Judith Phiri, Business Reporter
Financial technology (fintech) has been widely viewed as one of the methods that has transformed how the financial sector in Zimbabwe is using technology to deliver financial services and products to consumers.
Fintech innovation has decentralised exchanges, peer-to-peer (P2P) lending platforms, decentralised finance applications and brought about regulatory technology such as anti-money laundering software among others.
A number of players in the sector have called on financial institutions to utilise the strategic role that fintech is playing in addressing the financing challenges of the sustainable development agenda.
Bulawayo-based Imali Fintech Consultancy recently held a webinar on the Future of Business with a special focus on Fintech Innovation for Sustainable Growth. A number of panelists tackled how financial technology was transforming the financial sector in the country.
Imali FinTech Consultancy, as an organisation, implements strategies and technologies that help corporates and institutions explore and find new revenue opportunities to effectively build and manage their finances.
The moderator of the webinar, Imali Fintech Consultancy’s chief technology officer (CTO), Mr Mayenziwe Sibanda said as specialists in their field, they focus on key areas such as fintech consultancy and Buy Now Pay Later (BNPL), a type of short-term financing that allows consumers to make purchases and pay for them over time, usually with no interest.
Fintech- Mr Mayenziwe Sibanda
As well as regulation technology and digital insurance solutions, while using artificial intelligence (AI) embedded financial technology and client-centric engagement solutions, they support banks, FinTechs, InsureTechs, HealthTechs, Telcos, Lenders and other financial organisations.
Zimbabwe Innovation and Legal Tech Association founder and chief executive officer Mrs Rutendo Mugadza-Mugwagwa said most businesses should be leveraging AI for business automation in fintech.
“As finance embraces digital transformation, the role of AI in business automation is increasingly significant. By leveraging AI in fintech, companies and institutions in the sector keep in touch with their customers, automate customer support, improve fraud detection and simplify the decision-making process with data and predictive analysis,” she said.
Mrs Mugadza-Mugwagwa said AI is important in fintech automation due to its accuracy and precision as AI algorithms avoid the risk of human error, providing consistent and more accurate results.
She said AI is also fast and efficient as it can process large volumes of data quickly and effectively increasing operational efficiency.
“Another benefit of AI in fintech automation is cost reduction as AI can automate repetitive tasks, reducing the need for manual labour and ultimately reducing costs.”
She said AI applications in fintech include robotic process automation (RPA), automated software robots that mimic human tasks reducing labour costs and improving accuracy.
Mrs Mugadza-Mugwagwa said there is also machine learning where algorithmic techniques detect patterns in data, adapting to new situations and making accurate predictions.
“There is also data analytics where analytics tools enhance business intelligence, performing complex calculations on vast amounts of data, allowing users to make confident decisions.”
She said benefits of leveraging AI for fintech include improved customer experience, enhanced fraud detection, increased efficiency and reduced costs among others.
However, Mrs Mugadza-Mugwagwa said companies and businesses should also be on the lookout for legal challenges of AI such as privacy concerns, regulatory compliance, and transparency among others.
Lloyd Corporate Capital, Capital Raising and Investor Relations Officer Mrs Thandi Dube-Nkomo said fintech trends that were key for the financial sector were blockchain technology which is a digital database changing the way money is moved or stored, AI used to automate portfolio allocation and risk management processes and big data used to analyse market trends and identify new investment opportunities.
Regulatory technology (RegTech) such as anti-money laundering software among others, which assists financial institutions comply with regulations is another key trend. She said blockchain is revolutionary in the sense that there is transparency as records of all transactions are in a secure and immutable way.
“Blockchain is also believed to be secure as it is resistant to hacking and fraud. As well as being cost-effective in automating many manual processes, it processes transactions much faster. Blockchain is being used as an efficient and secure way to make payments, while one can secure transparent investments in assets. It also streamlines lending processes and prevents fraud and corruption with decentralised finance (DeFi),” she added.
Mrs Dube-Nkomo said the available traditional ways of investment in fintech include cash as the most liquid investment, bond where a business can lend money to a company or government, as well as stocks where one has ownership of a company and real estate having a physical asset for long term growth.
Fintech- Mrs Thandi Dube Nkomo
The alternatives are investing in raw materials such as oil, gold and wheat, and getting cryptocurrency, a digital or virtual currency.
“Other alternatives are having a private equity where one buys and manages businesses that are not publicly traded or cattle-backed securities where investors buy a stake in a herd of cattle. As well as crowdfunding where funds are raised from a number of investors for a specific project.”
She said crowdfunding, as a way of raising money to finance projects and businesses, allows individuals and companies to have access to a wider pool of investors for startups and entrepreneurs. Mrs Dube-Nkomo said as Lloyd Corporate Capital, they were providing human, equity and debt capital, training and advisory services with over 15 years of experience and expertise as a result of their exposure to Southern African markets.
“We bring convenience and capital markets closer to our users and offer diverse investment instruments to suit their risk appetite. As well as giving our clients access to traditional and alternative investments, while they have access to online investment and trading portals.”
Mr Kelvin Chelenje, a Robotic Automation specialist at Xplug Solutions, a subsidiary of NMB Bank, said cybersecurity and data privacy in the digital age are critical in fintech.
Fintech- Mr Kelvin Chelenje
“The rapid technological progression has also led to unprecedented threat exposure and a dynamic cyber threat landscape. We have also seen third-party risks in digital ecosystem and insider threats and vigilant safeguards. So, the best practices to take note of include proactive risk assessment, layered defense mechanisms and employee empowerment through training. Companies or businesses should also have comprehensive incident response plaining and zero trust architecture and policies among others,” he said.
According to the United Nations (UN) Environment Programme’s finance initiative, the role of fintech in the sustainable development agenda includes improving financial inclusion of underserved groups (low-income citizens and SMEs), building resilient infrastructure and fostering innovation in smallholder agriculture, sustainable and land use among others.
It said globally, banking peers were implementing fintech in various ways with collaborations critical for giving a perspective on what is available on the market, how to be more resilient and better prepared for innovative solutions, as well as providing participants with best practices on fintech in their market.
In Africa, fintech is emerging as a hotbed for investment, with average deal sizes growing and the proportion of fintech funding in Africa increasing over the past year, bringing jobs and growth to African economies.
As fintech matures, financial services on the continent are at an inflection point, and several African countries have a significant opportunity to capitalise on the momentum of recent years to unlock further potential in the sector.
The African fintech market is projected to reach US$65 billion by 2030, representing a 13-fold increase over 2021, according to a new study conducted by consulting firm Boston Consulting Group (BCG) and QED Investors.