Fintech
The telecom-fintech overlap
With the common factor of being two sectors constantly at the forefront of innovation, the telecommunications and fintech sectors have intersected in new and exciting ways that redefine each sector and push towards new business models.
There is significant overlap between sectors, as both telecoms and fintech are heavily regulated sectors and balance multiple providers across communications, technology and finance. Both sectors are focused on expanding access to financial services and improving customer experience, as well as introducing new solutions such as Software-as-a-Service.
What are the advantages of a fintech-telecommunications combination?
The enormous reach and infrastructure capabilities possessed by telcos easily facilitate the growth of fintechs by expanding the reach of their customers. Fintechs can build on existing service networks to acquire more consumers and access previously underserved populations. With built-in infrastructure, there is also built-in regulatory compliance.
The collaboration between telcos and fintech facilitates some of the most emerging forms of payments today, such as digital wallets, mobile banking, digital currencies, insurance and lending services, digital remittances and more. With the mass move towards digitalisation, telcos are embracing fintechs to promote new financial products.
Since most fintech is now digital and mobile-centric, connecting with telcos and fintech is a natural progression of services. Open APIs facilitate communication between telecom networks and fintechs, and data sharing facilities can enable further personalization of services for users. The ultimate goal is always convenience and accessibility for the consumer with the lowest level of friction, a goal for which telcos and financial institutions can collaborate.
What have telcos and fintech achieved as a team?
PWC surveyed 500 financial services and technology, media and telecommunications companies in a global questionnaire, finding that Chinese companies are at the forefront of incorporating emerging technologies into their products. The framework is to facilitate cooperation between telcos and banks to implement further virtual services.
Collaboration between telcos and fintech is seeing steady growth in Africa. M-Pesa’s mobile money service has accelerated the use of mobile banking and established a digital banking ecosystem in several African countries.
The one based in South Africa Vodacom Group has partnered its VodaPay superapp with Bidvest Bank to launch further fintech products and services. Other telcos in African countries, such as MTN Mobile Money in South Africa and Ecocash in Zimbabwe, are also becoming fintech providers to expand their reach. In 2023, MTN got the support of the payments giant MasterCard. Payments application Revolution also invested in payment corridors with African digital wallets Airtel, Orange Money and MTN just this month. Other countries where telcos also offer financial services include Kenya, Tanzania, Nigeria and Egypt.
In 2022, Bharti Airtel has partnered with Axis Bank to form a partnership between banks and telecoms in India.
Europe is also gaining ground, this year in Germany the mobile telephony giant Telekom has partnered with fintech Bling to engage more in the digital space.
Where next?
More and more pockets of convergence are emerging between fintech and other sectors as financial services become more accessible and immersed in technology.
As the fintech sector continues to expand and flourish, it intersects with other industries to deliver more holistic user experiences. Cross-industry collaboration and hybrid financial ecosystems enable overlap across industries to create innovative solutions that enhance the user experience and create new and exciting offerings.