Africa’s fintech industry is entering a more difficult phase of growth as rising cloud costs, cybersecurity requirements and tightening regulation begin to put pressure on the margins of companies that once benefited from the relatively low cost and flexibility of cloud infrastructure.
A recent poll of 400 fintech leaders by Africa Hyperscalers found that cloud cost was the biggest infrastructure challenge confronting fintechs as they scale, accounting for 60 percent of responses. Cybersecurity followed at 18 percent, regulation at 13 percent, local hosting at five percent and service reliability at four percent.
While the poll should be viewed as an industry signal rather than a representative survey, the scale of the response highlights a growing concern, in that, infrastructure is moving from a technology issue to a fundamental question of fintech profitability.
For years, cloud computing allowed African fintechs to avoid the heavy upfront investment associated with traditional data centres. Payment companies, digital lenders, remittance platforms and neobanks could deploy applications quickly, add computing capacity as customers increased and enter new markets without building physical infrastructure.
