Deepening Digitisation And The Future Of Banking In Africa

Crosby Mkhwanazi, Group Head of Transactional Products and Services at Standard Bank Group

Digital acceleration is transforming the banking sector globally and Africa is no exception. Technological advancements are increasingly shaping how financial products are distributed, how clients are served, and how underlying financial infrastructures are scaled.

Moreover, digitisation has sparked a marked adjustment in power away from just large corporates but towards all segments of clients, other stakeholders, and society at large. With digital disruption impacting almost every industry, clients have come to expect personalised service that can be accessed anywhere, at any time, via their preferred touchpoints. The new competitive advantages are built around great personalised client experiences and affinity towards a common purpose. Clients will continually expect greater levels of personalisation and it is important for organisations to understand that those demands cannot always be delivered through internal capabilities.

To succeed in this new world, strong partnerships must be established at various levels of the value chain. Knowledge, capability and skills are still being developed in this space and therefore organisations must actively develop and partner to leverage the requisite skills to take advantage of deepening digitisation across Africa.

The 2021 Sibos conference debated the topic of ‘recharging global finance’, looking at how the financial ecosystem can reassess and reenergise to meet client, regulatory and societal demands of the future. While a global conference, a number of key insights emanating from the conference have strong applicability within the African context: the evolution and modernisation of cross border payments; mobile money and driving payment capabilities within informal sectors; and the exponential growth and role played by fintechs.

The evolution and modernisation of cross border payments is a hot topic globally, and critical to Africa’s growth story as the implementation of the Africa Continental Free Trade agreement gains momentum. We need to make cross border payments a lot easier in terms of facilitation, execution and costs.

Mobile money and driving payments capabilities in the informal sectors to create more inclusivity in banking continues to be a key theme for Africa. The World Bank estimates that 85.8% of employment in Africa is informal and therefore, the backbone of economic activity. By contrast, only 25.1% of employment is informal in Europe and Central Asia. Mobile money also tends to be the cheaper, more available means of payment on the continent signifying its growing importance to banking institutions. Not only does it contribute to inclusive banking through payments, but banks will be able to collect more data on people moving money around and be able to offer products such as credit extensions and loans to people who previously weren’t able to access such products due to a lack of a formal bank account and no record history. The more we digitise payments the more we will drive inclusivity in banking which is key to driving sustainable and inclusive growth across Africa.

The exponential growth of fintechs and the role they are playing on the continent is becoming a much bigger component of the payments value chain in Africa. Globally, partnerships between traditional banking institutions and fintechs is on the rise, driven by the need to develop better solutions for customers. This too is a growing theme on the continent as competitive lines are constantly redrawn and constant innovation and reinvention is imperative to success.

With the future of treasury management services becoming more complex and centralised, Standard Bank partnered with a fintech and co-created Treasury Management Services which is a single-entry treasury management system platform that provides risk management practices, controls cash in a centralised manner and provides greater levels of cash management, close to real-time. In turn, allowing CFO’s and their teams to manage their value chains end-to-end without logging into multiple banking systems.

Over the past few years, Standard Bank has made significant structural changes to better serve clients. These shifts have allowed us to realise a more seamless delivery of financial services to our diverse customer base, reduce time and costs, and allow the organisation to innovate more quickly and efficiently. We will continue leveraging our scale advantages and strengths to defend and grow our current position in the market, while accelerating toward our 2025 Ambition of becoming a client-centric, digitally enabled platform business.

To take advantage of the platform economy and digital acceleration across Africa, banks will need to embrace partnerships and build the skills and capability to manage diverse networks. Organisations will then need to invest to gain a competitive advantage. Knowledge, capability, and skills are still being developed in this space, especially in Africa. Therefore, organisations must actively invest in developing these partnerships to leverage the requisite skills to take advantage of the opportunities offered in areas such a cross border payments, mobile money and driving payments capabilities in the informal sectors.

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