How FinTech Innovations Disrupt The Trading Industry

Africa is currently the fastest-growing fintech region in the world. According to a recent report discussed in our previous post, Africa’s fintech market — led by South Africa, Nigeria, Egypt, and Kenya — is projected to grow thirteenfold to $65 billion in 2030. Amidst the rise of new technologies and next-gen infrastructures, Africa has seen an increase in neo-banks, boosting financial access and inclusion. At the same time, experts believe the continuous growth of fintech in the region can further benefit the general public and economic expansion as it helps fast-track digital services.

Among the many benefits of Africa’s fintech growth, there is a notable increase in forex trading activity throughout the region. South Africa was recently dubbed the best country for forex traders thanks to an increased interest in forex trading. Based on various factors such as average global salaries, the number of forex jobs, average broadband speeds in the country, and the extent of trading laws’ restrictiveness, South Africa topped the list, followed by UAE and Singapore. Data from the study also indicates South Africa has the seventh highest inflation rate at 6.8, which may be a motivating factor for the growth of forex trading in the country despite having the fourth slowest median download speed.

In this post, we’ll look at how more fintech innovations are disrupting the trading industry throughout Africa:

Digital platforms improve financial accessibility

As briefly mentioned in our introduction, the growth of African fintech has improved financial inclusion and accessibility in the region. Starting with digitalization in the payments sector, financial inclusion in Kenya grew from 25% in 2006 to nearly 85% in 2021. Today, Africa’s fintech sector has grown to accommodate beyond payments and transactions. According to estimates, South Africa is the continent’s largest player in the online retail forex industry, with 190,000 daily forex traders and over 1,000 financial organizations participating in the country’s market. Thanks to the growth of fintech in the region, authorities can also implement strong regulatory frameworks that help establish South Africa’s presence in the forex industry.

One of the critical factors affecting the growing number of investors in Nigeria is the rise of digital platforms. These platforms have made forex trading more accessible to the average Nigerian. With user-friendly interfaces, educational resources, and even practice accounts for individuals to learn the ropes before investing real money, digital forex trading has helped Nigerians hedge against economic instability by participating more actively in the market.

Brokers harness fintech to improve platforms

Of course, the rise of digital trading platforms is only one part of the puzzle. As digital technologies continue to develop, brokers and companies must invest in improving and upgrading their features. This is especially important as new digital technologies also increase the risk of new cyber threats and attacks that may significantly affect traders’ privacy and security. Today, many online trading platforms continuously work on new features to ensure safety, reliability, and ease of trading for their users. These features include free virtual private server (VPS) hosting, which provides a fast and secure trading environment for users globally.

Trading platforms are also increasingly more intuitive, catering to all types of users — from beginner traders to professional and more experienced traders, scalpers, and algorithmic traders. To help make trading even more accessible, trading platforms offer different types of trading accounts with varied trading conditions and settings to accommodate traders of all levels.

African fintech enables ESG frameworks

An often overlooked aspect of fintech growth in Africa is the shift in focus towards ESG initiatives and mindsets. Put in an environmental context, the continuous development of African fintech should also ensure operations are sustainable to help mitigate the effects of climate change on the planet. According to the African Development Bank, Africa is the continent most vulnerable to climate change. Fintech platforms in the region can work on offsetting carbon emissions generated by trading activities by adopting green technologies.

As more African traders continue to participate in the market, more environmentally conscious traders can also trade in line with their beliefs by investing in shares of eco-conscious companies, which will further promote sustainable investments in the region. When more fintech companies adopt ESG-compliant initiatives and projects, African traders can participate in the market in ways that also help the environment while growing their wealth.

Fintech paves the way for digital currencies

Another potential disruption affected by continuous fintech innovations is the rise of digital currency in the region. The development of digital currencies can help boost local economies, improve the efficiency of cross-border transactions, and foster further financial inclusion. Zimbabwe recently released a gold-backed digital currency meant for peer-to-peer and peer-to-business transactions, which also acts as a store of value. In contrast, the country’s currency continues its decline against major currencies.

Unlike physical gold coins, this gold-backed digital currency may mean more Zimbabweans can access the precious metal — albeit digitally — by buying in Zimbabwean dollars or foreign currency. For traders in the region, digital currency may provide a more flexible and accessible investment alternative than conventional currency pairs in forex trading. Zimbabwe joins other African countries like Nigeria, Ghana, and South Africa that have introduced digital currencies.

Increase in crypto adoption throughout Africa

Finally, in line with state- and government-backed digital currencies, the rise of fintech in Africa has also given way to crypto adoption in the region. While the crypto market has faced challenges, Africa’s cryptocurrency market grew by over 1200% between 2020 and 2021. Four African countries — Kenya, Nigeria, South Africa, and Tanzania — currently rank in the top 20 for global crypto adoption.

According to experts, dramatic fluctuations in crypto value do not seem to affect crypto users in the region, as traders tend to cash in and out quickly. For traders looking to diversify their portfolio and boost trading opportunities, the growing crypto market — like the digital currencies mentioned above — offers an innovative alternative to the foreign exchange market. This provides more trading opportunities amidst declines in foreign reserves.

Ultimately, continuous developments in Africa’s fintech sector will change how local traders and investors interact with the markets. This includes new investment opportunities and increased accessibility to trading, as well as alternative means of investing beyond forex trading.

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