From Cape Town to Johannesburg: A Guide to South Africa's Must-Watch Fintech Companies

South Africa, with its bustling urban centers like Johannesburg and Cape Town, has long stood as a locus of trade and investment on the African continent. From the high-rises hosting leading banks like Standard Bank Group and FirstRand to the busy marketplaces where cash still reigns supreme, the nation's financial landscape is a blend of traditional practices and innovative potentials.

Despite an impressive 80% bank account penetration, the thorny issue of a cash-driven economy persists, with nearly 40% of all transactions still made in cold, hard currency. It's a conundrum that costs South Africa hundreds of millions of rand each year, sparking inefficiencies, theft, and economic exclusion. But where problems exist, opportunity knocks, and that's where the emerging world of Fintech steps in.

At an open banking event hosted by Ozow in May 2023, industry leaders gathered around virtual tables to discuss and debate the future of finance in South Africa. From bank APIs to = rapid payment programmes (RPPs), the gears are in motion to reshape the financial infrastructure of a nation.

With Fintech emerging as the largest sector in South Africa's startup ecosystem in 2021, and payments and remittances leading the charge, the country is shaping up as a force in Africa's Fintech revolution.

From underdogs to unicorns, from Cape Town's tech-savvy hubs to Johannesburg's financial powerhouses, Here's why you need to pay attention to the South African Fintechs rewriting the rules of finance. Welcome to South Africa's Fintech frontier.

Akiba Digital

Founder: Tebogo Mokwena

Founded in 2017, Akiba Digital is a South African startup that is revolutionizing the way lenders extend capital to small businesses and individuals. Using alternative datasets, Akiba Digital provides inclusive credit scores that enable lenders to reach people and small businesses otherwise inaccessible by traditional credit bureaus—a problem affecting nearly 80% of small businesses and individuals across Africa.

Akiba Digital recently secured a $1.1 million pre-seed funding round led by Expert DOJO and Oui Capital, along with other notable investors, including a former PayPal executive. The funds will be used to expand Akiba Digital's market share in South Africa and connect over 20,000 SMEs to lenders through its unique ecosystem. Mokwena, a triple major graduate in computer science, genetics, and biochemistry from the University of Cape Town and the University of California (Los Angeles), has a clear vision: to build alternative credit scoring infrastructure that unlocks better financing access for underbanked consumers and small businesses.

With the aim of contributing to Africa's economic growth through technological innovation, Akiba Digital stands as a testament to the transformative potential of Fintech. The company's commitment to inclusivity and the use of alternative data to democratize financial access places it at the forefront of financial innovation, addressing critical financial inclusion challenges in the continent.

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Yoco

Founders: Katlego Maphai (CEO), Carl Wazen (chief business officer), Bradley Wattrus (chief financial officer), Lungisa Matshoba (chief technology officer)

Yoco, founded in 2013 by Katlego Maphai, Carl Wazen, Bradley Wattrus, and Lungisa Matshoba, is a Cape Town-based Fintech startup that provides innovative payment processing solutions for businesses and merchants in South Africa. Recognizing the traditional challenges small businesses face in obtaining card machines, Yoco's product suite includes NFC-enabled and hardware-based card machines, payment gateways, link-based payments, and the Yoco App, an app-based platform for managing sales and tracking performance available on iOS and Android devices. The company's latest innovation, the Yoco Neo Touch card machine, is designed to bring efficiency and seamlessness to small business transactions.

Yoco has successfully secured a total of USD 107 million in funding, with a notable Series-C investment of USD 83 million in 2021 contributed by investors like Dragoneer Investment Group, Breyer Capital, HOF Capital, and others. This investment has fueled Yoco's mission to expand its financial ecosystem encompassing online and in-store payments, business software, and capital, and to extend its market presence beyond South Africa. Boasting a substantial user base of 350,000 merchants, Yoco experienced an impressive 90 percent growth in sales in 2022, reflecting the shift in consumer behavior towards digital transactions. This achievement underscores Yoco's commitment to supporting businesses in their rapid adaptation to changing market needs and solidifies its role as a leader in the payment processing landscape.

Yoco was listed in the top 200 Fintech companies by CNBC and Statista.

Ozow

Founders: Thomas Pays, Lyle Eckstein, and Mitchan Adams

Ozow was founded in 2014 by Thomas Pays, Lyle Eckstein, and Mitchan Adams, provides an instant Electronic Funds Transfer (EFT) payment service, bridging a gap that was previously uncatered to in the market. With headquarters in Sandton, South Africa, Ozow is dedicated to offering accessible, secure, and frictionless digital payments for both businesses and consumers, catering to an impressive 47 million bank account holders. The company has become a leading instant EFT payment provider, filling an essential niche and contributing to the growing digitalization of financial services in South Africa.

Since its inception, Ozow has experienced substantial growth and has expanded its reach through partnerships with various businesses, banks, and financial institutions, most recently with Capitec Bank. These strategic collaborations have allowed Ozow to broaden its scope and strengthen its position in the market. With almost $50 million raised in funding, notably from the Chinese multinational Tencent, Ozow's financial backing underscores its robust performance and potential. The company's focus on making digital payments more seamless reflects a forward-thinking approach and aligns with the global trend toward cashless transactions, marking Ozow as an influential player in the Fintech sector.

Bank Zero

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Founders: Michael Jordaan, Yatin Narsai, and other former First National Bank employees

Bank Zero, established in 2018 by a group of former First National Bank employees, most notably former CEO Michael Jordaan and executive Yatin Narsai, has quickly emerged as a prominent player in the neobanking sector. As an exclusively digital mutual bank in South Africa, Bank Zero offers banking services to both individuals and businesses.

Listed among the top 30 neobanks in the world, alongside giants like SoFi, Revolut, and Bunq, Bank Zero has distinguished itself from many competitors in the neobanking space that have faced challenges due to shifting consumer spending patterns. Instead, the bank has capitalized on the rise in interest rates by venturing into lending. Bank Zero's unique approach relies on a core banking platform, avoiding traditional pre-ready banking packages. Impressively, in the 15 months since its launch, the bank has reported no successful cases of card fraud, a rare accomplishment in an industry where card fraud typically equates to a significant percentage of total spend. Additionally, with a 45% black-owned and 20% female-owned composition, the bank reflects a commitment to diversity and innovation. Bank Zero's success story signifies a disruptive presence in South Africa's banking landscape, illustrating the potential for digital banking to bring robust security and modern financial solutions.

Bank Zero was listed in the top 200 Fintech companies by CNBC and Statista in August of 2023.

22seven

Founders: Christo Davel and Kenny Inggs

22seven, co-founded in 2012 by Christo Davel and Kenny Inggs, has emerged as a leading force within the digital financial planning ecosystem, both in South Africa and globally. With headquarters in Capetown, this Fintech company provides budgeting software services and a technological platform that centralizes and streamlines financial management. Over 580,000 South Africans are leveraging 22seven's services to navigate their financial landscape effectively, opting for the convenience and efficiency of the company's online tools over traditional paper-based methods.

Backed by Old Mutual, 22seven has the substantial resources needed to sustain its trajectory of growth and innovation, reflecting the broader trend of technology reshaping financial planning. The company's innovative budgeting software allows consumers to track all their money in one place, a feature that has propelled 22seven to be featured among the top 20 in the digital financial planning space. Its success positions it alongside global contenders like NerdWallet and Credit Karma, companies that are also leading in innovations in financial planning. Through its focus on empowering consumers and continuous commitment to leveraging technology, 22seven has become a symbol of innovation in the financial sector, reshaping the way people manage their financial lives in the modern era.

22seven was listed in the top 200 Fintech companies by CNBC and Statista in August of 2023.

Franc

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Founders: Sebastian Patel and Thomas Brennan

Franc is a South African investment app founded in 2017 by Sebastian Patel and Thomas Brennan. The startup offers simplified investment access via a mobile app and saw a 400% growth in 2021, leading to the launch of Franc Business, a B2B offering that enables partner businesses to offer investment products to their customers. Franc recently raised ZAR8 million (approximately US$522,000) in a seed extension round, including investment from 4DX Ventures.

The new Franc Business initiative is designed to enhance customer loyalty and value for partner companies through a "plug and play" savings and investment solution. With its simplicity, low cost, and quick integration, Franc aims to democratize investment in South Africa, allowing a broader audience to build wealth over time without the challenges of traditional investment platforms.

Naked Insurance

Founders: Alex Thomson, Sumarie Greybe, and Ernest North

Naked Insurance, a South African insurtech company founded in 2018, leverages artificial intelligence to offer streamlined insurance services for cars, homes, and valuables. With a focus on automation and online communication, Naked Insurance meets the demands of South African millennials, 60% of whom prefer online interaction with insurers. The company recently raised $17 million in Series B funding, led by the International Finance Corporation (IFC), to expand its AI capabilities and tap into Africa’s substantial insurance market.

Unlike traditional insurance models, Naked charges a fixed percentage of customers' premiums, passing cost savings from automation to customers through lower premiums. In years when claims are lower than expected, the surplus is directed to communities and causes chosen by customers. This unique approach sets Naked apart from other African insurtechs and positions it at the forefront of a market where online automation can reduce the cost of a claims journey by 30%.

Tymebank

Founders: Coen Jonker and Sandile Shabalala

Tymebank, an exclusively digital bank founded in 2018, offers customer-centric banking solutions designed to enhance financial inclusion in South Africa. Operating without physical locations, Tymebank leverages self-service kiosks in partnership with major retail chains and an Android app, reducing operational costs and providing accessible financial services to around 11 million previously unbanked South Africans. Offering personal and business accounts, digital banking, and specialized savings plans, Tymebank has rapidly grown to 6.2 million customers by 2023, securing its place as a prominent digital bank and attracting $143 million in investment.

TymeBank's growth and expansion continue to attract significant investment, with the bank recently raising $77.8 million in a pre-Series C round. This round was led by African-focused growth-stage fund Norrsken22 and Swiss global impact investment firm Blue Earth Capital, with participation from Tencent, which increased its stake to become TymeBank's third-largest shareholder. The South African Fintech is also backed by investors like British International Investment, Apis Growth Fund II, and JG Summit Holdings. TymeBank is a member of the Tyme Group of companies headquartered in Singapore, focusing on designing and operating digital banks for emerging markets.

Jumo

Founder: Andrew Watkins-Ball

JUMO, founded in 2015 by CEO Andrew Watkins-Ball, is an online marketplace for consumer & business loans and mobile-based banking channels that focuses on emerging markets. With headquarters in South Africa and London, the company offers lending products to enable entrepreneurs to avail loans and asset finance, tailoring the loan amount, life cycle, and repayment method to individual needs. Through its innovative AI-powered technology stack, JUMO connects banks with traditionally inaccessible customers and helps deploy loans, savings, and insurance services. Its banking-as-a-service platform harnesses artificial intelligence to provide savings, credit products, and financial infrastructure to mobile Fintech platforms and banks.

The company has garnered significant investment, raising more than $200 million in equity and debt rounds. Recent funding includes $120 million in a new round led by Fidelity Management & Research Company, marking Fidelity's first investment in an African company. Visa and London-based investment management firm Kingsway Capital also participated, boosting the company's valuation to $400 million. This comes on the heels of an additional $55 million raised in a previous financing round, underscoring the strong financial support for JUMO's mission to empower entrepreneurs and provide vital financial services in emerging markets.

The Fintech Association of South Africa

And finally, we’re breaking the rules a little here. This isn’t a startup like the others in this list. But ecosystem builders, connectors, and associations are a major part of the Fintech community, and catalyze progress for startups, connecting them to regulators, academia, investors, and so on. To that end, let’s talk about FINASA.

The Fintech Association of South Africa (FINASA) is a non-profit organization, founded in 2022 by a group of prominent Fintech industry leaders who recognized the need for a unified platform. This platform allows Fintech companies, entrepreneurs, investors, and various stakeholders to connect, share ideas, and collaborate on projects, with the common goal of driving innovation and growth in the South African Fintech sector. Today, FINASA is a thriving community, boasting a diverse membership base of Fintech professionals committed to fostering a vibrant ecosystem for financial technology.

FINASA not only serves its members by offering resources, events, workshops, and networking opportunities but also plays a critical role in shaping the Fintech landscape in South Africa. By providing services such as Fintech screening and one-on-one meetings, it helps members showcase their products and services to potential partners and investors.

Images courtesy of: Yoco, Ozow, Bank Zero, 22seven, Akiba Digital, Franc, Naked Insurance, Tymebank, Jumo, and FINASA.

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