On principle, and stubbornly practiced, I do not carry cash with me when I travel to other countries. There are some obvious reasons, such as safety. But safety is a convenient bonus of my decision to not carry cash. My decision is informed by the fact that there are cheaper and more convenient alternatives to cash as a medium of exchange. Enter FinTech.

FinTech, a contraction of the phrase ‘financial technology’, is the application of technology to the provision of financial services. The dawn of FinTech is associated with the advent of the ATM (automated teller machine) and has progressed to its current evolutionary phase where the application of artificial intelligence and Big Data to financial services is being harnessed. 

I was checking out of a hotel on a recent trip to an African country (that shall not be named). When presented with the bill, I indicated that I intended to pay by card. I was promptly informed that on Friday mornings, between 08h00 and 12h00 (which is the time I was checking out), the card machines provided to the hotel by a bank (that also shall not be named) are not able to facilitate electronic transactions because the bank is reconciling and settling transactions. WTF (What the Friday)?!

I’m not much of a conspiracy theorist, but at that point even I was beginning to question the “convenience” of an ATM, that is located within walking distance of the hotel, of the very same bright red bank (oops… I may have let slip the bank) that provides the hotel with the card machines that are not available on Friday mornings. 

If I were able to use my bank card to settle my bill, the fees I would have incurred would have been exchange rate fees between rands and kwacha (oops… I let slip the country). With cash being my only option to pay my bill, I had to incur the exchange rate fees (more or less equal in both cash and card payments) PLUS cash withdrawal fees PLUS interbank ATM fees as I do not have any accounts with the “bright red” bank. To say I was annoyed is an understatement. I saw red. Literally and figuratively. 

I am privileged in that I could afford to (grumpily) pay for the myriad of service fees that I was confronted with, albeit that the excess fees paid are an opportunity cost for me. But many people in Africa are not as privileged as I am. Transaction costs, such as cash handling fees, or fees associated with assessing a small business for a revolving credit facility for operations or a loan to purchase equipment, are disproportionately high for lower-income individuals and small businesses. The irony of this is that it is this group of people who most need every cent, thebe or ngwee to sustain their livelihoods and businesses. 

Mobile money, a unique feature of FinTech in Africa, has created a democratised financial services solution that enables those who are and are not able to open and transact with a bank account access to a range of digital financial services at lower cost using mobile technology, thereby allowing once marginalised individuals to participate in the formal financial system. As FinTech embraces more people in the formal financial system, we need to ensure that financial sector regulations ensure the stability of the financial system and consumer protection. 

Beyond the innovation of mobile money, I am an ardent advocate of FinTech because FinTech can support our transition to net zero production and consumption. Blockchain technology can be used to objectively measure environmental outcomes and automatically effect payments programmed into a smart contract. Crowdfunding platforms and peer-to-peer lending create alternative capital-raising options for ‘green’ initiatives. 

It is the nexus of climate finance and digital technology that is the topic of my PhD at Stellenbosch University Business School. Watch this space as I, and other researchers in the field of development finance, explore the opportunity for ‘green’ and ‘blue’ financial services solutions. Better yet, join us as we push the frontiers of FinTech.