Experts are saying that South Africa’s fintech landscape is set to undergo major developments in 2024 as a result of regulatory changes, technological advancements, and increased competition.
Financial technology, or fintech, is the implementation of technology to enhance and streamline conventional financial services and procedures. This includes various products and services like online banking, mobile payments, peer-to-peer lending, digital wallets, and financial management tools.
According to a report by Research and Markets, “South Africa’s financial services sector is internationally recognised as one of the most sophisticated,” seeing 40% of all fintech revenue in Africa.
In the last decade, this has been “complemented by a small but fast-growing fintech sector that is transforming financial services through digitisation, streamlining or disruption.”
Fintech experts at Webber Wentzel, Dawid de Villiers, Gabi Richards-Smith, and Lerato Lamola have said that they believe that 2024 will see significant developments in the industry.
The five key predictions for South Africa’s fintech industry are around:
- Generative AI and machine learning guidelines;
- Amendments to the payment laws;
- Crypto and blockchain changes;
- Open finance framework regulation;
- More entrants into mobile banking and financial services.
Generative AI and machine learning guidelines
Artificial intelligence and generative AI boomed in 2023. The experts believe that guidelines for the “effective use of artificial intelligence (AI)” in highly regulated industries such as the financial sector are expected.
“These [guidelines] will shape how these powerful tools are used, ensuring innovation with safeguards,” said the experts.
Amendments to the payment laws
Anticipated amendments to the National Payment System Act – which provides for the management, administration, operation, regulation and supervision of payment, clearing and settlement systems in South Africa – are expected to be rolled out.
“Expect to see the amendments allowing for greater involvement of non-bank players accessing the payment system,” they explained.
The finalisation of the Conduct of Financial Institutions Bill is also expected, which could include provisions dealing with payment system-related activities.
Crypto and blockchain changes
The Financial Conduct Sector Authority is anticipated to issue formal approval of various crypto asset service providers’ licenses in the first months of 2024.
The Conduct of Financial Institutions Bill, which is expected to have provisions dealing with crypto assets, is also set to be finalised. “Further regulation and standards around the regulation of crypto assets dealing with the cross-border flow of funds and the market conduct of crypto asset service providers are also anticipated,” said the experts.
Open finance framework regulation
It is expected that the adoption of guidelines which regulate the activities of financial institutions and third-party providers is imminent from the Financial Conduct Sector Authority.
“The finalisation of the Conduct of Financial Institutions Bill is expected to have specific provisions dealing with data sharing, consent, and security within the open finance framework,” they said.
More entrants into mobile banking and financial services
More players providing financial services through mobile telecommunication services are anticipated in the evolving sector.
“Further foreign investment in local players as well as entrants from other international regions are also expected to enter the South African market.”