Fintech Revolutionizing Financial Services: The Case of Virtual Savings and Credit Supply Technological Platforms in Africa

Alternative finance has dwelt on financial services provided through alternative platforms and the mobile phones pioneered a retail electronic financial services platform is one such innovative case, a virtual platform. Its genesis is the retail electronic money transfer platform, M-Pesa that has now innovatively covered all the services of a banking system virtually. It is impersonal and efficient and does not require physical movement to a point of service. This is perhaps more applicable to the African economies, where physical and financial infrastructure is challenged but perhaps applicable across the globe where real time electronic payments are desirable and critical for business and household survival. The launch of M-Shwari, a savings virtual account, in Kenya in November 2012 and the developments in virtual savings and credit that ensued have been replicated across Africa. This has transformed the saving and credit supply process in Africa’s financial market. This section looks at the digital evolution that has taken place, supported by a transformative regulatory framework (“test and learn” approach) and the presence of an identification system that created a unique identifier for Know Your Customer (KYC) purposes and security. The section discusses how digital evolution has pushed the frontiers of financial inclusion through the virtual savings and credit supply products developing very fast in Africa. The lessons from Kenya and the other four African countries are important to regulators in improving their regulatory environment without stifling the innovative developments of their financial services sector.