AlphaCode lays out predictions for SA fintech in 2019

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Fintech has been an exciting space in recent years especially in South Africa and Africa at large in fact.

Senior investment executive at AlphaCode, Dominique Collett (pictured) has presented her predictions for the local fintech space in 2019.

Digital banks to shake things up

The banking sector is set to undergo something of a shake up in 2019.

The main reason for this is the introduction of digital banks such as Discovery Bank.

“The introduction of TymeBank, BankZero and Discovery Bank will no doubt shake up the industry and give customers greater choice. It will also force the incumbent banks to respond by refining their customer value propositions and user experiences. As a result, we expect to see greater focus from the traditional banks on their digital channels,” says Collett.

The exec adds that mobile network operators are also relooking mobile money products and that non-bank players will make advancements in the digital banking space.

Cryptocurrency is (un)dead

Yes, yes, we’re still talking about cryptocurrency in 2019.

While last year saw the global cryptocurrency market shrink, Collett believes this shrinkage was due in large part to initial coin offerings (ICO).

“Almost $10bn was raised through ICOs in the first half of 2018, but a study done by ICO advisory firm Statis Group showed that more than 80% of these were scams and investors lost significant cash,” the executive said.

That having been said, Collett thinks the confidence lost in cryptocurrency last year will deter folks from creating initial coin offerings. This is ultimately good news for the cryptocurrency sector as it may lead to folks treating investment in cryptocurrency the same as investment in other areas.

“Regulators are also likely to get more involved in the industry – most have fintech and cryptocurrency working groups and they are ensuring they have a good understanding of the asset class,” says Collett.


Insurtech firms are set to grow throughout 2019.

Last year saw firms such as Indie, Naked and Pineapple enter the insurtech space. While the sector is not especially easy to enter, Root Insurance makes it easier for potential insurers to enter the market with its open API software.

This means that existing firms are going to have to start upping the ante to compete with these new firms.

“We can expect incumbent insurers to ensure greater focus on their digital offerings to compete with these new entrants, and this is good news for consumers. We will also see non-insurance players like mobile network operators, retailers and banks entering the digital insurance space,” explains Collett.

More ways to save for more people

This year Collett foresees more savings products being released and greater financial inclusion.

“In our recent AlphaCode Incubate initiative, which identifies South African financial services entrepreneurs with extraordinary ideas and businesses that could impact the financial services industry, we saw a lot of businesses trying to solve the problem of financial exclusion and ways to provide low income customers with relevant financial services products,” says Collett.

Businesses such as Prospa and iSpani will gain traction this year thanks to their inclusive product offering for insurance and savings.

Our focus must be on SMEs

The next prediction from Collett is more of a piece of advice than a prediction.

To grow the local economy we must build up our SME sector. To this smaller businesses need support and this will happen organically to some degree according to what Collett says.

“Coupled with the pressure for corporates to transform their supply chain as new BEE charters are adopted, we will see an increase in the number of SME financing solutions that enable black SMEs to gain greater market access,” explains the executive.

“I am most excited by models like Nisa Finance and InvoiceWorx that have innovative offerings for SMEs. I also think we can expect a business banking shake-up in the SME market, given that Capitec is moving into the SME space through its acquisition of Mercantile Bank. That’s a game change.”

More funding

2019 will see increased interest from international investors thanks to the local fintech industry maturing.

“I believe we will continue to see interest from international players. We will also see more local funding such as Naspers Foundry which will be exciting for the fintech space. Banks in particular will start noticing SA fintech successes,” says Collett.

We’ve seen startups such as Yoco and Jumo attract invest from international venture capitalists and Collett expects to see this continue this year.

Fintech startups to watch in 2019

The AlphaCode executive also took some time to outline the fintech startups to watch in 2019.

  • Pineapple, a digital insurer, aims to decrease costs, cap profits and deter fraud in an effort to create more value from an insurance policy than the traditional model.
  • Akiba allows you to track your savings goal, keep focused and get rewards for saving.
  • Franc is South Africa’s cheapest way to invest. It allows stokvel members to invest in money market and exchange-traded funds (ETFs) free.
  • Prospa is a savings platform for people earning between R2 000 and R8 000 a month.
  • Nisa Finance is an invoice financing platform that enables financiers to issue invoice-backed loans to small businesses quickly and affordably.
  • InvoiceWorx is an inventory financing platform that gives small retailers access to lines of credit from suppliers.
Brendyn Lotz

Brendyn Lotz

Brendyn Lotz writes news, reviews, and opinion pieces for Hypertext. His interests include SMEs, innovation on the African continent, cybersecurity, blockchain, games, geek culture and YouTube.