How Microfinance Is Navigating the Fintech Revolution in Africa

20 June, 2018

Last year Triple Jump held a survey on the use of and attitude towards Fintech from African microfinance institutions. Read here ‘How Microfinance is Navigating the Fintech revolution in Africa’. Triple Jump supports Digital Transformation at microfinance institutions. This publication looks at how African MFIs view the opportunities and challenges of Fintech and how they are adapting to this dynamic environment.

Main conclusions:

1.      MFIs see Fintech solutions as a major opportunity and not (yet) as a rising threat from Fintech players entering their markets, for instance as digital lending platforms; Fintech is considered more an enabler than a disruptor.

2.      African MFIs are actively looking for ways to improve customer convenience, reduce risks and improve efficiency and productivity by leveraging Fintech solutions. The basic use of digital delivery channels like mobile banking and mobile money are mostly in use or in the pilot phase, especially in East Africa. The intermediate level of digitizing or automating workflows is on the rise. This includes the likes of Digital Field Applications (DFA) and identification technologies.

3.      Fintech solutions like digital financial education and (alternative) credit scoring are definitely on the radar of MFIs, albeit not yet in use at MFI level. These digitized services and products could be considered as a third phase in digitization, requiring a robust foundation, especially  on the data availability and quality fronts.

4.      Deploying Fintech solutions entails major challenges for MFIs, the most significant being the high upfront investment needed to acquire and implement the technology. Other obstacles include finding the right Fintech partner, the required change management and the integration of Fintech solutions into existing MIS.

5.      This implies that to leverage Fintech successfully, MFIs should be forward looking and that they need to pro-actively manage the required transition for the institution, its staff and its clients. Strategic guidance from the board and management and sufficient financial and human resources will be indispensable in this respect.

Click here to read the full report.

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