A total of 39% of banks in Africa now ringfence at least $3 million per year for digital transformation and innovation. This is according to a survey that tracked financial technology transformation in Africa’s banking sector.
From the survey, it can be said that there is now an overwhelming consensus over how crucial digital transformation is to the future of African banking:
- About 60% described it as the single most crucial factor, and
- Another 34% stated it was among their top three priorities
- Since the last survey, there has also been an increase in the size of budgets allocated by banks to digital development
- A massive 49% of African banks said that they had significantly increased the speed of implementation because of the pandemic
- Almost 81% of respondents described themselves as being open to change
However, the survey shows that banks were already attempting to shift from the traditional model before the pandemic, a trend informed by competition from fintechs and digital players.
Another challenge highlighted in this report is the lack of inclusion of African small and medium enterprises in the new digital platforms and the banking system in general.
Indeed, SMEs are often afraid of banks’ enormous fees for digital services. On the other hand, banks have missed the opportunity as the new fintechs to lure SMEs.
Fortunately, some lenders have adopted strategies to address these issues, and their efforts could inspire the industry.
The survey also found that banks lack a skilled workforce, with 465 of those interviewed regarding this as the biggest threat.
The survey was conducted by African Banker magazine and BackBase, an engagement banking Platform. The magazine’s editorial team surveyed more than 100 banks.
Read / Download the survey below: