Launching a fintech business in a new region presents both opportunities and significant risks. Emerging markets demand financial products, but ambition alone is not enough. How can one choose the right country and avoid failure?
Where’s the Fintech Boom happening?
Developing countries with rapidly growing GDPs are attracting investors’ attention. According to consulting firm BCG, Asia is expected to become the global leader in the fintech industry by 2030, while the number of fintech companies in Africa has tripled
since 2020. However, these markets are still in their formative stages — there is demand, but financial infrastructure and literacy remain weak.
Consumption growth is set to be a key driver of fintech expansion in Asia. According to McKinsey, in 2000, only 15% of Asia’s population belonged to the consumer class (defined as those spending more than $11 per day) but by 2030, 3 billion people, or 70%
of the region’s population, may become part of this class, leading to increased and more complex financial needs.
Africa is also experiencing a fintech boom. According to the European Investment Bank, as of January 2024, Africa had over 1,263 active fintech companies, compared to 1,049 in April 2022 and just 450 in 2020. These firms are concentrated in Africa’s largest
economies — Nigeria, South Africa, Kenya, and Egypt — which account for 70% of all fintech companies and 80% of funding. Nigeria leads the African fintech market, accounting for 28% of all fintech firms on the continent.
Investment vs. Risk
All these regions are eager for investment and open to it, allowing them to attract investors from around the world — those with both experience and resources.
Investors are already actively entering these markets, particularly at the seed investment stage. According to PwC, more than 60% of fintech investments in ASEAN countries in 2024 targeted early-stage startups, reflecting confidence in the sector’s potential
and future innovations. Overall, fintech funding has increased tenfold over the past decade, peaking at nearly $6.4 billion in 2021.
However, promising prospects do not guarantee success. Key risks include weak regulation, underdeveloped infrastructure, cybersecurity vulnerabilities, and challenges with payment systems. For example, in Nigeria, despite its vast market potential, legal
and infrastructure barriers make business operations difficult. Мany experienced, high-paid executives are unwilling to relocate there.
Language and cultural barriers are also critical. India has 58 official languages, while in Kenya, 94% of users rely on Android, a factor which must be considered when developing applications. Lack of market knowledge, overestimating capabilities, and excessive
optimism can lead to a startup’s failure.
Regulatory compliance is another major concern. A business that seems promising and profitable in theory may ultimately become unprofitable. Overly strict regulations can hinder scalability within a country. Some nations enforce ‘data localization’ laws,
requiring foreign companies to store computing resources within national borders. This increases infrastructure and operational costs, often forcing businesses to rethink their entire model.
People as the Key Factor
Talent acquisition is critical. An experienced local specialist is essential for success. Cultural nuances cannot be overlooked — understanding local traditions and language fosters strong connections. Additionally, some countries place a strong emphasis
on gender balance in lending and financial services.
The focus should be on service, not corporate values — consumers want convenient solutions, not a company’s philosophy. While automation is important, customers should not feel it as a forced technological imposition.
Cultural barriers should not be overlooked. A specialist working on-site should be mentally aligned with the local culture, loyal to both the company and the local community. Ideally, this should be a fintech expert with deep regional experience, knowledge
of business etiquette, an understanding of local government processes, and free from the illusions of a newcomer.
Language proficiency is also crucial. The extent of English penetration is often overestimated, and if language barriers exist even in Europe, then in Africa or Asia, knowledge of the local language, or at least a willingness to learn it, is a necessity.
Also, cultural awareness is important, as interpretations of gestures and behaviors vary widely. For example, a hand gesture that signifies ‘OK’ in Western countries is considered a curse or an evil eye symbol in Kuwait and other Arab nations.
Sometimes, the best strategy is to avoid entering a market if critical elements are missing. However, with a well-planned approach, a startup can not only secure a strong position but also drive the economic growth in the region.
