Technology has made financial services easy and accessible for the entire world.
While for some countries, new technologies are just an added feature, some regions find the latest tech as a much-needed solution to their everyday problems. The best example of this is Africa.
With the rise of fintech, the region is certainly ready to step up in the world market, as it has opened new doors for Africa.
However, the implementation of fintech solutions requires several technologies, including Blockchain and crypto.
The use of Blockchain and Crypto has been pivotal in the development of a robust fintech system that not only elevates the experience of a user but also enables users to have advanced features, security, and transparency.
If you are interested in knowing more about the role of blockchain and crypto in the fintech revolution of Africa, then keep on reading! In this one, we will be taking a sneak peek into how blockchain and crypto have improved the fintech experience for Africa.
So without further ado, let’s get started!
Blockchain and Crypto in Fintech: An Overview
Before we understand the impact of these technologies from an African perspective, let us take an overview of how these technologies are used in fintech.
Blockchain is an underlying distributed ledger that enables decentralized transactions that are transparent in nature and have immutable records for each transaction.
The way it works is quite simple: the data sent over the Blockchain is saved across a network of nodes, instead of storing all of it in one central location.
This helps in eliminating any entity from being in authority, like what we have seen in traditional transactions, where the bank has all the data and records.
On the other hand, crypto is the ultimate application where Blockchain can be executed.
These are the media of exchange that are used as currencies for completing a transaction on the Blockchain.
The best part of crypto is that it does not require any intermediary (unlike traditional currencies), meaning your transactions are super secure and only you and the payer/payee can track them.
Since these use Blockchain, none of the transactions can be altered after they have been made.
Financial service providers, especially those from non-traditional backgrounds, can easily leverage blockchain and cryptocurrency technologies to give their fintech solutions reliability and robust security.
These technologies offer several benefits, particularly in the context of the African fintech ecosystem.
Check them out in the next section.
Benefits of Using Blockchain & Crypto in Africa’s Fintech Ecosystem
As you might have already understood from the overview, blockchain and crypto play a vital role in the widespread adoption of fintech all around the world, including Africa.
The current African fintech ecosystem is relatively new and rising. Implementation of blockchain and crypto can certainly up the game for existing players and put any fintech company ahead of the competition, as it brings along some of the most desired benefits for the user.
These benefits include –
1. Reduced Remittance Costs and Faster Payments
Africa is one of the largest recipients of remittances and cross-border payments. The integration of a decentralized ledger like blockchain can easily reduce the cost of transactions and make the remittance costs much less than what they currently are.
With the help of cryptocurrencies, the settlement time of transactions can be reduced, making payments faster and more accessible.
2. Financial Inclusion for the Unbanked
Blockchain and cryptocurrencies are not bound by brick and mortar, unlike traditional banks and financial institutions.
Which is why the reach that these technologies harness is endless. If we look at Africa, one of the biggest issues that the economy currently faces is the high number of unbanked population.
Users often find themselves in a difficult situation when they have to pay high fees or visit a physical branch far away from their homes.
With the help of technology and blockchain-enabled solutions, these issues can be eliminated for good.
3. Enhanced Transparency and Security
Blockchain and crypto offer high transparency in every transaction, as the records for each of these transactions are immutable and go through a distributed ledger.
Asset ownership becomes more secure and easier to manage with the implementation of crypto and blockchain, helping people avoid unnecessary fraud and corruption.
With the help of blockchain and crypto, the reliability of digital banks and payments can be improved, giving the usability a boost.
4. New Opportunities for Entrepreneurship
The introduction of new technologies in fintech also helps the industry unlock new avenues and opportunities.
The current fintech market in Africa has allowed local entrepreneurs to explore new ideas and ways to monetize the financial revolution that the region is going through.
Introduction of blockchain and crypto not only allows them to expand their services but also allows them to raise capital from a global audience, giving them access to both external funds and a wider audience.
5. Helps in Handling the Instability of Currency
With the emergence of cryptocurrencies and stablecoins, people living in regions that have high inflation rates or currency instability can use stablecoins that help maintain the worth of their savings.
Cryptocurrencies often serve as a great way for investments as they also determine their value based on the availability, demand, and supply of the coins.
Africa, being a developing economy, needs ways to stabilize its savings, and crypto can offer just the same.
Knowing all the benefits, you might have become interested in integrating blockchain and crypto into your fintech solution.
However, before entering the African market with these technologies, you must be aware of the use cases for the same. Check out the next section where we have shared the same!
Use Cases of Blockchain & Crypto in Africa’s Fintech Ecosystem
Blockchain actually finds its applications in various fields if implemented correctly.
Uses such as your land registration, Intellectual Property licensing, and more are some non-financial use cases of the technology.
However, it is fintech that makes the most of these technologies in simplifying financial transactions.
Here are some of the use cases of blockchain and crypto in Africa’s fintech ecosystem –
► Decentralized Finance
One of the key ways blockchain and crypto have changed the fintech ecosystem of Africa is by reaching the unbanked and underserved population through decentralization.
Blockchain allows companies to offer financial services without having a traditional banking infrastructure or intermediaries.
► Cross-Border Payments
As mentioned earlier, the use of crypto and blockchain simplifies cross-border transactions, making them fast and secure at no extra cost for the user.
These payments can be business transactions, remittances, or any type of payment made from one country to another.
► Digital Identification & Security
When using fintech services, people are often skeptical of keeping their funds in an app that has no physical branch they can reach out to.
Similarly, companies are also a bit worried about potential fraud and a lack of accountability.
Thanks to the use of blockchain, both issues can be resolved as it supports digital identification, and all the information shared remains secure.
► P2P Transactions and Micro-Lending
Another interesting use case of blockchain technology in fintech is the enablement of peer-to-peer transactions and micro-lending.
These digital lending solutions can be made secure for the user through the use of decentralized ledgers that blockchain has to offer.
It also gives existing fintech services a new area to expand their services, facilitating users with an interest in lending to meet borrowers.
Other than these, applications in agritech and other public services make blockchain a must-implement solution in countries like Africa.
These use cases also open a plethora of opportunities for investors and local entrepreneurs to start their own business.
However, grabbing those opportunities is not that easy. The benefits can only be realized when you have successfully implemented the technology.
There are several challenges that you might come across when planning a blockchain and crypto-enabled app.
We have discussed them in the next section. Check them out!
Challenges of Implementing Crypto & Blockchain in Africa’s Fintech Ecosystem
The use cases of blockchain clearly show how vital the technology is for the growth of Africa’s fintech ecosystem.
But then why is it that only a limited number of apps are using the technology?
Well, the answer to that lies in the challenges that one has to overcome in order to make the most of blockchain technology.
If you, too, are planning to enter the market, make sure you are aware of the following challenges-
The fintech ecosystem in Africa is evolving. While the current regulations related to crypto are simplified, they are surely uncertain.
This uncertainty can make or break your business. Hence, you have to be prepared for changing compliance and ensure that your application adheres to them as necessary.
Infrastructure Limitations
Fintech as an industry is new in Africa, with Nigeria serving as the. That also means that while the startups and companies are giving their best, the current market infrastructure is not ready to give fintechs the necessary push.
Blockchain and crypto both require the latest technology, efficient processors, and a stable internet, all of which are still a luxury in many parts of Africa.
High Costs of Scalability
Blockchain, as you are already aware, is a resource-hungry technology and requires a lot of necessary resources that are costly.
Affordability is a massive challenge for local entrepreneurs. Scalability becomes limited with the implementation of blockchain, as it will need a lot of resources that may not be a possibility for a business to provide.
Lack of Knowledge and Trust
Irrespective of how convenient the technology and features appear, it is a challenge to convert users who lack trust in technology to manage their funds.
Not to mention, not every user is equipped with the necessary knowledge on how to use the blockchain or how beneficial it can be for them.
Educating your users beforehand can be a great challenge.
All these challenges surely make it difficult for a fintech business to upgrade and move towards blockchain and crypto in Africa’s fintech ecosystem.
However, with the right team of developers and analysts, one can easily benefit from the growing demand for crypto and blockchain-enabled fintech platforms.
If you are someone who is eyeing on cracking the African fintech market by leveraging fintech and crypto, then make sure you read the next section, as we might have just the right solution for you!
How to Leverage Blockchain and Crypto in Africa with Nimble AppGenie?
To crack the market and bring new innovative solutions that leverage blockchain technology and crypto, you must focus on –
Step 1: Solving a Problem
Integrating new technologies only makes sense if it solves a problem. With blockchain, you can solve the problem of security and transparency, which is enough to help you attract users.
If your app doesn’t need an upgrade at all, avoid integrating the technology. Remember, never fix something that is not broken!
Step 2: Integration with Legacy Systems
Optimize your use case to the extent that your new technology can be integrated with the existing system.
This way, you can reduce the cost and time taken to develop an app with blockchain and crypto capabilities.
Step 3: Finding the Right Development Partner
In order to leverage technology for better business, you must have a guiding force that leads you towards success.
Having the right development partner gives you an edge, as the experts are equipped with the best resources to execute your plan without any issues.
If you are wondering who can help with all of these, then your search ends here! Nimble AppGenie is the best fintech app development company in Africa, allowing you to stay ahead of the competition with cutting-edge features and technology.
Connect today to take your first step!
Conclusion
Every technology brings a new set of features and experiences for the users. The benefits of using blockchain and crypto in fintech are already proven in different parts of the world.
With Africa’s fintech ecosystem evolving as per the modern market needs, it is only fair to say that it is the next big market for people looking to invest in a fintech solution of their own.
Blockchain and crypto are highly anticipated fintech trends that can drastically change the way financial services function.
And to leverage the potential that these technologies can unlock, you must hire a mobile app development company that understands the market and helps you with the right solution.
With that said, it is also important to make your decision fast, as Africa’s fintech ecosystem is evolving rapidly, and delaying your solution might put you at a disadvantage.
Hope you find the shared information helpful. Thanks for reading, good luck!
FAQs
Africa is one of the fastest-growing crypto markets, with approximately 10.4% of the total population using cryptocurrency. The continent is rapidly adopting blockchain and crypto to support fintech growth and financial inclusion.
Flutterwave, with a valuation of over $3 billion, is the biggest fintech company in Africa. Founded in 2016 in Nigeria, it leverages advanced technology, including Blockchain, to power seamless and secure digital transactions.
Blockchain offers multiple benefits to fintech companies in Africa, such as faster remittance transactions, low-cost cross-border payments, enhanced transparency, and high security for financial applications.
Integrating blockchain and crypto into a fintech app requires technical expertise in distributed ledger technology. The process includes secure architecture design, smart contract development, and testing. Partnering with a skilled fintech app development company ensures efficient and secure implementation.
Niketan Sharma, CTO, Nimble AppGenie, is a tech enthusiast with more than a decade of experience in delivering high-value solutions that allow a brand to penetrate the market easily. With a strong hold on mobile app development, he is actively working to help businesses identify the potential of digital transformation by sharing insightful statistics, guides & blogs.
