Outdated technology and fragmented financial systems could limit institutions’ ability to capitalise on the continent’s fintech market, which is projected to generate about $65 billion in revenue by 2030, according to Elenjical Solutions, a Johannesburg-based fintech consultancy.
The projection, attributed to Boston Consulting Group (BCG), represents roughly a 13-fold increase in the continent’s fintech revenue and would make Africa the fastest-growing fintech market globally, according to the consultancy.
However, Elenjical Solutions warned that financial institutions seeking to expand beyond digital payments into lending, insurance and cross-border transactions must first address weaknesses in their underlying technology systems.
The consultancy said many institutions were pursuing new financial products without assessing whether their existing infrastructure could support the additional operational demands, risk management requirements and regulatory obligations associated with those services.
Tertius De Bruin, a consultant at Elenjical Solutions, said Africa’s progress in mobile money had created opportunities for broader financial services, but the systems supporting payment transactions were not necessarily equipped to handle more complex financial products.
“Africa has done an impressive job building payment infrastructure, but financial depth is a different challenge entirely,” De Bruin said.
The consultancy cited BCG data showing that Africa accounts for approximately 74 per cent of global mobile money transaction volume, while more than half of lending on the continent still takes place through informal channels.
According to De Bruin, the contrast highlights the opportunity to expand access to formal credit and other financial services, while exposing the infrastructure limitations that could slow the transition.
Unlike payments, which typically involve verifying funds, transferring money and settling transactions, lending and insurance require institutions to assess customer eligibility, evaluate risks and establish approval processes before financial transactions take place.
These services also involve continuing obligations, including monitoring, collections, claims or settlement management, and regulatory reporting. Such requirements place additional demands on the technology systems supporting financial institutions.
Elenjical Solutions said treating the expansion from payments into other financial services as a straightforward extension of existing products could leave institutions with systems unable to accommodate the complexity of their new operations.
The consultancy also warned that established banks and insurers could face challenges from legacy technology accumulated over several years, even where they have advantages such as large customer bases, extensive historical data and established relationships with regulators.
De Bruin said institutions often operate multiple systems for customer information, product management and risk assessment, with manual processes connecting platforms that do not communicate efficiently.
While these arrangements may function at relatively low transaction volumes, he said, they can become operational bottlenecks as businesses expand, increasing the potential for errors and exposing institutions to additional risks.
He added that the problem often develops gradually as systems are repeatedly modified instead of being comprehensively assessed and modernised.
According to the consultancy, institutions must incorporate risk management and internal controls into the design of their technology systems from the beginning, rather than attempting to introduce them after new products have entered the market.
De Bruin said the architecture of a financial institution’s systems determines the information available to its employees and how operational decisions are made, making early planning essential to avoid expensive corrections later.
The challenge could become more pronounced as African financial institutions pursue cross-border transactions and regional integration.
Elenjical Solutions pointed to the Pan-African Payment and Settlement System (PAPSS) as an example of the coordination required to support financial services across multiple markets.
The system requires participating institutions to accommodate processes including pre-funding, standardised payment messaging, sanctions screening, multi-currency settlement and regulatory compliance across different jurisdictions.
These requirements mean that expanding cross-border services involves more than introducing a new payment feature, as institutions must also ensure that their systems can support the associated operational controls and audit requirements.
Rather than replacing their existing technology infrastructure entirely, De Bruin advised financial institutions to adopt a phased modernisation approach that allows them to improve individual components while keeping current operations running.
Under this approach, institutions would identify systems that require replacement, isolate components that can be upgraded and test changes before gradually transferring workloads to the improved infrastructure.
De Bruin said a complete transition could take approximately two years, depending on the institution and the complexity of its existing systems.
“You can’t just switch off the system you’re running on to go build something new,” he said, adding that old and new systems would need to operate alongside each other during the migration process.
Elenjical Solutions said financial institutions that postpone infrastructure improvements until new revenue opportunities emerge could find themselves behind competitors that began modernising earlier.
The consultancy recommended that institutions begin with an audit of their existing technology systems to determine which capabilities can support future products, which require replacement and which can remain unchanged.
It also said successful modernisation requires collaboration between financial institutions and technology partners with an understanding of both the business and its underlying systems, particularly where changes must be introduced without disrupting existing services.
The warning comes as African fintech companies and established financial institutions explore opportunities to expand digital financial services beyond payments. However, Elenjical Solutions argued that the ability to sustain that expansion will depend not only on the products institutions introduce but also on whether their technology infrastructure can support them reliably.
