For over sixty years, the U.S. was the leading innovator of financial technology (or FinTech) in the world. Over the past decade, however, China has become the global leader: Powered by smartphones and social apps, China has used remote payments and the digitization of money management to build a steady vehicle of financial inclusion. But it may not be the leader for long. Recently, African countries such as Nigeria and Kenya have emerged as FinTech hotbeds, and are using inexpensive, accessible tech to mobilize consumers in ways never seen before. To stay competitive, U.S. banks and FinTech companies need to study the factors enabling these successes abroad — and figure out how they can keep pace.
Kenya Is Becoming a Global Hub of FinTech Innovation
For more than half a century, the U.S. was the center of global innovation for financial technology, inventing credit cards, ATMs, and online banking. Now, however, it’s falling behind, as China has become a leader of mobile payments, and now African countries — namely Kenya — are making huge strides with familiar technologies such as mobile phones and SMS-style messaging, and rapidly expanding the circle of financial inclusion. Companies can learn three important lessons from this most recent wave of innovation: bundling services (think: banking and cellular as one offering) is essential to success; finance is about trust, but trusted companies can lend their credibility to newcomers with promising offerings; and technology that enables mass adoption or expansion is often old, not cutting edge.