Across Africa, the financial services sector is playing a catalysing role in driving economic transformation and broader financial inclusion through innovations in payments and regulatory technology (RegTech).
The payments ecosystem in Africa is fundamentally shifting, as an explosion of fintechs and Third-Party Payment Providers (TPPPs) drives advances in digital transactions. These transformational changes have necessitated more robust RegTech solutions to create more resilient infrastructure and forge a path towards greater efficiency.
Against this backdrop, the recent Africa Payments & RegTech Forum, held in Johannesburg, highlighted that the continent's financial ecosystem has entered a critical phase of maturation.
Innovation is reshaping Africa’s payments landscape
Rapid innovations, such as interoperable instant payment rails, regional cross-border frameworks under the African Continental Free Trade Area (AfCFTA), and mobile wallet expansion, are taking place alongside an evolution in traditional banking infrastructure.
While these developments have created a dynamic and vibrant financial services sector across Africa, they have simultaneously amplified compliance and security pressures.
In response to the growing need to support payment innovation with robust risk management and regulatory compliance, the Africa Payments & RegTech Forum brought together regulators, banks, and innovators to shape the future of financial services in Africa.
The key trends highlighted during the conference focused on tokenisation and digitalisation, underpinned by the growing role of artificial intelligence (AI), digital payments, blockchain and cryptocurrencies, ESG-driven RegTech, cybersecurity, and biometric authentication.
RegTech central to safer scale
Alongside the modernisation of the payments space, a raft of regulatory changes is taking place to ensure the industry keeps pace and creates a safe and secure environment for service providers, businesses and consumers.
To safely scale, the industry is experiencing a massive push toward advanced RegTech solutions, which utilise AI-driven real-time fraud detection, automated anti-money laundering (AML) tracking, and smarter supervisory technology (SupTech) data pipelines.
Fraud prevention must become proactive
One of the biggest challenges currently facing the sector is containing the ever-present and evolving fraud threat. Fraudsters are becoming more sophisticated and smarter with the use of AI, and are now working around the clock, with scams increasingly targeting more vulnerable communities and markets.
The sector largely remains defensive, with banks managing risk as a collective. However, proactive measures are required to stay ahead of the evolving threat landscape and maintain trust in the financial services ecosystem itself, which is what ultimately builds investor confidence and attracts investment.
From a conduct perspective, financial institutions must also remain alert to the rise of scams such as romance fraud, heightening protections for those most at risk.
At Investec CIB, the focus remains on protecting clients while balancing fairness and sustainability. Redress has an important role to play, but prevention is a more effective approach, with Treating Customers Fairly principles remaining critical in how institutions respond to these cases and keep the client at the centre.
The need to address how the sector thinks about risk management around AML and fraud prevention was clear, as many financial institutions continue to operate these divisions in silos. There is a growing need to operate as an integrated division because the collective risk from more sophisticated attacks is significant and potentially systemic.
Stronger oversight for cross-border payments
Cross-border payments are another area ripe for RegTech innovation, as international fund flows can become problematic when identifying beneficiaries. In this space, technology is an enabling tool that reduces friction and boost volumes, but requires the controls and proper oversight in place to monitor financial activity.
The need to address how the sector thinks about risk management around AML and fraud prevention was clear, as many financial institutions continue to operate these divisions in silos. There is a growing need to operate as an integrated division because the collective risk from more sophisticated attacks is significant and potentially systemic.
This has become even more pressing as the industry responds to the Financial Action Task Force (FATF) evaluation requirements, works closely with regulators, and manages a growing influx of data needed to strengthen transparency and oversight.
The promulgation of new regulations has shifted the focus toward implementation, with preventative controls, Ultimate Beneficial Ownership transparency and tighter payment oversight becoming key operational priorities.
This was a key discussion point for think tanks at the forum, which explored how to weave AML and fraud prevention together to manage collective regulatory risk and avoid the sector slipping back onto the grey list.
The application of real-time monitoring in how financial services providers can innovate and be strategic in managing regulatory requirements is a viable solution to address these risks.
AI strengthens real-time monitoring
Most banks, including Investec, are leaning into AI to boost real-time monitoring capabilities and optimise models. In this regard, service providers are developing, testing and refining a range of vendor and bespoke solutions, as there is no one-size-fits-all solution.
However, the need to access capabilities and solutions also creates regulatory challenges related to data privacy, security and sovereignty.
Payment and financial services providers that choose to outsource material systems and infrastructure must ensure that the chosen model aligns with the relevant data storage and access regulations.
As banks remain the custodian of client data, these technology provisioning models may not always offer a suitable option, with the Protection of Personal Information Act (POPIA) the ultimate guide when building these controls.
Payments governance entering a new phase
Another key development in the regulatory space is the change to South Africa's long-standing payments body, the Payments Association of South Africa (PASA). After 30 years, its responsibilities have been transferred to PayInc in what is a major restructuring of the country's payments infrastructure.
The restructuring establishes PayInc as a scheme operator under a co-ownership model with the South African Reserve Bank (SARB), which received approval to acquire a 50% equity stake.
Collaboration will define the next chapter
Overall, the abiding message from the Africa Payments & RegTech Forum is the need for greater industry collaboration. Attendees gained a deeper sense of the reach fintechs and TPPPs are achieving, with pockets of competence and innovation unlocking new avenues to collaborate across sectors.
Creating a broader and more open market will benefit financial inclusion on the continent, with nimble and agile fintechs able to scale rapidly and cater to the lower LSMs. Growing this base will benefit Africa’s large unbanked population, while building a stronger pipeline of customers that can feed into the broader financial services ecosystem.
For African fintechs, telcos, and legacy banks, the mandate is clear: sustainable growth can no longer rely on speed alone. The sector now requires a foundational baseline of trust, security-by-design, and proactive regulatory alignment.