, the majority of which are underbanked. Alongside the increased accessibility to devices such as smart phones, tablets and laptops, there is a prolific frontier in which neobanks can thrive and provide their services to millions across the continent.

Neobanks are currently at the centre of African infrastructure development, transforming the continent digitally and allowing individuals and businesses to thrive in a fast-paced online world. And with so much to offer, such as resources (natural and manufactured), skilled labour and land investment opportunities, the use and progression of neobanks can facilitate the large-scale and fast exchange of wealth, furthering growth and Africa’s presence in the global market.

THE FUTURE OF FINTECH

FinTech is largely regarded as a sunrise sector in Africa, with foreign investment pouring into the continent, such as from the US who invested almost $1.5 billion in African FinTech during 2021.

This relates once more to the absolute potential that the continent holds when it comes to FinTech growth and the rise of digital accessibility for the overall population.

In total, 2021 saw tech start-ups raise almost $5 billion for the continent – around double the amount seen in 2020, and roughly nine times more than in 2017 – with FinTech alone accounting for approximately $3 billion.

In the FinTech space, one such company changing the face of African finance is Kippa.

Kippa is a disruptive FinTech start-up that provides a simple-to-use bookkeeping app, as well as a finance management app, to generate professional invoices, track profits, manage expenses and recover debt three times faster than the standard. Its free business app allows over 250,000 business users in Africa to record sales and expenses for their customers easily and securely, while keeping track of all their business finances.

Kippa specialises in simple banking and bookkeeping for micro businesses, allowing its users to set up an Instant Business Bank Account, have access to simple bookkeeping, and send invoices and receipts; as well as being a platform for e-commerce, it is the perfect tool for a growing digital generation of entrepreneurs.

Given Africa’s potential and the funding pouring into the continent, FinTech companies such as Kippa, as well as the increase in neobanks, are two financial service spheres that will be central to the growth of individuals, families and businesses into the future.