The rise of Fin Techs
One of the critical challenges which banks and financial institutions across the African continent need to address is that of financial inclusion.
One of the critical challenges which banks and financial institutions across the African continent need to address is the issue of financial inclusion. In response, a number of Fin Techs have built solutions to address this issue which is requiring traditional banks to respond appropriately or risk losing market share.
In addition to Fin Techs, the continent’s banking and financial services landscape is increasingly being encroached on by mobile telecommunications operators. Safaricom, for example, controls more than 60% of Kenya’s mobile market with around 31 million subscribers.
The company - of which both Vodacom and the Kenyan government hold a 35% stake, with a 5% stake from Vodafone - established the successful M-Pesa mobile money product. Safaricom partnered with Kenyan banks CBA Group and KCB, allowing the banks to lend to customers and take deposits via the M-Pesa platform. It has recently renewed a partnership agreement with Equity Group, Kenya’s second biggest bank by assets, to expand its digital financial businesses and revamp the M-Kesho banking application.
Given the enthusiasm with which most in Africa have adopted mobile technologies, it’s perhaps no surprise that mobile has become key to the provision of financial services.
Mobile technologies have been instrumental in deepening financial inclusion across Africa, says Sola David-Borha, Chief Executive of Standard Bank’s Africa Regions.
Mobile banking today is so ubiquitous, so convenient and so taken for granted, that it’s easy to forget how revolutionary it is. There’s almost no reason these days for someone with a smart phone to enter a branch. That’s an enormous change over less than a decade.Sola David-Borha, Chief Executive - Standard Bank’s Africa Regions
According to the World Bank, sub-Saharan Africa is a global leader in mobile money innovation, adoption and usage, leading the world in mobile money accounts per capita, mobile money outlets and volume of mobile money transactions. The World Bank says close to 10% of GDP transactions are occurring through mobile money.
In fact, there are more mobile money accounts than traditional accounts in the region, according to the African Development Bank. In countries such as Gabon, Ghana, Kenya, Namibia, Tanzania, Uganda and Zimbabwe, more than 40% of the adult population use mobile money on an active basis.
In South Africa, certain external best practice regulations have a negative impact on innovation, says SA Banking Association MD Cas Coovadia.
SA tried to implement M-Pesa through Nedbank, but because it was subject to international banking regulations, it never succeeded here. Unlike Kenya which took the view that although it brought risk into the industry, they would manage that risk.Cas Coovadia, MD - SA Banking Association
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