Africa & Middle East Embedded Finance Business Report 2023: Market is Expected to Grow by 45.3% to Reach $11.49 Billion in 2023 – 50+ KPIs on Lending, Insurance, Payment, and Wealth Segments 2020-2029
By alexandreFinance
Africa & Middle East Embedded Finance Business Report 2023: Market is Expected to Grow by 45.3% to Reach $11.49 Billion in 2023 – 50+ KPIs on Lending, Insurance, Payment, and Wealth Segments 2020-2029
The Africa and Middle East embedded finance business report for the year 2023 has been released. According to the report, the market is expected to grow by 45.3% to reach $11.49 billion in 2023. The report provides over 50 key performance indicators (KPIs) on lending, insurance, payment, and wealth segments covering the years 2020-2029.
Embedded finance refers to the integration of financial services into non-financial products such as e-commerce platforms, telecommunication networks, and ride-sharing apps. This type of finance is becoming increasingly popular in Africa and the Middle East due to the large number of people who are unbanked or underbanked.
Lending Segment
The lending segment is expected to grow by 50% to reach $3.79 billion in 2023. This growth can be attributed to the increasing demand for microloans and personal loans in the region. The report shows that mobile money lenders are driving the growth of the lending segment. These lenders offer convenient and accessible loans to individuals who do not have a bank account or a credit history.
However, the report notes that there are challenges facing the lending segment in Africa and the Middle East. One of the challenges is the lack of credit information. Most people in the region do not have a credit history or a financial record, making it difficult for lenders to evaluate their creditworthiness. Another challenge is the high default rates among borrowers, which results in losses for lenders.
To address these challenges, the report recommends that lenders should adopt alternative credit scoring models that use non-traditional data sources such as mobile phone usage and social media activity. The report also recommends that lenders should partner with fintech startups to improve their underwriting processes and reduce default rates.
Insurance Segment
The insurance segment is expected to grow by 47% to reach $2.45 billion in 2023. This growth can be attributed to the increasing demand for microinsurance products in the region. Microinsurance products are designed to provide affordable insurance coverage to low-income individuals who do not have access to traditional insurance products.
The report shows that mobile network operators and fintech startups are driving the growth of the insurance segment. These companies have leveraged their existing customer base to offer insurance products through mobile platforms. The report notes that the adoption of mobile insurance products is still low in the region, and there is a need to educate consumers on the benefits of insurance and how it can protect them from financial risks.
To address this challenge, the report recommends that insurance companies should partner with mobile network operators and fintech startups to leverage their existing customer base and distribution networks. The report also recommends that insurance companies should develop customized insurance products that are tailored to the needs of low-income individuals.
Payment Segment
The payment segment is expected to grow by 44% to reach $4.38 billion in 2023. This growth can be attributed to the increasing adoption of mobile payments and digital wallets in the region. Mobile payments and digital wallets offer a convenient and secure way for people to make transactions without the need for cash.
The report shows that mobile network operators and fintech startups are driving the growth of the payment segment. These companies have developed mobile payment solutions that are integrated into their existing platforms, making it easy for consumers to send and receive money.
However, the report notes that there are challenges facing the payment segment in Africa and the Middle East. One of the challenges is the lack of interoperability between different mobile payment systems. This means that consumers cannot use their mobile wallets to transact with other users who are on a different mobile network.
To address this challenge, the report recommends that mobile network operators and fintech startups should collaborate to develop a unified mobile payment system that is interoperable across different networks.
Wealth Segment
The wealth segment is expected to grow by 30% to reach $1.87 billion in 2023. This growth can be attributed to the increasing demand for investment products in the region. The report shows that there is a large untapped market for investment products among the middle class in Africa and the Middle East.
The report notes that banks and asset management companies are driving the growth of the wealth segment. These companies have developed digital platforms that offer investment products to retail customers.
However, the report notes that there are challenges facing the wealth segment in Africa and the Middle East. One of the challenges is the lack of financial literacy among consumers. Most people in the region do not have a good understanding of investment products, making it difficult for them to make informed investment decisions.
To address this challenge, the report recommends that banks and asset management companies should invest in financial education programs that aim to improve financial literacy among consumers.
In conclusion, the Africa and Middle East embedded finance business report for the year 2023 provides valuable insights into the growth of the lending, insurance, payment, and wealth segments in the region. The report highlights the challenges facing these segments and provides recommendations on how they can be addressed.
The report shows that mobile network operators, fintech startups, banks, and asset management companies are driving the growth of embedded finance in Africa and the Middle East. These companies are leveraging technology to provide convenient and accessible financial services to a large number of people who are unbanked or underbanked.
