Pioneering The Future Of Banking In Africa

The banking sector in Africa is at an important juncture in its transformation journey. The industry has achieved significant milestones. At the same time, challenges remain around navigating increased competition, evolving regulations, and the need to expand finance access and inclusion. To thrive amidst these complexities, banks must embrace a digital-first strategy across their organisations. This approach opens the door to greater financial inclusion as well as faster and more efficient customer onboarding and originations that can serve as catalysts for differentiation.

Seamless customer experiences, remote account openings, and innovative lending products can all accelerate growth. And, a rapidly unfolding landscape of digital payments—with the ascent of networks, like the Pan-African Payment and Settlement System (PAPSS) that promises interoperability across the continent—is key to expanding financial and economic inclusion for unbanked and underbanked individuals.

As pioneers lead the industry forward, a collaborative approach toward addressing pain points can unlock mutual value and shape a more robust financial ecosystem. Though the path has obstacles, greater financial access and efficiency are both within reach, and Oracle Financial Services is helping leaders to set a path for a new era of banking innovation across Africa.

“Banks of the future will be characterised by digital innovation, customer centricity, ecosystem integration, sustainability, regulatory compliance, and resilience. Embracing these principles will enable banks to adapt to the digital age, drive sustainable growth, and position themselves as trusted partners in the customer’s financial journey, stated Habil Olaka, CEO of the Kenya Bankers Association.

An Evolving Landscape

Across the continent, several common trends underscore both the opportunities and challenges facing African financial institutions.

Economic Opportunity On The Horizon

Significant economic development on the horizon across the continent is expected to lead to new growth opportunities for banks and other financial enterprises. Recent McKinsey reports indicate that Africa already hosts over 400 companies with annual revenues exceeding $1 billion, and the African Continental Free Trade Area, which fosters connections among numerous countries, will likely fuel additional growth. As cross-border economic opportunities continue to grow, the landscape of digital payments is evolving rapidly. The ascent of payment networks is becoming increasingly critical, as are corporate customers who require advanced control over their working capital.

High operational costs and growing competition pose a threat to profitability.

African banks face high operational costs, with an average cost-to-asset ratio of 4 to 5 per cent—nearly double the global average continues the report. Since 2016, profitability in Africa’s five major banking markets (Egypt, Kenya, Morocco, Nigeria, and South Africa)…