A recent study carried out by the Mastercard Economics Institute revealed that the Coronavirus crisis has presented Africa with significant growth opportunities for Fintech firms. The study has noted that the industry should, this year, play a key role in promoting greater financial inclusion in the African continent.
The study, titled Economy 2021, cited concerns regarding contracting COVID-19 from making visits to physical bank branches and using physical currency notes which could be contaminated due to the virus. The study also emphasized the need to bring the population in Africa into the digital economy through Fintech platforms as a key priority.
Economy 2021 is an international outlook report offering extensive analysis of the economic impact of the Coronavirus crisis, such as permanent changes in consumer behavior and spending habits. The report noted that the COVID-19 crisis might present a major opportunity for Fintechs to offer banking services and apps that can address financial inclusion requirements on the African continent.
Another important part of promoting financial inclusion that’s mentioned in the Economy 2021 report involves leveraging emerging technologies in order to connect African consumers to SMEs and various micro-merchants.
Suzanne Morel, Country Manager of Mastercard SA, stated:
“We recognize the overwhelming pressure that small business owners are currently facing and are committed to supporting them through COVID-19 and beyond as they adapt to a new way of operating and evolved customer needs. This is why we have collaborated with Standard Bank, and Google to help small business owners move their operations online, accept digital payments and attract more customers.”
As first reported by IT Web, the research study also mentioned that as digital innovation continues to improve and Internet access increases, online payment solutions like contactless, virtual card numbers and QR codes should provide even more possibilities than before.
The key trends examined by Mastercard in the research report include a major shift towards using digital platforms and services, mainly driven by changing consumer behavior, mobility restrictions and the need to create revenue streams beyond the simple brick-and-mortar or physical business locations.
Within the existing scope of ongoing digital transformation, the report pointed out that digitalization in the MENA region is key to enabling financial inclusion.
The study also noted that this is quite relevant in world regions like East Africa, where International Monetary Fund research has revealed that even where financial inclusion via regular banking services was low or declining, improved access to digital platforms actually helped with financial inclusion.
Mastercard’s management predicted:
“This trend is set to continue in 2021, especially in the more digitally-advanced economies such as Ghana, Kenya and Uganda.”
While highlighting digital commerce developments, the Economy 2021 report’s authors believes there’s around a 20-30% permanent “stickiness factor” in total retail spending, which is an important consideration as companies continue scaling their digital transformation strategies.
This trend was also noted in a new Mastercard digital commerce study, which found that over a third or 68% of South African residents have been shopping a lot more online since the start of the pandemic. This particular trend seems to be permanent, as 71% of the study’s respondents claimed that they would keep shopping online in a post-COVID environment.
The Economy 2021 report further noted that as digital commerce becomes a major way to “pandemic-proof” a company’s operations, adoption by older consumers and greater convenience and lower overall costs for customers will lead to the steady growth of digital demand this year.
David Mann, Chief Economist for Asia and MEA at Mastercard, stated:
“This growth of the digital economy represents a ‘coming of age’ for e-commerce, a turning point in bridging the digital divide. We are heading for a multi-speed global recovery that favours low-touch over high-touch. Small businesses and micro merchants are especially crucial to the region’s economies, and by enabling them to accept digital payments, we can connect more people and communities to financial freedom and eventual prosperity.”