Fintech: The digital key to spotting new markets

This article was contributed to TechCabal by Leila Rwagasana.

Fintech, the fusion of finance and technology, is revolutionising financial services globally, particularly in emerging and developing countries. From ancient Greece’s minted coins to Persia’s invention of cheques and, more recently, the deployment of ATMs and digital transactions, financial tools have always aimed to facilitate economic growth and societal development. Today’s digital technology ought to make financial services even more inclusive.

A prime example of fintech’s transformative power is M-Pesa in Kenya. Launched in 2007 as a mobile money service for airtime transfer, M-Pesa quickly expanded into a comprehensive financial tool. By 2021, M-Pesa’s transactions accounted for 87% of Kenya’s GDP, lifting 2% of households above the poverty line.

The evolution of financial tools has always aimed to facilitate the exchange of goods and services, stimulating financial inclusivity and furthering societal development. Societies with advanced financial systems tend to prosper, as more inclusive financial transactions lead to higher incomes, increased demand, and innovation. Conversely, societies with restricted financial access stagnate and struggle to achieve economic growth. This pattern is particularly evident in emerging and developing countries, where financial inclusion remains a critical challenge. 

Post-independence, Africa’s financial systems remained unchanged, still designed to serve colonial interests. This left most of the population excluded from mainstream financial services. By the 1970s, about 90% of Africans were unbanked, and today, 52% remain without banking access, conducting 90% of transactions in cash. This exclusion hinders economic growth and development.

Fintech, however, can turn things around. After the 2008 financial crisis, traditional banks became more conservative, and digital innovations emerged. With the internet and mobile technology expansion, fintech companies have filled the gaps left by traditional banks. Platforms like M-Pesa enable people to pay bills, transfer money, and purchase goods using their mobile phones, demonstrating fintech’s potential to drive financial inclusion and economic growth.

Fintech operates without traditional banking infrastructure. It requires no physical branches, cards, or chequebooks—only a smartphone and telecom ecosystem. This simplicity has allowed fintechs to thrive in regions with limited banking infrastructure. In Kenya, for example, M-Pesa expanded financial access from 26% to 83% of the population between 2006 and 2021, showcasing the potential for inclusive financial systems. 

Fintech also supports small and medium-sized enterprises (SMEs), which are crucial to developing economies but often face barriers to traditional financial services. Fintech platforms give SMEs access to loans, enabling them to expand operations and contribute to economic growth. Digital-only banks like South Africa’s TymeBank and Nigeria’s Kuda offer services at a fraction of traditional banking costs, democratising financial access and empowering entrepreneurs.

Fortunately, or not, the COVID-19 pandemic’s strain on the economy accelerated the adoption of digital banking. African banks now collaborate with fintech startups to offer a broader range of financial products, catering to a tech-savvy population. With mobile phones accounting for about 75% of all online traffic in Africa, digital platforms are increasingly designed for mobile users, driving innovation and expanding access to financial services.

Fitech is also promoting gender equality by providing women with access to financial services. Women, who often manage SMEs and agricultural activities, face significant barriers in traditional banking. In Rwanda, the recent FinScope report highlights this progress, showing that women’s access to formal and non-formal financial services (including fintechs) has increased significantly from 73% in 2020 to 90% in 2024. This demonstrates the pivotal role of fintech in bridging the gender gap and empowering women economically.

Fintech apps used by cooperatives and mutual support groups empower women by facilitating access to loans and other financial services. Studies show that companies with more female employees perform better financially, underscoring the importance of gender-inclusive financial systems. In Africa, where 40% of SMEs are female-owned, fintech is closing the funding gap and enabling women to contribute more effectively to economic growth.

The inaugural Inclusive FinTech Forum in Kigali, a global platform for financial inclusion and fintech co-organised by the National Bank of Rwanda, Elevandi, and the Kigali International Finance Centre, further showed fintech’s transformative potential in Africa. With nearly 3,000 attendees from 65 countries, the forum emphasised shared experiences and best practices driving financial inclusion and sustainable development. The presence of high-profile participants, including Rwanda’s President Paul Kagame, underscored the significance of fintech in shaping Africa’s economic future.

Additionally, the Africa Continental Free Trade Area (ACFTA) promises to boost intra-African trade, and the fintech-based Pan-African Payment and Settlement System (PAPSS) is a significant step in this direction. Harmonising national payment systems will facilitate seamless trade transactions across the continent, enhancing economic integration and growth.

Fintech also reduces technological inequality between advanced and developing nations. A McKinsey study shows that between 2020 and 2021, nearly half of Africa’s 5,200 tech startups were involved in disrupting or augmenting traditional financial services. Fintech is expected to grow by 19% annually through 2025, reaching a valuation of $150 billion. This growth is driven by increasing smartphone ownership, declining internet costs, expanded network coverage, and Africa’s young population, which is well-versed in the digital world.

Fintech represents a significant milestone in the history of financial technology. By breaking down traditional barriers and opening financial services to the masses, fintech can drive unprecedented economic growth and prosperity in Africa and other emerging markets. Embracing this digital revolution offers a more equitable and prosperous future for all.

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Leila is the FinTech Lead at Rwanda Finance Limited. She is a business development and partnerships professional with 10 years of work experience in Rwanda and across Africa.