For decades, the rigidity and risk-averse culture of legacy banking systems have limited the access that millions of Africans have to basic banking services. However, the recent wave of fintech solutions sweeping across the continent is changing that narrative. Previously unbanked and underserved customers now have more accessible and cost-effective alternatives to traditional banking solutions thanks to digital banks and other related fintech sub-sectors.
By digitizing banking solutions, leveraging the recent surge in smartphone penetration in Africa, and tapping into innovative offline strategies such as agency banking, neobanks now provide critical services, including current and savings accounts, investments vehicles, money transfers, payment solutions, loans, and more. They are getting to places beyond the reach of traditional banks, shaping and meeting customer expectations, and changing the face of Africa’s banking industry.
Interestingly, some legacy banks are also evolving their processes to integrate fintech capabilities either by launching their own products or collaborating with fintech companies. The result of these developments is an African banking ecosystem that is seeing “collaborative competitiveness” between incumbent banks and emerging neobanks.
Although banks are making inroads into the fintech space, stakeholders believe they are not moving fast enough, a view that has spurred predictions like the possible extinction of traditional banks sooner than later.
Yves Eonnet at #AFTSCapeTown2022 attributed this slow evolution to several factors, “No, I don’t think they are (evolving fast enough), but again it’s not easy. It’s complex for a bank because it has to deal with regulations. It has to deal with its legacy system, which is so heavy. It also has to deal with, as you said, some old people, some young people, I mean, everybody doesn’t go to the same place,” the Skaleet founder and CEO said.
Despite the traction that digital banking services have gained, some stakeholders don’t believe they will push legacy financial institutions into extinction, at least not by 2030 as suggested in some quarters. On this, Dr. Tomisin Fashina, Ecobank Group Executive – Operations and Technology, said, “I don’t think that banking will be fully digital in 2030, which is eight years away. We’re still going to have the grandmas and grandpas — the older population that do banking in the traditional way. We’re still going to have in Africa people that like to go to the bank because it’s their social outing for the day.
“I think the future is more about a hybrid format. It will not be a hundred percent digital and not Brick-and-mortar, rather, it will be a case of finding the right balance between Brick-and-mortar banking and digital banking and ensuring that, more importantly, we can serve our growing customers,” Fashina added.
Conversations around banking in Africa and the place of digital tools in revolutionizing the sector will continue at the upcoming Africa Fintech Summit Washington D.C., which will take place on April 12 at the Walter E. Washington Convention Centre.
AFTSDC2023 is set to continue the AFTS tradition of delivering carefully curated and relevant engagements that foster collaboration, inform regulatory framework design and deliver high-impact insights for growth. At this year’s DC event, expect 80+ speakers across more than 12 panel sessions, several workshops, a VIP Dinner, New Venture Pitch Competition, Startup exhibition, the annual Excellence in Fintech Awards Ceremony, networking happy hour, and much more!
If the reviews from recent AFTS events are anything to go by, AFTSDC2023 will exceed expectations. Don’t miss out on this opportunity to take part in the largest gathering of African and global fintech stakeholders. Tickets for in-person and virtual participation are available on the Africa Fintech Summit website.
About Africa Fintech Summit
AFTS is the premier global initiative dedicated to the African fintech ecosystem. AFTS is traditionally hosted in Washington, D.C., each April during the World Bank/IFC annual meeting week and in a different African city each November (most recently Lagos, Addis Ababa and Cairo). The summit is being held in a hybrid format, in person in the selected Venue in compliance with COVID-19 protocol and global live virtual delegates. The November 2022 summit will take place in Cape Town, South Africa.
Supported by an advisory board of thought leaders and fintech pioneers, AFTS is a unique space where innovative ideas are debated, investments mobilized, partnership deals signed, and collaborations formed across sectors and geographies. AFTS is organized in partnership between Washington, D.C. based firms, strategic advisory group, Dedalus Global, and Pan-African consultancy/advisory firm, Ibex Frontier.