Fintech innovation in emerging markets is not confined to traditional powerhouses like New York or London. Across South Africa and Latin America (LATAM), new fintech ecosystems are rapidly emerging, redefining access to banking, credit, and insurance. While challenges remain, especially around financial literacy, regulatory complexity, and legacy infrastructure, the fintech revolution is gaining serious traction in both regions.

Let’s dive into how these areas are reshaping the global fintech narrative.

South Africa’s Fintech Ecosystem: From Fragmented to United

Until recently, South Africa’s fintech ecosystem was marked by fragmentation. With founders often acting in isolation and regulation evolving slowly, collaboration was minimal. That changed with the creation of the Fintech Association of South Africa, a nonprofit aimed at fostering community and cooperation across the sector.

The association now includes startups, regulators, and major financial institutions. It aims to solve systemic issues such as financial literacy, regulatory clarity, and responsible innovation. One of the biggest hurdles? A cultural reliance on cash, driven by deep-rooted mistrust in the banking system. Roughly 96% of South Africans have a bank account, yet many immediately withdraw their funds—highlighting a gap between access and trust.

Efforts are underway to shift that mindset through fintech tools that offer better transparency, security, and user experience than traditional banks. And with over 1,200 fintechs identified in the country—most focused on payments—the momentum is undeniable.

Bank-Led Innovation vs. Fintech Disruption

One reason South Africa’s fintech evolution has been slow is its historically bank-led model. Traditional banks held tight control over deposits and payments, limiting fintechs’ operational freedom. That’s starting to change.

Neobanks and challenger banks like Time Bank and Capitec are making inroads by partnering with retail chains instead of opening physical branches. This model improves accessibility and lowers costs—an important advantage in a highly banked yet under-served society.

Still, the competition isn’t fintech versus banks. It’s digital tools versus cash. The real battle is getting people to shift their financial habits into digital ecosystems.

Insurance Tech Finds a Unique Niche

South Africa also stands out for its insurance innovation. Funeral cover, for example, dominates the insurance landscape. An estimated 70% of the population uses some form of insurance—mostly funeral-related. Even soccer clubs offer policies to fans.

This presents a unique opportunity for insurtechs. By combining cultural needs with digital platforms, companies can innovate while addressing real societal issues. The challenge is to expand this innovation beyond funeral coverage and into other forms of protection—especially as climate risks and health concerns rise.

Regulation: From Bottleneck to Bridge

South Africa’s regulatory environment is more progressive than many realize. Multiple agencies—such as the Reserve Bank, Financial Sector Conduct Authority (FSCA), and National Credit Regulator—coordinate efforts through working groups like the IFWG.

Fintechs now receive more guidance on licensing for payments, crypto, and lending. There’s even an initiative called Project Khokha exploring blockchain for interbank settlement systems. While there’s no dedicated charter for fintechs yet, the ecosystem is becoming increasingly supportive.

Still, navigating regulatory requirements remains difficult for smaller startups, especially those based in townships. Bridging that gap is a key goal of the Fintech Association’s corporate partnerships and outreach programs.

Diversity in Founding Teams: Still a Work in Progress

Despite the growth, diversity remains a challenge. A majority of South African fintechs are led by white male founders, with only about 8% involving women. This imbalance affects not just representation but also innovation itself. To address this, partnerships with global tech firms and legal consultancies are helping township-based entrepreneurs launch and scale fintech ventures.

The goal is simple: more inclusive innovation for a more inclusive economy.

LATAM’s Fintech Leap: Credit for the Underserved

In Latin America, the fintech focus is laser-sharp: improving credit access. In markets like Mexico and Brazil, millions remain unbanked or underbanked. Traditional credit scoring fails these populations, leaving them outside the formal financial system.

That’s where platforms like Quash.ai are stepping in. By analyzing alternative data—everything from telco activity and purchasing habits to psychometric inputs—these platforms help financial institutions assess creditworthiness beyond the traditional credit score. The impact? A 20% increase in origination rates without additional risk.

How AI Is Changing Credit Scoring

Quash.ai is leveraging artificial intelligence not just to process data, but to rethink credit evaluation from the ground up. For example, topping up a prepaid phone three times a month or having a stable internet IP address can now serve as credit indicators. Even behavioral data—like how someone answers application questions—plays a role in risk profiling.

The result is faster, fairer access to credit. Financial institutions can use dynamic, data-rich models instead of blunt instruments like FICO scores. And for customers, it’s a chance to prove their creditworthiness through behavior—not just history.

Coaching Creditworthy Behavior with AI

The real future of credit scoring lies in behavior change. With machine learning and natural language tools like ChatGPT, it’s possible to coach customers toward better financial habits.

Banks can offer feedback and nudges based on real-time data, helping users understand how to improve their credit profiles. For example, if someone’s informal income isn’t reported, the system could suggest uploading receipts or payment confirmations to strengthen their application. It’s about turning rejection into education.

Fintech Innovation in Emerging Markets: A Path Forward

South Africa and LATAM are showing what fintech can accomplish when it meets real-world needs. Whether it’s streamlining funeral cover, enhancing credit access, or building trust in digital payments, these regions are making progress by focusing on practical, scalable solutions.

AI, alternative data, and grassroots collaboration are leading the charge. But it’s the human element—education, inclusion, and trust—that will determine the long-term impact.