The State of Fintech: 5 Fundamental Industry Findings

It is hard to ignore Fintech’s rise in popularity and impact on our lives. Fintech startups have disrupted traditional financial services business models and given access to underserved markets around the world.

Knewston and Rosenbaum provide important definitions pertaining to the Fintech Industry. They defined FinTech as "technologies used to provide financial markets with a financial product or financial service, characterized by sophisticated technology relative to existing technology in that market". A FinTech firm is a ‘firm that primarily uses FinTech in its business model, to provide a financial product or financial service’. We released our Fintech Industry Report earlier this year and we want to share a few essential findings.

High Number of Suppliers

Global estimates suggest there are nearly 25 million app developers. This means that suppliers’ bargaining power will be relatively weak which is good for industry profitability.

Traditional Banks Have a Strong Financial Pedigree

Traditional banks process trillions of rands every year and total income is comparatively high. The value of advances is R4.4 Trillion and the value of deposits is R4.9 Trillion.

Strategic Alliances

The majority of startups (48.2%) opt are Complementors- i.e. they offer fintech solutions to incumbents (traditional financial entities).

Most South Africans Save Money One Way or the Other

The opportunity for creating innovative fintech solutions to help people save money regularly is attractive as the majority of adults in South Africa have the habit of saving money.

The majority of South Africa’s adult population also save money; 62.3% save money in general, 40.5% saved money in an account, and 26.4% use saving clubs or other individuals

Slowing Industry Growth

Industry growth is akin to a tale of two cities. Although funding has increased the number of new startups being founded has drastically declined based on data.

If you would like to dive deeper into the Fintech Industry, feel free to purchase our Fintech Report