Steve Streit on Fintechs in Emerging Markets: 5 Trends

The best-known financial technology companies of today — Stripe, Zelle, PayPal, and on and on — launched and grew in high-income North American and European countries.

That might not be the case for the top fintechs of tomorrow. Already, the industry’s axis of growth is shifting to emerging markets in Africa, Latin America, and Asia, driven by rising standards of living and increasingly widespread smartphone use. And incumbent leaders are taking notice.

“We’re seeing impressive growth in emerging markets’ homegrown financial technology industries even as companies based in higher-income countries look more seriously at expanding internationally,” says Steve Streit, who invests in fintech startups through SWS Venture Capital.

Let’s take a closer look at five emerging-market fintech trends Streit and other experts are watching, and what others in the industry should do to prepare. 

1. Africa May Be the Most Exciting Fintech Market Right Now

The number of active fintech enterprises based in Africa nearly tripled from 450 in 2020 to 1,263 in 2024, according to data from the European Investment Bank.

Indeed, among emerging-market regions of the world, Africa is the clear leader in fintech development. This is down to its strong base of homegrown software talent, high smartphone use, and widespread distrust of traditional banks and even central banking authorities across the continent.

In the near future, look for more African fintechs to expand elsewhere in the Global South, and not long after that to make inroads into Europe, North America and higher-income Asia-Pacific countries.

2. The Cost of Capital Still Matters

Unfortunately, the forces of gravity dragging on the economy in high-income countries are even more pronounced in emerging markets. In Africa, the European Investment Bank observes that private-sector credit has fallen from 56% of gross domestic product in 2007 to 36% of GDP in 2022, sharply reducing the amount of homegrown funding available for the continent’s startups.

Perhaps that’s why EIB data finds 77% of sub-Saharan African banks reporting that “current economic conditions” are their top business concern, followed by 53% citing asset quality. Time will tell if capital markets serve as a structural impediment to EM fintechs’ growth, or more of a temporary speed bump.

3. Emerging Market Tech Talent Is a Good Buy, But for How Long?

The laws of supply and demand tell us that as competition for talent heats up, its cost rises as well. We saw this movie in coastal China, where demand for factory and, later, engineering labor drove (and continues to drive) a phenomenal increase in prevailing wages.

A repeat could be in order for “dev-heavy” emerging markets where fintech startups currently thrive (and many Global North financial businesses utilize lower-cost local labor for back-office roles). If that’s the case, fortune favors the early movers.

4. The AI Race Could Disrupt Global Fintech Dynamics

As EM fintechs grow, they may benefit from a “flattening” of software capabilities. Driven, of course, by rapid improvements in AI.

“As AI agents and AI assistants improve, they’ll offer more powerful ways for fintech companies to integrate them into their business models, stay competitive, work at market speed and provide better services to their customers,” says Amanda Downie, editorial content strategist at IBM.

Without overstating the possibilities, fintech stakeholders should consider the implications of this flattening effect. In a world where AI models are more reliable and capable than they are today, it’s much more likely that the next fintech mega-unicorn — a truly game-changing platform — emerges from somewhere other than the United States, Canada, Australia or Western Europe.

5. “Omni-Apps” Offer Value and Scale

Successful EM fintech apps of the future may not be fintech apps at all. At least, not entirely. They may be bundled into “omnichannel” retail platforms, social media apps (which we’re already seeing to some extent), and other multipurpose applications, regulations permitting. 

“The lines between our interactions online and in real life are blurring, and more and more consumers are splitting their shopping between online and physical avenues,” notes digital marketing expert Ashley Deland. Soon, consumers could be using “everything apps” not only to manage purchases but to manage their money as well.

What’s Your Emerging Market Strategy?

At some point, an emerging market strategy is necessary for any entrepreneur keen to realize their enterprise’s full potential.

For those in the fintech sector, that point tends to come sooner. All the more so today, as the global financial system grows more interconnected and the purchasing power of those in the Global South rises ahead of projections.

Your emerging market strategy is your own, purpose-built for your business. Here’s hoping, however, that you’ve taken some useful lessons from the trends identified here — lessons you can put to good use as you build the payment network or money transfer app or rewards ecosystem of the future.