The FinTech industry’s most significant innovation over the next 24 months will come from Asia, Africa, North America, Latin America, and eventually Europe. This prediction is due to the lack of infrastructure in developing countries, which creates an opportunity for innovation that would not succeed in the West’s over-banked and heavily entrenched economies.
One of the contributors to the Payments Innovation Jury Report, assembled by payments industry veteran John Chaplin and a team of experts, noted that “the developing world is not bound by existing legacy systems, business models, or customer behaviors, and as such offers a fresher perspective that can often see beyond the scope of established business models.”
In contrast to FinTech services in developed countries that primarily focus on online customers, startups in developing countries target a broader market: cell phone users. According to the International Telecommunications Union, an estimated 95.5% of the world’s population has access to a cell phone, giving SMS a greater impact than the Internet.
Mobile money transfer services like M-Pesa in Kenya and bKash in Bangladesh have significantly changed the economic situation of underbanked populations in these countries. In 2013, the International Finance Corporation (IFC), a member of the World Bank Group, became an equity partner in bKash. In 2014, the Bill & Melinda Gates Foundation invested in bKash to provide a broader range of financial services for the low-income masses of Bangladesh.
In Africa, there are now more mobile money accounts than bank accounts in 16 African markets. FinTech solutions in developing countries are making existing services more convenient, creating new infrastructure, and increasing financial inclusion for millions of people in the real economy.
The potential opportunities in these enormous markets demonstrate that FinTech is changing the world for the better.