Without a doubt, Africa is currently undergoing a ‘Financial Revolution’ caused by new startups in fintech. Traditional financial service providers, banks appear to be scrambling to keep up with the trend.
For a long time, banks had the opportunity to reform the financial sector. However, due to the competition provided by fintech companies, they have been slow till now. How can these financial institutions possibly catch up and gain an advantage? According to a recent report by CR2, a Dublin-based financial software vendor, this is an important talking point.
Africa’s fintech takeover is being fueled by advances in mobile internet usage and revenue from international venture capitalists, according to the paper titled “Africa’s Fintech Transformation: Traditional Banks Can Still Gain an Edge”.
The success of M-Pesa in Kenya, which was able to emerge as a compelling case study on the sustainability and scalability of financial technology on the continent while not being supported by any VC funds, piqued investors’ interest in African fintech.
As a result of this, foreign investors have crowded to the continent, bringing with them billions of dollars from years back which have mostly gone into fintech startups. Some of which are Paystack, Chipper Cash, and other fintech startups are now giving traditional banks a run for their money. Many thanks to partnerships with some globally-recognized financial players like PayPal and Visa, the rush continues to grow in favor of African fintech.
Although, this does not necessarily mean that African banks have been rendered completely powerless in the face of impending revolution. As the new report by CR2 already said, some of the biggest banks on the continent went into a state of panic early and ever since, have begun to improve on their ‘legacy infrastructure’ and at the same time building new ones, just to be able to meet more unbanked customers. However, there is more they can do. CR2 recommended the below as a way African banks can gain an advantage in the face of the impending digital revolution happening in the African financial economy.
1. African banks should look into considering offering a seamless digital training experience for their customers.
2. They should widen their service offerings to unbanked market segments.
3. African banks should look into providing day-to-day payment options for customers and also include innovative remittances and lifestyle banking.
4. They should pick a digital banking platform vendor that supports Open API banking.
5. African banks should operate on both smartphones and USSD to expand access to segments of Africa’s population, with or without the connectivity of Wi-Fi and other mobile phone features.
6. African banks should also connect ATM access to continue to give access to cash parallel to online payment options.
Amidst Fintech Boom, Analysis Shows How African Banks May Still Have An Advantage
