Africa’s Financial Evolution Towards Digital Banking
In the realm of Africa’s financial sector, a significant evolution is underway towards digital banking. This transformation, highlighted by finance leader Backbase and African Banker magazine through the Africa Digital Banking Experience Series 2025, delves into the essence of ‘Next Gen Retail Banking’ as elaborated by Neil Ford.
The transition to digital banking in Africa, initially rooted in the retail domain, is now branching out to encompass small enterprises, corporates, businesses, and investments. There is a noticeable shift in how banks cater to retail customers, expanding their product range and focusing on customer-centric services to enhance revenue and foster personalized interactions.
Diversity in strategies and origins among market players is propelling innovation in the sector. Traditional banks in Africa face challenges from digital-first entities and neobanks, while telecom and mobile money providers present additional competition, all benefiting from the realm of fintech developers.
Digital-first banks have the advantage of evading legacy costs carried by established banks. This propels them to build futuristic platforms at reduced long-term costs compared to maintaining extensive branch networks. The recent Next Gen Retail Banking report revealed three pivotal priorities in African digital banking: enhancing operational efficiency, broadening financial service accessibility, and expanding market outreach.
Taking the lead, certain countries like South Africa and Kenya have swiftly enacted supportive regulations to drive investments. South Africa hosts key digital-first banks like Tyme Bank, while Kenya emerges as a hub for digital financial services innovation.
The surge in digital banking not only curtails costs but also extends financial services to the unbanked populace, enabling them to secure accounts despite the absence of local branches. While the percentage of population with financial service access shows a rising trend, it lingers at 55%, with an even smaller fraction engaging in digital banking services.
Both digital-first and traditional banks have directed efforts towards launching mobile and online banking platforms, initially offering basic services and gradually augmenting their range to encompass lending and refined customer relationships.
This evolution emphasizes bespoke service delivery to individual customers, although the shift from face-to-face to digital services poses a barrier between banks and customers. However, customer-centric methodologies aim to bridge this gap by fostering personalized relationships, leveraging detailed customer data to tailor product offerings.
