Oleg Boiko on the Raptures and Risks of Launching Fintech Startups in Emerging Markets

Launching a fintech business in a rapidly developing region may seem like a golden opportunity, but it is often fraught with complex and significant risks. While emerging markets are in clear need of financial innovation, ambition alone is not enough to guarantee success. So how can founders choose the right country and avoid failure?

Emerging markets, especially in Asia and Africa, are witnessing rapid growth in the fintech sector. Asia is projected to lead this growth by 2030, while Africa has experienced a tripling of fintech companies since 2020. Nigeria, South Africa, Kenya, and Egypt now account for 70% of the continent’s fintech firms and 80% of its funding. These regions are attracting global investors due to their promising growth potential. However, they also present various risks, including weak regulatory frameworks, underdeveloped infrastructure, and cybersecurity vulnerabilities, all of which can complicate business operations.

Understanding local cultures and languages is crucial for success in emerging markets, as these factors significantly influence user experience and trust in financial services. Hiring experienced local professionals is equally important. With their deep knowledge of cultural nuances and regulatory landscapes, such individuals play a vital role in driving the success of fintech ventures in the region.

Oleg Boiko, founder of Finstar Financial Group, has outlined several key investment risks associated with launching fintech startups in emerging markets, identifying the following as the most prominent:

Weak Regulation: Many emerging markets have underdeveloped regulatory frameworks, which can pose significant challenges for fintech startups. These weak regulations can lead to legal uncertainties and difficulties in ensuring compliance.

Underdeveloped Infrastructure: Infrastructure limitations can hinder the efficient operation of fintech companies. These include challenges with payment systems, banking networks, and digital connectivity.

Cybersecurity Vulnerabilities: Emerging markets may have less robust cybersecurity measures, increasing the risk of cyber-attacks and data breaches. This can be a major concern for fintech companies that handle sensitive financial information.

Challenges with Payment Systems: In some countries, the payment systems are not well-developed, which can hinder the smooth operation of fintech services. For example, Nigeria has vast market potential, but legal and infrastructure barriers make business operations difficult.

Language and Cultural Barriers: Understanding local languages and cultures is crucial for success. India, for instance, has 58 official languages, and in Kenya, 94% of users rely on Android. These factors must be carefully considered to ensure successful market entry and user adoption.

Regulatory Compliance: Overly strict regulations can hinder scalability. Some jurisdictions enforce data localization laws, requiring foreign companies to store computing resources within national borders. This can significantly raise infrastructure and compliance costs, often forcing companies to adapt or rethink their business models entirely.

Oleg Boiko emphasizes that these risks reinforce the importance of thorough market research and long-term strategic planning for any fintech looking to enter high-growth but high- potential foreign markets.

He also points out that fintech firms should prioritise delivering practical, consumer-focused services over abstract corporate values. Consumers are ultimately seeking accessible, convenient solutions. While automation plays an important role, it should never feel like a forced or impersonal technological imposition.

While entering a new market may not always be the right move if key conditions are lacking, Oleg Boiko maintains that with careful preparation, strong local partnerships, and a deep understanding of the regional context, fintech startups can not only establish a successful presence but also play a vital role in accelerating inclusive economic growth.