Africa's fintech startups have received the bulk of venture capital funding as entrepreneurs and investors work to turn its fragmented financial systems into opportunities.
Consequently, all eight unicorns on the continent are fintechs, and this funding has driven growth in other sectors.
Critics would, however, argue that there are too many fintech startups providing similar services. While funding to fintechs has dropped in the last two years, many investors believe there's still so much untapped potential in the sector.
Techpoint Africa spoke to four investors on the continent to identify where they see significant potential and what ideas they wish to see built and pitched to them.
From merchants of records to embedded finance, here are the hottest ideas according to investors.
Dotun Olowoporoku, General Partner, Ventures Platform
Embedded finance, microinsurance, and mortgage
There are two areas within fintech that I believe have significant untapped potential across the African continent. The first is embedded banking products that can enable access to financial services in non-finance industries.
Imagine fintech solutions seamlessly integrated into industries such as retail and healthcare, enabling consumers to access affordable financing and driving consumption. These embedded financial products can significantly lower the barriers to entry for everyday consumers and help close the gap in access to financial services.
Insurance, particularly microinsurance, is another area with great promise. Given the low insurance penetration in Africa, there's an opportunity for innovations that create more accessible, tailored insurance products.
Microinsurance solutions can make a meaningful impact on people’s lives by covering small but essential risks, helping them better manage unexpected events like illness or property damage. This could be transformative, particularly for low-income individuals and small businesses that have historically been excluded from traditional insurance markets.
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Looking forward, there’s a real opportunity for startups to tackle long-term mortgage solutions. The idea of linking long-term rental payments to home ownership could unlock housing for Africa's growing lower-middle-class population.
Startups that can innovate around mortgage products, making them more flexible and accessible, can help bridge the gap in affordable housing across the continent. The key is creating financial solutions that allow people to gradually convert their rental payments into home ownership without the traditional, often unaffordable, down payment hurdles.
Lexi Novitske, General Partner, Norrsken22
Cross-border payments and fraud management
We’re excited about the cross-border transaction space. As the world becomes more interconnected — with remote workers, migrating populations, and increasing cross-border trade — the need for seamless, fast, and cost-effective transactions is growing.
Our recent investment in NALA underscores our commitment to this space, and we’re also exploring opportunities in other areas, including the infrastructure that supports intra-Africa and global trade.
I believe there’s a significant gap in fraud management solutions, which will only grow and increasingly impact the bottom lines of financial services companies. Two of our portfolio companies, Smile ID and Orca, are addressing some of these issues, but they’re still only scratching the surface.
Additionally, we’re beginning to see traditional industries adopt B2B solutions, especially in the payments sector. Payments on the African continent are far from being fully optimised, presenting a huge untapped opportunity.
Joe Kinvi, Co-Founder and CEO of Borderless
Merchants of record
At this moment, no sector in particular stands out as "untapped." Fintech in Africa is fundamentally different from fintech elsewhere. In regions like the US or Europe, fintech often complements existing banks and financial institutions.
However, in Africa, fintech operates as infrastructure. Companies like Paystack, Moniepoint, and Flutterwave are building the foundational rails upon which other businesses are being constructed. They've moved from being "nice-to-have" solutions to essential infrastructure.
Take Kenya, for example — its entire economy runs on M-PESA, and many fintech companies build on top of these rails. Calling Safaricom a fintech company would be inadequate given the scope of its impact.
We're also seeing companies like Mono in Nigeria and Stitch in South Africa creating critical infrastructure for their economies. For fintech to thrive in Africa, it must offer solutions that are sticky and cannot be replicated by incumbents.
The solutions we see will ultimately be dictated by market needs as founders build to address new use cases as the market matures. One emerging trend is the rise of merchants of record, driven by the growth of global online commerce.
As Africa becomes more connected to the global economy, we're witnessing increased interest from international retail investors seeking liquid investment opportunities in the region. This will lead to more fintechs, both local and indigenous, developing solutions that cater to this use case.
Oyeniyi Immanuel, Business Lawyer and Venture Scout
Insurtech, regtech, lending, and embedded finance
I believe a lot of untapped potential in Africa lies in insurtech and lending. While payments and digital wallets have seen significant growth, the insurance sector remains underdeveloped, with vast opportunities for microinsurance and tailored products for underserved populations.
Lending platforms, especially those utilising alternative credit scoring for SMEs and individuals without formal credit histories, also have great potential to expand access to capital. Also, cross-border payments still need some work, as trade and remittances between African countries are growing but remain plagued by inefficiencies.
Over the next two to five years, I would like to see startups focus on several key areas that can drive significant impact. One priority should be the development of financial inclusion tools that leverage blockchain and decentralised finance (DeFi) to facilitate cross-border transactions. This is especially important in regions with limited banking infrastructure, and companies like Onboard are already leading the way in this space.
Another area to watch is the use of AI-driven credit scoring systems to support lending to informal sectors and small to medium-sized enterprises (SMEs). Platforms like IziFin are working on solutions that can extend credit to these underserved groups.
Startups should also invest in embedded finance solutions, which integrate financial services directly into non-financial platforms such as agriculture and healthcare. These solutions can provide users with seamless access to financing options, as seen with Comeso, a German-Ghanaian startup focused on healthcare.
Lastly, innovations in regulatory technology (regtech) will be crucial for helping financial institutions navigate Africa’s fragmented regulatory landscape more efficiently while ensuring compliance. Regfyl is an example of a company already working on solutions to streamline this process.
