From London to Lagos to Nairobi, British fintech firms are deploying capital and technology into sub-Saharan Africa at an unprecedented rate. Practitioners with direct knowledge of African financial markets say the same error is being repeated across every expansion programme — and the correction will be costly.
In the autumn of 2022, the UK’s fintech sector is, by its own assessment, on the right side of a historic opportunity. Sub-Saharan Africa represents the world’s largest concentration of unbanked adults — an estimated 350 million people who conduct their financial lives outside formal financial systems. For digital payment platforms, mobile money services, and embedded finance companies headquartered in London, Edinburgh, and Manchester, this is not primarily a social impact narrative. It is a market opportunity, and several of the UK’s most prominent fintech firms have begun pursuing it aggressively.
Wise, Revolut, and a cohort of infrastructure players have either entered African markets directly or announced strategic partnerships that position them for significant African operations within the next three to five years. UK investors have poured capital into African fintech intermediaries. The British government’s own trade and investment strategies have, in multiple recent iterations, identified the Africa-UK fintech corridor as a priority commercial relationship.
The consensus among the firms pursuing this strategy is, broadly, that the product they have built for European consumers — with modifications for local regulation and currency — is the right product for the African market. It is a consensus that a growing number of practitioners with direct knowledge of African financial behaviour consider to be systematically mistaken.
The dominant UK fintech approach to African market entry can be described, with some simplification, as localisation: take an existing product, comply with local regulatory requirements, translate the interface into local languages where necessary, and partner with local agents or telecommunications companies for last-mile distribution. The underlying product design, which entails the user journey, the trust architecture, the assumptions embedded in the flow, remains substantially unchanged.
This approach has a name in product management circles. It is called feature localisation, and experienced practitioners who understand the African market consider it to be a fundamental category error.
Adeola Olaniyi is a financial services practitioner with years of experience in Nigeria’s formal banking sector, including customer-facing roles at Zenith Bank PLC, one of sub-Saharan Africa’s largest commercial banks. She has been observing the UK fintech expansion into African markets with what she describes as a mixture of admiration for the ambition and concern about the execution.
“The UK fintechs entering Africa have done the regulatory work. They have done the partnership work. Some of them have done the language localisation work. What none of them have done, at least not in any way that is visible in their product experiences, is the trust localisation work. They are building products for a user who trusts digital financial interfaces, who trusts that money deposited will be money available, who trusts that a failed transaction will be reversed, who trusts that the institution behind the app is accountable. The majority of the African users they are trying to reach do not have that trust. And a translated UI does not create it.” Adeola Olaniyi enlightens the media.
Trust localisation, as Adeola defines it, is not a product feature. It is a design philosophy, one that requires UK fintech firms to fundamentally reconsider the assumptions embedded in their product architectures before they deploy them in markets where those assumptions do not hold.
The European fintech product has been designed, iteratively, for a user population that is already embedded in formal financial systems. The baseline user, in the context for which most successful UK fintech products were built, is someone who has had a bank account since childhood, who has a credit history, who has used contactless payments for years, and whose primary complaint about financial services is that they are inconvenient, opaque, or expensive — not that they are untrustworthy.
The sub-Saharan African user that UK fintechs are targeting is, statistically, someone who has had no bank account, or an account they interact with only occasionally, whose experience of formal financial institutions has been characterised by fees they could not anticipate, reversals they could not obtain, and customer service that was inaccessible. The problem these users have with financial services is not inconvenience. It is structural mistrust that has been earned, over decades, by the institutions that preceded the fintechs.
“I have watched, from a bank counter, what happens when a digital product fails for a user who did not trust it to begin with,” Adeola notes. “The failure is not just the loss of that customer. The failure propagates through their social network, because in communities where financial decisions are collective and information travels through personal relationships rather than review platforms, one bad experience becomes thirty negative impressions. The UK fintech failure in Africa will not look like bad reviews on an app store. It will look like communities quietly deciding that a product is not for them.”
The financial logic of UK fintech expansion into Africa depends on a set of assumptions about customer lifetime value and cost of acquisition that Adeola considers to be based on inaccurate product models. If the products being deployed do not generate the trust necessary for sustained engagement — and her argument is that they will not, as currently designed — the unit economics of the Africa expansion will not hold.
“The customer acquisition cost in African markets is higher than the optimistic projections suggest, because the informal distribution channels that substitute for digital marketing are expensive in time and relationship capital. The lifetime value assumptions are lower than the projections suggest, because a product that generates registration but not sustained engagement does not produce the revenue that justifies the acquisition cost. When these numbers are reconciled against actual data, probably within the next two to three years, several of the Africa expansion strategies currently being celebrated will look considerably less robust.”
Adeola is not arguing that the UK fintech opportunity in Africa is illusory. She is arguing that it requires a different product design approach than the one currently being deployed: one that she describes in terms of three specific shifts.
First, what she calls the zero-cost first interaction: the product’s initial engagement with the user must require nothing of them: no money, no data, no irreversible commitment; and must deliver something tangible and verifiable in return. The purpose is not to generate revenue from the first interaction. It is to generate a trust data point.
Second, failure protocol design: every potential failure mode in the product such as failed transactions, delayed confirmations, connectivity disruptions must have a designed response that is proactive, visible to the user, and resolution-oriented. In the European market, silence after a failed transaction is an inconvenience. In a market defined by institutional mistrust, it is confirmation of the fear that the money is gone and no one is accountable.
Third, social trust architecture: the product must have explicit features that allow trust to propagate through social networks, tools that make it easy for a satisfied user to demonstrate the product’s reliability to someone in their network, because in the African market, peer trust transfers are the dominant form of product endorsement.
“These three shifts are not expensive to implement if you design for them from the beginning,” Adeola observes. “They are very expensive to retrofit into a product that was designed without them. The UK fintechs entering Africa have a window to build these design principles before they discover, at scale, why they were necessary.”
The capital currently flowing from UK fintech into African markets is, in aggregate, substantial enough that the correction Adeola anticipates will have consequences beyond individual company balance sheets. It will shape the trajectory of UK-Africa financial technology partnerships, influence the risk appetite of the development finance institutions that co-invest alongside private capital, and determine whether the next generation of African financial technology is built primarily by African practitioners who understand the market, or by international firms that believe understanding it is a function of having a local office.
