Africa: Digital transformation in banking industry well underway — report
Banking access across Africa has increased in 2022, with 48% of the population having access to banking services, compared to 45% in 2017, according to the latest edition of the African Digital Banking Transformation Report, that attributes the growth to the popularity of mobile money and digital banking.
Overall, the new survey paints a picture of gradual growth and progress when it comes to the demand for digitalization of banking services in the continent and how African banks are dealing with it.
The comprehensive 30-page African Digital Banking Transformation Report, published by African Banker, delves into the latest advancements in the African digital banking landscape, meticulously monitoring the rate of progress, key focus areas for banks, and the strategies employed to establish mobile app and internet banking functionalities.
Apart from these positive developments, the study has also found that approximately 50% of the continent’s population remains unbanked, indicating significant potential for further growth in the sector.
McKinsey, the global management consulting firm, predicts a 10% annual growth rate in the African financial services market, generating $230 billion in annual revenues by 2025.
However, cash still dominates financial transactions in the continent, accounting for about 90%, while electronic or digital channels represent only 5% to 7%. In comparison, Asia and Latin America have a higher digital banking adoption rate of around 50%, the study notes. Nonetheless, a new generation of urban, middle-class customers is emerging, who prefer conducting transactions online.
Younger people are more inclined to adopt digital technology than are their parents and grandparents, suggesting that the uptake of digital banking services will continue to grow. The report also highlights Kenya and Ghana as leaders in adopting digital payments, with mobile wallet transactions in Kenya accounting for as much as 87% of its GDP in 2021.