Indian fintech firm M2P raises US$100m for African expansion

Indian fintech company M2P Fintech is set to expand its presence in Africa following a recent capital injection from Helios Investment Partners, an investment firm focused on the continent. Helios, known for backing companies such as Vivo Energy, Helios Towers, and Interswitch, has led a US$100m investment round in M2P to support its African expansion.

Based in the southern Indian city of Chennai, M2P was founded in 2014 by three friends Madhusudanan R, Muthukumar A, and Prabhu R as an API infrastructure company providing technology to help businesses connect their systems. It has since evolved to become one of the world’s largest banking-as-a-service (BaaS) players. BaaS refers to a platform that enables businesses – including banks, fintechs, and non-financial companies – to integrate financial services like digital payments, lending, and core banking into their operations without having to build their own systems. M2P now operates in over 30 countries, supporting over 200 banks, 300 lenders, and 800 financial technology companies, reaching more than 50 million users.

Africa has become the fastest-growing international market for M2P, driven by rapid fintech innovation, financial inclusion, and the digitisation of banking services. The African BaaS and infrastructure API market is still underdeveloped. According to Helios, many of the existing local providers are limited in scope, focusing on single regions or specific products. This presents a significant opportunity for M2P to penetrate the market, leveraging its broad product range and expanding geographical presence. Helios believes M2P’s extensive experience in Africa will help accelerate growth and revenues.

Africa is home to over 1000 fintech companies, with nearly half of them established since 2017. While payments dominate the sector, other areas such as account services and lending are beginning to gain traction. Since 2000, African fintech firms have raised US$6.6bn in equity financing, with investment growing at a compound annual growth rate (CAGR) of 57%, compared to 27% globally.

Projections indicate that Africa will be the fastest-growing fintech market between 2023 and 2030, with revenues expected to increase 13-fold, compared to a global average of six-fold. Several factors underpin this anticipated growth. Africa has the world's fastest-growing population and strong GDP growth forecasts, yet financial services penetration remains low. For instance, despite the widespread adoption of mobile money, 90% of payments are still made in cash, compared to 56% globally in 2022. Similarly, domestic credit to the private sector stands at just 37% of GDP, compared to 145% globally, and gross written premiums (GWP) in the insurance sector are half the global average by percentage of GDP.

Cross-border payment costs are also a significant challenge, with transfer fees ranging between 12% and 20% in Africa, compared to the global average of 6%. Additionally, a large segment of the population remains unbanked or underbanked, with only 40% of adults in Sub-Saharan Africa (SSA) having a bank account, far below the global average of 74% in 2021.

 

References

‘Know all about Indian Fintech started over a cup of tea | M2P Fintech’, Startup Duniya, 17 November 2021

‘Unlocking the fintech potential in Africa’, Boston Consulting Group, 2023

‘Tech Translated: Banking as a Service (BaaS)’, PwC, 11 July 2024

‘Helios leads $100 million Series D funding round in M2P to support its expansion across Africa’, Helios Investment Partners, 24 September 2024