BCG report says Africa will be the fastest growing region and projects a fintech revenue compound annual growth rate (CAGR) of 32% until 2030.

Egypt, Kenya, Nigeria and South Africa are key markets leading Africa’s fintech growth, according to a new report released by Boston Consulting Group (BCG) and QED Investors.

The Global Fintech 2023: Reimagining the Future of Finance report forecasts that Africa will be the fastest growing region and projects a fintech revenue compound annual growth rate (CAGR) of 32% until 2030 in Africa, with the four countries playing a vital role in this growth.

Globally, fintech revenue is projected to grow sixfold, from $245 billion to $1.5 trillion by 2030, the report notes.

The report analyses the growth of fintech companies across various sub-sectors, including payments, lending, deposits (including neobanking), insurance, wealth management and financial infrastructure.

It also examines the regulatory environment for fintech companies and the impact of emerging technologies like artificial intelligence, API-based (application programming interface) open connectivity and distributed ledger technology.

The report predicts massive fintech growth for Africa, despite the sector experiencing headwinds in recent months.

African fintech deal activity dropped 69% year on year in the first quarter of 2023.

FinTech Global Research, in its latest study, says African fintech funding ended the quarter at $331 million, a 17% reduction from the same period in 2022.

Nigeria was the most active country in terms of fintech deal making in Africa in this quarter, with 12 deals – a 32% share of total deals.

Overall, African fintech companies only raised $71 million in the quarter.

In the report, BCG and QED Investors say globally and in Africa the fintech journey is still in its early stages and will continue to transform the financial services industry.

Caio Anteghini, partner at BCG, Johannesburg, comments: “Even though financial services remains one of the most profitable sectors of the economy worldwide, it struggles with innovation and customer experience remains poor.

“More than half the world’s population remains unbanked or underbanked, with the majority in emerging economies, and technology continues to unlock new use cases in leaps and bounds.

“All stakeholders must therefore seize the moment. Regulators need to be proactive and lead from the front, while incumbents should partner with fintechs to accelerate their own digital journeys.”

Nigel Morris, managing partner at QED Investors and co-author of the report, says: "We expect to see continued growth not only in developed markets in the US and Europe, but also in developing fintech markets in Latin America, Asia and Africa, where the inertia and friction is even greater. QED remains more bullish than ever about the future of fintech and its promise to improve the lives of billions of people across the world."

Looking ahead, the principals of the report say regulators should consider levelling the playing field. Actions such as enabling faster pathways for banking and payment institution licences, facilitating an open banking ecosystem and supporting digital public infrastructure will help ease the challenges.

“The rise of new technologies has created a need for next-gen infrastructure that can facilitate complex transactions in a more digital world – and systems that facilitate the delivery of essential services and benefits to the general public, such as digital ID and verification, can promote economic expansion, especially in emerging markets,” says Anteghini.