The future of neobanking in Africa

The rise of NeoBanking in Africa is creating waves in the traditional banking sector as non-bank financial technology startups disrupt the industry and provide innovative ways of transacting. The continent is witnessing a surge in startups like PayDay, founded by Favour Ori, that are reshaping the banking landscape. In a recent interview with CNBC Africa, Ori shared insights into the growth and potential of NeoBanks in Africa. One key theme that emerged from the conversation is the need to provide banking solutions to the unbanked and underbanked populations in Africa. Ori highlighted the example of young Africans seeking international job opportunities but facing challenges in receiving payments. This gap in the market has fueled the growth of NeoBanking as a means to facilitate global payments for African workers. Three key points emerged from the discussion: 1. Fast Uptake and Growth: Ori pointed out that startups like PayDay have experienced rapid growth, with over 120,000 users, many of whom are freelancers or work for foreign employers. The platform provides users with real American, UK, and other accounts to receive payments quickly. The speed and convenience of transactions have contributed to the platform's popularity and exponential growth. 2. Smartphone Penetration and Market Potential: Despite concerns about smartphone adoption rates in Africa, Ori believes that the continent's young and educated population presents a significant market for NeoBanking. With a focus on the working class who already own smartphones, NeoBanks have the opportunity to reach millions of potential customers. Traditional banks have made strides in mobile banking, but NeoBanks offer tailored solutions for specific user segments, giving them a competitive edge. 3. Collaboration and Regulatory Challenges: Ori emphasized the importance of collaboration with governments and existing banks to navigate regulatory hurdles and obtain the necessary licenses to operate. While some central banks in Africa have established sandboxes to support Fintech companies, there are still challenges for NeoBanks to scale independently. Collaborating with local banks and financial institutions is crucial for NeoBanks to expand their services and reach a wider audience. In conclusion, Ori highlighted the future prospects of NeoBanking in Africa, foreseeing a time when users can transact online seamlessly across multiple African countries. With innovations in technology and a growing investor interest in Fintech, NeoBanks are poised to revolutionize the banking industry in Africa. As Ori shared, the vision is to provide users with the freedom to transact and manage their finances effortlessly, leading to a future where NeoBanking becomes the norm. As the African Fintech landscape continues to evolve, NeoBanks are set to play a pivotal role in shaping the future of banking on the continent.