Africa's fintech story is usually told as one of disruption. But across the continent's big four markets, digital innovation hasn't replaced traditional institutions; it has reshaped how they operate. According to Briter data, Egypt, Kenya, Nigeria, and South Africa together account for more than 60% of Africa's fintech investment, and the same pattern keeps emerging across all four. Banks hold the liquidity moat, fintechs have won on interface and innovation speed, and telcos have only selectively converted distribution into dominance. Kenya remains the standout case, where Safaricom’s M-Pesa established the rails ahead of regulation, interoperability, and competition.
What sets these markets apart is their foundations and who captures value. Egypt is state-engineered and bank-anchored. Kenya evolved as a telco-led market. Nigeria presents a hybrid model of competitive intensity across banks, telcos, and fintechs. South Africa is a mature system being quietly reopened by a single regulatory decision. As our previous report found , collaboration across these three actor types is structurally necessary, as few players control all the components required to deliver financial services at scale. But who provides infrastructure, who owns the customer, and who captures margin varies by market and determines which business models prove sustainable.
Nigeria: hybrid competition and fragmented power
In Nigeria, no single actor controls the full stack. Banks hold settlement infrastructure, regulatory capital, and the cheapest Naira liquidity in the market. Fintechs own merchant relationships and product iteration speed. Telcos hold SIM-based identity and agent distribution. Liquidity is where sustainable margins concentrate, and banks have it. In the first nine months of 2025, nine major Nigerian banks collectively earned $19 billion in interest income, more than the combined revenue of Nigeria's largest fintechs.
The bank-fintech boundary is nonetheless becoming more porous. Banks are building fintech subsidiaries, fintechs are acquiring microfinance licences, and collaboration is increasingly a strategic priority on both sides rather than a concession by either. Paystack and Sycamore recently acquired microfinance licences, bringing both players closer to the balance sheet advantages long held by incumbents. Their access to low-cost deposits and lending licences creates a moat that licensed fintechs are only beginning to approach, and unlicensed ones cannot access at all.
Telcos entered Nigerian fintech with a clear distribution advantage, backed by agent networks, airtime touchpoints, and high-frequency customer presence. That advantage has eroded more quickly than the early trajectory suggested. Telco-led finance succeeded in Kenya, Ghana, and francophone West Africa by keeping transactions inside closed-loop systems, which gave operators control over data, float, and merchant relationships. Nigeria's interoperable infrastructure, anchored by NIBSS for interbank settlement, makes that model unworkable. The same openness that underpins the efficiency of Nigeria’s payment rails reduces the advantage telcos have maintained in other markets. This shift is visible at the distribution level. “As airtime margins collapsed, agents who formed the backbone of telco reach pivoted to agency banking, and when they did, they moved to fintechs rather than their former telco employers,” said Edidiong Uwemakpan, VP of Corporate Communications at Moniepoint .
Payment Service Bank licences further constrain telcos, limiting them to basic deposit-taking and transfers, with no lending permitted. This forces them to compete on payment volume alone in a market where margins are already thinning. In 2023, MTN MoMo and Airtel SmartCash reported revenues of $4.8 million and $6 million , respectively, against PalmPay's $63.9 million and Kuda 's $32.1 million.
Where banks and telcos have structural assets, fintechs have captured user experience and iteration speed. "Banks have tended to design products on the assumption that customers would adopt them, with less emphasis on the research loops fintechs treat as standard practice," argues Chibuzor Melah of PalmPay . The result has been savings tools, insurance products, and credit instruments that miss actual user behaviour, gaps that fintechs have been quick to fill. Trust, however, remains a constraint. Users have historically been reluctant to hold large balances with digital-only providers, which limits fintechs' ability to build the deposit base that banks deploy for lending and other revenue-generating activity. Some fintechs are responding by opening physical locations, though it has come at the cost of eroding the asset-light model that allowed them to undercut incumbents on cost and scale rapidly.
“The fintechs better positioned to outlast the current dynamic are those that use early payment traction to build proprietary datasets on customer behaviour and creditworthiness, then monetise those datasets through lending or personalised products,” said Nchedolisa Akuma, senior investment professional at V8 Capital Partners . The broader question for Nigeria's financial market is not which sector wins, but who can most effectively combine liquidity, distribution, and interface across institutional lines.
Egypt: bank-led rails and constrained competition
The Egyptian financial ecosystem is a state and bank-centric system. The Central Bank of Egypt (CBE) serves simultaneously as the architect, builder, and regulator of the system, having launched initiatives like InstaPay, Meeza, and Fintech Egypt to drive a more cashless economy. Between 2016 and 2022, account ownership in Egypt grew by about 147% , resulting in a financial inclusion rate of approximately 76%, according to the Central Bank of Egypt. In this model, every fintech and telco wallet must be anchored to one or more banks’ balance sheets, and most startups require two to three bank partnerships just to operate, locking in dependence on incumbents for core liquidity and licensing.
Banks in Egypt primarily serve the top 10% of the population (formally employed, higher-income Egyptians). The banks hold the balance sheet, bureau access and the licensing advantage that allows them to do everything: deposits, credit, and lending. However, banks rely on fintechs to reach customer segments they cannot serve themselves profitably. Banque Misr launched One Bank , a digital bank built in-house rather than through partnership, replicating the fintech model without ceding the customer relationship.
Telcos like Vodafone Cash and Orange Money together account for 90% of Egypt’s mobile money market. However, they are prevented from becoming primary financial interfaces like M-Pesa due to regulations that restrict them from taking deposits or offering credit. These players are mandated by state interoperability, which means no telco has exclusivity or a specific advantage, keeping the core banking services with the banks.
Egypt’s state-led model lowers the cost of entry for fintech players, as they can plug into existing rails without needing to invest substantially in proprietary technology. However, this model limits the value that smaller companies can extract, as margins are very low at the interface layer due to the near-zero payment fees (0.1%) mandated by the InstaPay rail.
As a result, viable fintech strategies concentrate in higher‑margin niches (data‑driven credit and lending, and merchant‑focused B2B) where players such as MNT‑Halan , Paymob , and Fawry use transaction data, scoring models, and large merchant or agent networks to escape pure payments economics and capture more durable revenue, notes Maria Najjar, editor, This Week in Fintech.
Najjar argues that fintechs are the most credible candidates to serve Egypt’s unbanked, gig‑economy, and lower‑income segments (especially those able to secure stronger licences), while banks retain higher‑income, formally employed customers, and the state retains the lowest‑income segment via social transfer rails. In that sense, fintechs are both complements and future competitors at the edge of the system, but they operate under a constant “watch, partner, absorb” dynamic in which banks and the central bank can copy, cap, or eventually acquire their most successful models
“For many fintechs, a viable path points toward scaling sufficiently to the point where banks acquire them, or attempting to obtain their own banking licenses,” said Najjar. Despite this challenging environment, startups like Khazna are aiming to acquire a banking license by mid-year, a notoriously difficult feat given the complete lack of precedent and the market's heavy reliance on incumbent banks. Regardless of the outcome, Najjar predicts the market will remain fundamentally segmented, with no single winner taking all segments, but rather a divided landscape where banks, fintechs, and the state each control distinct parts of the population.
South Africa: how one regulatory move could reshape the stack
South Africa enters this conversation from a different starting position than the rest of the continent. With around 85% account penetration and a well-functioning Electronic Funds Transfer (EFT) infrastructure, its financial system is, by most measures, mature. The big five banks ( Standard Bank , Absa, FirstRand , Nedbank , and Capitec ) are highly capitalised and deeply embedded in the regulatory architecture. And yet, the presence of infrastructure does not equal its use. Despite widespread account ownership, 71% of South African adults still primarily use cash for food and grocery purchases, and cash accounts for roughly two-thirds of all retail transaction volumes.
"The real difference no longer lies in digital capability but in architecture, focus, and organisational speed," argues Doug Walker, Yoco 's Programme Director for Financial Services. Banks optimise for risk minimisation, carry significant legacy complexity, and serve multiple segments simultaneously. Fintechs, built on flexible, technology-first platforms, can iterate faster, though they still depend on banks for clearing, settlement, and balance sheet access. As in other markets, banks provide the balance sheet, infrastructure, and liquidity, while fintechs bring product speed, data-led insight, and distribution into defined customer segments.
That dependency may be shifting. In 2025, the South African Reserve Bank (SARB) opened the National Payments System to non-banks , allowing fintechs and telcos to participate directly in the payments infrastructure. Banks remain critical partners, but the structure of participation is gradually becoming more open, notes Walker. Opening access more broadly has the potential to change cost dynamics, settlement timing, and competitive pressures in payments, and to introduce a more diverse set of players into infrastructure that has long been bank-controlled.
For fintechs, margins currently sit within payments, which addresses the most immediate merchant need and anchors the customer relationship at the highest frequency. The larger opportunity, Walker argues, lies in building around that payment relationship over time through working capital, financial management tools, and other adjacent services. Lending is part of that picture, but needs to be approached carefully.
The SARB's decision also opened a credible path for telcos, with MTN seeking a full banking licence . If granted, MTN MoMo would be able to take deposits, deploy a lending balance sheet, and operate as a regulated institution. But a licence does not automatically deliver customer trust, credit underwriting capability, or integrated product architecture.
South Africa's financial ecosystem shows few signs of consolidating around a single dominant model in the near term. The future points to one where the primary customer relationship sits with platforms that build trusted financial ecosystems rather than single products, whether banks that wrap their balance sheet in fintech-quality interfaces, fintech platforms that accumulate product breadth over time, or large digital ecosystems that use financial services as a retention layer.
Kenya: a telco-led ecosystem
Of Africa's four largest fintech markets, Kenya is the only one where power sits with the telcos. Mobile money penetration sits at around 91% , and M-Pesa, the country's dominant telco player, processes over 21 million transactions daily . What began as a simple fix for airtime access and fraud at Safaricom, M-Pesa's parent company, quietly became the infrastructure backbone of an entire economy. That infrastructure has since hardened into leverage. Financial institutions seeking to tap Safaricom's distribution network have largely had to operate on the telco's terms.
Safaricom leverages its extensive distribution network and established reputation to dominate smaller-ticket payments and merchant transactions across Kenya. Like other telcos, it derives its primary revenue from transaction fees, and the scale of its network means it generates significantly more from this than comparable players elsewhere on the continent. That fee income, however, is coming under pressure. The Central Bank of Kenya has signalled plans to slash the cost of sending money via M-Pesa and Airtel Money, arguing that high fees are choking innovation and limiting the next phase of financial inclusion. In response, Safaricom has begun diversifying (adding share-buying on its app and partnering with remittance providers to offer cross-border payments), signalling a broader ambition to move up the financial services stack before its core revenue base erodes further. M-Pesa's dominance has also drawn regulatory scrutiny, with lawmakers pushing Safaricom to split into two separate entities to reduce its market concentration.
Banks, by contrast, own the high-value layer: cross-border payments, credit underwriting, and layered financial services like insurance and investment products. They primarily serve corporates and institutions and generate higher margins on individual products, anchored in risk-underwritten lending, though that margin comes with corresponding credit risk. Banks also hold a data advantage that their fintech and telco rivals cannot easily replicate. Without open-banking regulation, Kenya's lenders face no obligation to share customer data with fintechs or telcos, and that asymmetry has shown little sign of closing. However, since 2024, the Central Bank of Kenya has been aggressively pushing for interoperability in the financial sector to foster inclusion, reduce costs, and enhance the digital economy. When Kenya's interoperability regulation is put in place, the data advantage the banks once wielded will be tapered.
"Until open banking arrives in Kenya, fintechs will keep negotiating access to bank data, straining their margins and revenues," notes Ifelade Ayodele, former consultant at Accenture. Fintechs occupy the middle ground. Better distributed than banks, but with thinner margins than either player above them and no balance sheet of their own. They can move faster, unconstrained by legacy technology, and can out-innovate the other two, making them indispensable as intermediaries: helping banks extend reach to MSMEs and retail users, and helping telcos serve more sophisticated customer segments that their infrastructure alone cannot reach. Fintechs generate revenue through SaaS fees, automation, and transaction facilitation, though their dependency on both banks and telcos for infrastructure access keeps their structural position fragile.
We are, however, beginning to see deeper cross-collaboration. KCB's recent investments in Pesapal and River Bank Solutions signal a move from commercial collaboration towards banks buying into fintechs rather than just partnering with them. The partnership between all three players is expected to deepen, with fintechs remaining the link between telcos and banks, telcos holding their distribution dominance, and banks working to bring their balance sheet and credit capabilities into the digital channels their partners have already built.
How collaboration may shape who wins
Across Egypt, Kenya, Nigeria, and South Africa, the question is no longer whether banks, fintechs, or telcos “disrupt” one another, but who can survive margin compression and regulatory tightening while combining balance‑sheet strength, low‑cost distribution, and a trusted interface. In practice, that points less to a single winner than to hybrids: banks that productise like software companies, fintechs that secure licences and deepen balance‑sheet capabilities, and telcos that turn raw distribution into true financial ecosystems rather than closed wallets.
Put differently, the future of African finance may be less about any single actor owning the full stack and more about how the rules of collaboration take shape. The players that manage to turn shared rails into a lasting advantage (through the commercial terms they negotiate, the customer narratives they shape, and the ways they quietly compound proprietary data into credit, savings, and adjacent services) could end up playing an outsized role in the next decade, even if they continue to wear the familiar labels of bank, fintech, or telco.
