Digital Financial Services Are Key to The future of Africa’s Banking Sector

Mobile

May 29, 2018//-The impressive growth in financial inclusion in Sub-Saharan Africa (SSA) over the last few years has been driven primarily by mobile money and agent banking.

By and large, the growth in traditional financial institution accounts lag behind. Where they do increase, it often appears to be on the back of the mobile money revolution.

The message is clear: the future of the financial sector on the continent is digital. While East Africa has long been the star performer in terms of the evolution of digital financial services, West Africa is the new growth market.

Not only in terms of reach, but also for innovation. Banks in the sub-region are increasingly forming partnerships with mobile money operators to offer accessible and affordable services beyond the historical target market, and are investing in their own digital operations to build new ways of banking.

Fintechs have sprung up from Dakar to Lagos, and the regulatory environment continues to improve. There is every reason to believe that the early success of East Africa will be replicated and even surpassed in West Africa.

Fintechs have sprung up from Dakar to Lagos, and the regulatory environment continues to improve. There is every reason to believe that the early success of East Africa will be replicated and even surpassed in West…

There is a need in the broader industry across the continent to shift to the next generation of digital products. A broader, more multi-faceted market is asking for more sophisticated and relevant products beyond person-to-person payments.

There are evident opportunities to develop digital banking, savings and credit products, as well as the digitization of value chain financing and merchant payments.

This can significantly improve customer benefits and usage, as well as long-term sustainability for providers.

The customer is the new boss in town. As the lines between providers are becoming increasingly blurred, users don’t necessarily care about who or what kind of entity the provider is, as long as they can access the services they desire.

Banks, microfinance institutions, mobile network operators, payments service providers and fintechs are all exploring competing services across the region.

Understanding mass market customer needs will be the key to success. More than ever before, it is an open field. The true winner is the African consumer, who is no longer excluded from the benefits of financial services.

 By Riadh Naouar, IFC Head, Financial Institutions Group Advisory, Sub-Saharan Africa

Digital Access: The Future of Financial Inclusion in Africa, 2018

 

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