Across Africa, the development of financial services is following a path that looks very different from the one taken in Europe or North America. Instead of spending years modernising ageing core banking systems, many African fintech companies, mobile money operators, and even licensed financial institutions are building digital financial services without relying on traditional banking infrastructure at all.
This is not a temporary workaround or a response to limited resources. It is a deliberate and increasingly mature model shaped by local conditions, market demand, and regulatory choices.
Banking without a heavy past
In large parts of Africa, traditional banking never achieved broad coverage. Physical branches were concentrated in urban centres, account opening was slow, and fees were often out of reach for everyday users. For many households and small businesses, banks were present in theory but absent in practice.
When digital financial services began to expand, there was no deeply embedded legacy system serving the majority of the population. As a result, new providers were not constrained by the need to integrate with or gradually replace decades-old infrastructure. They were free to design systems around how people actually transact.
Mobile use shaped financial behaviour early
Africa’s financial digitisation did not move step by step from branches to online banking and then to mobile apps. In many countries, it started with mobile.
Basic phones, USSD technology, and agent networks made it possible to move money, pay bills, and store value without a bank account or a smartphone. Over time, these services evolved into full digital wallets and payment platforms.
This mobile-first reality demanded a different type of infrastructure. Systems needed to operate in real time, process large numbers of small transactions, and remain reliable in environments with uneven connectivity. Traditional banking cores, designed for overnight batch processing and branch-led operations, were not built for these conditions.
Financial inclusion expanded outside banks
Recent data shows how far this model has progressed. According to Global Findex 2025, the share of adults in Sub-Saharan Africa who have either a bank account or a mobile money account rose from 34% in 2014 to 58% in 2024. A substantial part of this increase came from mobile money accounts rather than conventional banking relationships.
For millions of people, their first formal interaction with the financial system was not through a bank branch, but through a mobile wallet. That starting point fundamentally changed expectations around speed, access, and cost.
A fast-growing fintech market
The infrastructure supporting this shift has expanded rapidly. Between 2021 and 2025, Africa’s fintech sector grew at an estimated compound annual growth rate of around 38%, with mobile payments, digital wallets, and API-based platforms leading the way.
These segments grew fastest because they address everyday needs: paying merchants, sending money, receiving wages, and integrating payments into transport, retail, and telecom services. Instead of investing in large, monolithic banking systems, many companies opted for modular architectures that can scale transaction volumes and adapt to regulatory changes with less friction.
Economics matter as much as technology
Modernising a traditional core banking system is costly and time-consuming. It often involves long implementation cycles, complex data migrations, and ongoing dependence on a limited set of vendors. For new entrants, especially those serving first-time users, this investment rarely makes economic sense.
Building on modern, ledger-based systems allows financial service providers to launch faster, adjust products incrementally, and direct capital towards compliance, distribution, and customer trust rather than infrastructure maintenance.
Regulation Made Space for New Models
Regulatory frameworks across Africa have also enabled this shift. Many countries introduced licences for mobile money operators, payment service providers, and electronic money institutions that sit alongside, rather than inside, traditional banking regulation.
These frameworks allow non-bank entities to issue stored value and process payments under defined safeguards. As a result, providers are not required to operate full-scale banking cores and can instead rely on transaction-ledger systems combined with compliance and reporting layers.
This approach has encouraged innovation without abandoning oversight.
What Replaced Legacy Banking Systems
Skipping legacy infrastructure does not mean abandoning discipline or control. The systems now in use still support reconciliation, audit trails, and regulatory reporting.
The difference lies in structure. Modern fintech stacks in Africa are typically built around real-time transaction ledgers, API-first integrations with payment rails and telecom networks, modular compliance tools, and lightweight digital onboarding. Frontend channels are designed for mobile use, while backend systems are built to scale horizontally as transaction volumes grow.
This makes it possible to evolve services without destabilising the financial core.
Platforms as financial foundations
Not every organisation builds this infrastructure internally. Many rely on modular or white-label fintech platforms that provide a ready-made financial backbone.
These platforms reduce time to market and support local deployment models, which is critical in regions with diverse regulatory and infrastructure conditions. Some global providers, including SDK.finance, work with African companies building payment platforms, digital wallets, and embedded finance products without relying on legacy banking systems. In such cases, the platform functions as a neutral financial layer rather than a traditional bank core.
Built for volume, not branches
Africa’s digital finance growth is driven by transaction volume rather than high margins per customer. Systems must process millions of low-value payments reliably and at low cost. Legacy banking platforms were never designed for this pattern.
Modern, modular architectures are better suited to agent networks, merchant ecosystems, remittances, and financial services embedded into everyday applications. They scale with usage rather than organisational complexity.
A Different Path Forward
Africa is often described as “catching up” in financial services. In reality, it is building something different.
By avoiding heavy legacy banking infrastructure, many African markets have created financial systems that are mobile-first, integration-driven, and closely aligned with real-world behaviour. These systems did not emerge despite local constraints. They emerged because of them.
As digital finance continues to expand, the African model offers lessons for any market questioning whether the future of banking must be tied to the past.
