FinTech in Sub-Saharan African Countries : A Game Changer?

FinTech is a major force shaping the structure of the financial industry in sub-Saharan Africa. New technologies are being developed and implemented in sub-Saharan Africa with the potential to change the competitive landscape in the financial industry. While it raises concerns on the emergence of vulnerabilities, FinTech challenges traditional structures and creates efficiency gains by opening up the financial services value chain. Today, FinTech is emerging as a technological enabler in the region, improving financial inclusion and serving as a catalyst for the emergence of innovations in other sectors, such as agriculture and infrastructure.

There is a need to balance the trade-off between the benefits that FinTech technologies may generate and potential added risks and vulnerabilities. Given the lower levels of financial inclusion, bank competition, and macro-financial linkages in sub-Saharan Africa relative to other regions, regulators and central banks could potentially benefit from considering FinTech as a leapfrogging opportunity to foster inclusive economic growth and development. At the same time, these new technologies and business models present new risks that would need to be addressed with suitable regulatory frameworks. This paper from IMF explores the advantages and challenges of FinTechs.