This article was written by Malek Ferdi, Senior Director of Africa at Diebold Nixdorf. The original article was published by PaymentsAfrika. You can find the article here. 

Banks in Africa

While the African banking sector has regularly demonstrated its resilience, it still needs to address the issues of inclusivity and sustainability in its various territories to cement its transformation in favour of citizens, entrepreneurs and communities. In search of new challenges, African banks must be able to identify innovations that will enable them to leverage new opportunities to contribute to progress on the continent.

Endowed with vast economic potential, Africa has been experiencing a surge in re-industrialization for some years now. This phenomenon is helping to accelerate the continent’s social and economic evolution. As an essential development tool, banking is one of the dynamic sectors driving this trend.

At a time when many industries were suffering the consequences of the health crisis in 2020, Africa’s robust banks have succeeded in accelerating their deployment through online services. Strengthened in their competitiveness, they have been able to adapt to international standards and embrace a more open, modern ecosystem, in particular, to succeed in the face of the risks and evolutions of African markets and to move upmarket in their services.

Financial innovation has often illustrated itself as a dynamic vector of transformation for Africa but has long remained in the wake of fintech, startups and telecoms operators. With a large proportion of the population having difficulty accessing financial services, these technological structures have enabled the rapid implementation of relevant solutions, including domestic and international payments and transfers. This supports the local economy and meets the needs of previously unaddressed populations via banks with a traditional model.

In addition to mobile money, participatory financing and community investment platforms such as ThriveAgric and FarmCrowdy in Nigeria have provided African entrepreneurs access to alternative financing, promoting local autonomy. The digitization of payments, the rise of mobile financial services and the spread of blockchain, via solutions such as Yellow Card or Bundle, have all contributed to boosting payments and money transfers.

Supported by proactive government regulations in countries such as Nigeria, Rwanda and Kenya, African banks now have a favourable environment in which to play a key role in innovation on the continent for the benefit of reliable and transparent services and to drive projects linked to digital and sustainable finance.

With the resources at their disposal, they can support the continent’s transformation by getting involved in financial inclusion projects, such as micro-credit and micro-insurance. To fully play this role and ensure their economic resilience, however, they need to be able to deploy advanced services that can be adapted to local specificities without jeopardizing their business model.

In the face of rapid change in Africa, banks need to consider strong technology partnerships to meet the needs of a rapidly expanding market and support their strategy. In addition to reducing costs and improving security, partners are called upon to modernize bank infrastructures, adapting solutions to local constraints such as poor connectivity and power cuts.

Focusing on issues of financial inclusion and sustainability, the partners’ mission is to develop accessible solutions and agile customer paths, particularly for unbanked populations, while offering intelligent solutions capable of managing their electricity consumption as their source of energy.

Looking to the future, Africa is on the path to strong economic growth, a turning point that can only be achieved with increased financial inclusion. Many challenges remain, requiring the continent’s banks to modernize their services to offer sustainable and equitable access to financial services. Supported by technology partners dedicated to banking issues and with a perfect understanding of local constraints, this ambitious project is now within the reach of African banks wishing to contribute to a better future.