By Bongiwe Gangeni, Head of Consumer, Private and Business Banking, Africa & Middle East, and Europe (AME/E), Standard Chartered
The global financial landscape has changed profoundly in the aftermath of the COVID-19 pandemic, with digitalisation regarded as a key driver in this process. During their post-pandemic routes to recovery, banks around the world have increasingly moved away from conventional banking methods toward more data-driven, digital business models. This has come in response to the growing demands for instant and personalised services, with many consumer touchpoints becoming online-only. While these changes have been in motion for several years, the pandemic is viewed as a catalyst driving the availability and appetite for digital financial services.
This shift has been particularly pronounced in Africa and the Middle East, where many banks have digitally upgraded a significant share of their operations, with tech-rich countries such as Kenya, South Africa, Nigeria and the United Arab Emirates (UAE) adopting holistic omnichannel strategies encompassing both digital and physical channels.
Expanding financial reach
This widespread adoption of digital financial services has not only allowed banks to streamline their operations and enhance efficiency but has also been instrumental in expanding financial inclusion. By breaking geographical barriers and reaching previously underserved communities, digitalisation has democratised access to financial products and services, fostering economic growth and social development in the region.
Across Africa, the acceleration of access to banking services continued in 2022, largely due to the popularity of mobile money and digital banking. Nearly half of Africans had access to digital banking last year. Notwithstanding, much of the population remains unbanked, even as the financial-services industry is expected to grow rapidly, generating $230 billion in annual revenues by 20251.
Expanding access to financial services can support a more inclusive economic recovery and speed up innovation in the industry, especially in Africa. The World Bank supports this view, urging policymakers to foster innovation within and outside the banking sector by creating headroom for new players and products. This needs to be backed by an open regulatory framework and expanding traditional infrastructure, such as credit registries and payment systems, beyond banks2.
Kenya is an illustrative example of this. In 2022, the Central Bank of Kenya (CBK) operationalised the Digital Credit Providers Regulations, expanding its mandate to include Digital Credit Providers (DCPs). These regulations apply to all entities wishing to carry out credit facilities or loan services through digital channels in Kenya, including the previously unregulated non-deposit-taking microfinance institutions. So far, close to 10 percent of the 288 existing digital lenders have been cleared to operate in the country, providing instant loans to borrowers who may not otherwise have had access3.
With increased digitalisation, however, also comes the heightened risk of cybercrime. Reports show that cyberattacks in the banking sector rose during the pandemic as customers moved to digital platforms and governments minimised people’s movements. In Africa, cybersecurity-related incidents result in losses between $3.5 billion and $4 billion annually, a figure that has grown by almost 22 percent since 2020. It is, therefore, not surprising that 97 percent of surveyed executives at top financial institutions in Africa consider cybercrime a significant threat4.
While many of today’s attacks are increasingly sophisticated and rely on social engineering to persuade a victim to provide sensitive information, there remain instances of successful attacks resulting from routine lapses—such as failing to deploy patch updates or enter the correct security configurations. In this context, habitual practices to handle critical data safely and secure networks can make all the difference.
The good news is that African governments are not taking the rise in cybercrime lightly. So far, 33 of Africa’s 54 countries, including Nigeria, South Africa and Egypt, have all enacted cybersecurity legislation5. Not only are these countries enacting such legislation, but they are also creating data-protection laws that require companies to employ standard cybersecurity protocols.
According to a recent survey conducted by Deloitte, financial institutions in Africa consider cybersecurity a top priority for future digital investments to ensure adequate safeguards are in place to prevent and mitigate the impacts of cyberattacks6.
Cyber-risks transcend geographic borders. This realisation has seen central banks and financial authorities reach out to their peers in neighbouring countries to coordinate, cooperate and establish joint initiatives where appropriate.
Innovation every step of the way
The move to electronic and mobile banking builds on the premise of providing a seamless omnichannel customer experience. Customers now rely less on cash and cheques, showing an increasing interest in digital banking. This trend presents an opportunity to introduce innovative ideas that can significantly enhance customer experiences and drive value for banks.
One such area is artificial intelligence (AI), which can improve personalisation by analysing customer behaviours and providing customised support in real-time. AI tools can also increase the speed of service delivery by automating routine tasks and freeing customer-service executives to focus on more complex issues. AI can even aid in fraud detection, flagging suspicious activities more accurately. The “African Digital Banking Transformation Report 2023” cites nearly 69 percent of survey participants stating that AI will be the most important technology trend for African banks in 20237.
However, it is important to note that customers still value bank branches. Human interaction is especially required for transactions that necessitate advice or assistance, and legacy banks continue to rely on customer trust and relationships built over the years. One downside of digital banking is that it can often come across as impersonal, despite the convenience and accessibility it offers. It is thus vital that conventional and new-age banks place their customers at the heart of their digital strategies and avoid a siloed approach, instead creating a unified experience through integrated banking platforms.
While responding to the increasing demands for digital and innovative solutions, banks have also sought to collaborate with other players outside of banking. A case in point is the collaboration between banks and fintech (financial technology) companies to offer short-term loans in a competitive and agile manner. These partnerships allow banks to leverage the innovative capabilities of fintechs, providing customers with new financial solutions, such as mobile wallets, digital lending and innovative payment options.
The post-pandemic banking landscape in Africa and the Middle East is witnessing a rapid shift toward digitalisation, innovation and customer-centricity. By embracing these changes and staying agile, banks can better serve their customers and contribute to the region’s economic development and growth.
1 African Business: “African Digital Banking Transformation Report 2023.”
2 The World Bank: “Financing Africa: Through the Crisis and Beyond.”
3 Central Bank of Kenya (CBK): “Licensing of Digital Credit Providers,” January 20, 2023, Press Release.
4 Deloitte/Africa Financial Industry Summit: “African Financial Industry Barometer,” April 2023.
5 KPMG: “Africa Cyber Security Outlook,” John Anyanwu, Marcelo Vieira and Anthony Muiyuro, September 2022.
6 Deloitte/Africa Financial Industry Summit: “African Financial Industry Barometer,” April 2023.
7 African Business/African Banker: “The African Digital Banking Transformation Report 2023,” May 2023.