Article 14: Fintech, a key disruption to the traditional banking sector

Written by Adv. Brownie Ebal

On 22nd July, 2022, I attended a zoom panel discussion by The East African Law Society.

The zoom discussion highlighted the growing importance of fintech technology and dominance in the financial sector. In this regard, the rapid mobile penetration in the East African economy, has led to fintech taking a high gear in the emerging economies. Fintech refers to firms leveraging technology to deliver financial products capabilities to customers or other financial services firms, it has also curved out a distinct offering to create a fully fledged sector group, complete with its own service providers, accelerator and market. Once a conduit of the traditional financial service sector, today, fintech holds its own as a mainstay service sector.

Fintech as a nontraditional player has increased non-financial companies offering financial services. These refer to new market entrants outside the traditional banking institutions and carter specific financial services to it’s customer segment and they include; technology companies, mobile network operators, Cash Network, E- Retailer. Many Fin Tech’s due to their robust business models have been able to taste success and have enabled traditional financial institutions to explore areas of co-operation and partnerships to improve reach and efficiency. Due to this new phenomenon, traditional banks have been challenged to become more innovative, promote economic growth and partner with various key players to remain relevant.

Currently, the fintech space is not regulated and further discussions are underway to regulate the space.

The discussion concluded that consumer protection is needed to protect clients of fintech. The panelists urged for better collaboration across all sectors. Currently, various companies use mobile money payments for bills to be paid. E.g. MTN Mobile money, Airtel money.

Further discussions were held in regards to the practicality of fintech to the banking sectors in Kenya, Rwanda, Uganda and Tanzania.

I urge young lawyers to always attend such informative discussions so as to remain relevant in this ever changing space.

An informed lawyer is an asset.