Fintech startups in Africa are shifting from investing in niche areas like payment, lending, insurance and investment to offering a broad range of services. Disrupt Africa, which is a website that provides news about African startups, has released a report.Nearly 25% of fintech startups that were tracked this year operate in multiple industries. This is an increase of 15% and 8% respectively in 2019 and 2017. This report was compiled using data from 576 fintech startup in Africa. Fintech startups are those that challenge established service providers and disrupt traditional financial services.According to Tom Jackson, Disrupt Africa co-founder, this diversification is driven primarily by startups' need to grow. He says that startups, particularly those venture-backed and where growth is a key performance indicator are looking for growth and more customers.Nigeria is the most popular country where diversification is occurring. 27% of fintech startups in Nigeria are multi-category such as Flutterwave and Kuda. Cowrywise, OneFi, Cowrywise and Cowrywise are all examples. South Africa follows at 22%, and Kenya at 21%. Investors are more likely to finance the expansion of existing fintech startups than funding new ones due to the Covid-19 pandemic.Fintech is still the most appealing category for African investorsFintech is Africa's most important sector, with over half of all startup funding going into it in the last four years. Disrupt Africa reports that over the past six-and-a half years, African fintech startups raised $900 million. This is more than double the amount raised by startups in other sectors during the same time period. Flutterwave, a payment technology company that focuses on Africa, raised $170 million in a Series B round. This was the biggest funding announcement in this sector.These startups are filling the gaps in traditional financial services, as more than half the adult population is still not banked. They also innovate and set up infrastructure and digital systems. They can diversify to fill these gaps and leverage technology's opportunities in banking, credit, and payment.Fintech startups can innovate and reach new clients with technology.Innovative solutions can be found in technology to reach customers. According to the report, payment, remittance and business admin platforms are the most popular. Payment, lending and financing companies are also very popular.Jackson states that businesses can scale vertically or geographically. Adding new verticals to your product line is often easier because you're offering a new service only to existing customers, who may already trust you, rather than trying to attract new customers in a different market.Jackson states that there is a pull factor on the customer's side. Customers want to be able to do all of their financial transactions from one location.Get the Quartz Africa Weekly Brief in your inbox.
