When It Comes to Fintech, the Future is Asian and African

Innovations in digital financial tools will be central to the growth of developing economies

One of the rewarding aspects of embarking on our 50th anniversary timeline project (more here) is discovering things you thought you knew which it turns out you didn’t. We had cited M-Pesa as the milestone in the development of mobile payment systems. But IIC Director Dr Peter Lovelock pointed out that the first system, Smart Money, was introduced in the Philippines in 2000, and was followed in 2004 by GCash – seven and four years respectively before the launch of M-Pesa in Kenya. By contrast, mobile payments came much later to Europe, with Lydia in France (2013) and the UK mobile payment service, Paym, launching in 2014. (Interestingly, M-Pesa has now found its way to Europe too, and has been available in Albania and Romania since 2014).

The impetus for innovation in developing countries was based on ‘necessity being the mother of invention’. The large number of unbanked citizens, almost all of whom owned a mobile phone, couldn’t be ignored. The end result was a leapfrog in technology over more developed countries. This matters because, with large and growing populations, the economies of Asia and Africa are predicted to be the world’s fastest growing over the next decade. Much of this growth will come from the expansion of the digital economy and, in particular, areas such as e- and m-commerce. No surprise, then, that financial technology has become the focus of much digital innovation in countries like South Africa, Nigeria, Kenya, Myanmar and the Philippines, with conferences every week and start-ups seemingly appearing every day. There are still issues with the cost of data and reach of infrastructure, and it’s likely that the focus will remain on building out 4G rather than 5G in many countries. But could it be that the next great digital leap will come from Lagos or Bangalore rather than California? Might it be an African country that goes cashless before a European one? Now that would be an interesting addition to a future timeline.