Technological advancements are accelerating innovation across the fintech industry. A collaboration between both the sectors is driving economic transformation by bridging the gap between digital connectivity and financial inclusion.
Collaboration between telcos and FinTechs in Africa is an inspiring example. Telcos not only provide calling services and mobile reception, but they are also revolutionizing the way this economy accesses and uses financial services. FinTechs, simultaneously, are targeting the telco’s large customer base for greater synergy. The Digital payments market in the MENA region is estimated at USD 226.53 billion in 2024 and is expected to reach USD 380.86 billion by 2029.
The evolving role of telcos in bridging the digital divide
Telcos are becoming fintech providers. They are making finance accessible to the underserved by turning mobile phones into virtual wallets. Many telcos in the African region are now offering their own digital currencies and add-on services. Offerings like MTN Mobile Money, Vodacom M-Pesa, and EcoCash, offered by Econet are transforming how people manage their finances. These currencies are now being accepted by retailers, supermarkets, and even utility companies. Users can now conveniently send and receive money, access loans and savings, pay bills, etc. right from their mobile phones.
Millions of people who previously had limited options to access banking services are now gaining access to the same through the operators.
The rise of new business models
Telcos and FinTechs are re-visiting their business models to expand service offerings, diversify revenue streams, increase competitiveness, and influence competitiveness in this dynamic industry.
This positively impacted customer experience by allowing customers to make transactions, transfer funds, and manage financial services easily from their mobile phones. Apart from this, mobile banking allows customers to manage their bank accounts through calling, text messaging or WhatsApp for quick on-the-go status updates.
Lending and insurance services are other areas where both the industries have come together to provide easy access to traditional banking services for all. These leverage the robust data sets available with telcos and tap their access to real-time messaging channels to create intelligent and scalable ecosystems. This drives actions like credit rating and real-time analysis, through powerful monitoring and reporting.
Fintech providers who specialize in cross-border payments and telcos are also collaborating to facilitate international and domestic remittances through digital channels. In all of this, telcos are playing a prominent role in developing digital identity verification and Know Your Customer (KYC) processes.
Driving the future of FinTech
We have witnessed the rise of internet banking, mobile banking, and mobile payments and have seen them become an integral part of our lives. Mobile Network Operators (MNOs) are playing a pivotal role in securely facilitating payments from anywhere in the world.
This telecom infrastructure also plays a key role in enabling the security of banking data. Secure networks, reliable connectivity, and speed of telecom networks are crucial to expedite the future of the fintech revolution.
Telecoms are now making investments in network infrastructure, including 5G networks and edge computing, etc. to enhance data transmission speed, and enable fast deployment of fintech solutions.
Such partnerships are aiding the fintech sector in expanding the reach and capabilities of their solutions. Integration of technologies such as AI, cloud, and advanced analytics has further enhanced convenience for this tech-savvy generation. This collaboration is driven by the increasing demand for quick and seamless experiences, which are the determining factors for today’s young customers.
Telcos are powering fintech innovation by providing access to cloud services, resulting in sandbox environments for startups to test and refine their solutions. This enables them to provide secure and verified customer data to enterprises, facilitating credit scoring and KYC processes.
The vast pool of data has led to greater personalization of financial products, allowing rapid development, flexibility, and powerful access to endless possibilities. This is redefining digital finance and payment solutions.
Enabling regulatory compliance
Digital transactions have now got the endorsements of governments across the world as a secure means to conduct financial activities. These digital channels have helped both the sectors to make these transactions more secure, traceable and detect fraudulent transactions more easily.
However, as the landscape continues to evolve, telcos have become more agile in adapting to regulatory frameworks, causing new financial models to come into being.
Telecom and fintech companies are share a common objective – to enhance customer experience and broaden access to financial services. To achieve this, collaboration is key to tackling challenges including networking, regulatory hurdles, and mitigating fraud risks.
In Conclusion
Digital payments and transactions are now a part of our new normal.
Telcos are emerging as prominent enablers in the fintech realm, elevating customer relationships and financial products to new heights. Governments across GCC countries like Saudi Arabia, Kuwait, Qatar, and UAE are offering strong regulatory support for fintech innovation-driven to build a globally integrated environment. The role of telecom in this cannot be ignored.
The telecom and FinTech sector creates a transformative impact on the economy by driving financial inclusion. The need for more secure, fast, and accessible payment systems keeps increasing as the world becomes increasingly interconnected and digitized. The convergence of these two sectors helps in driving innovation and growth in a digital economy.