February 28, 2020

African banks ride the digital wave as mobile adoption soars

By
Nabila Jelbaoui
Business Development

For an increasing number of technology companies, Africa, once a continent of limited business prospects and potential, now represents a vastly untapped market.

The catalyst behind such a step change is largely down to the rise of Africa’s tech-savvy consumer base across its 1.5 billion population, powered by mobile.

In the last ten years, Africa has seen an upsurge in mobile ownership and use. A recent Gallup poll showed about two-thirds of Sub-Saharan African households owning at least one mobile phone, in addition to even greater mobile ownership in the Africa’s top five digital markets - South Africa, Nigeria, Egypt, Angola and Morocco. Africa’s mobile revolution is further demonstrated with the continued rollout of internet providers across the continent, with countries like Morocco now providing internet to 26 million people, distributed between multiple providers like Maroc, Telecom, Inwi and Orange.

The rapid growth of mobile networks and phone use has had a profound effect on communications, business, and culture. It has also provided a gateway for many global technology brands to enter the African market. Uber, Facebook, Xiaomi and TransferWise are all examples of brands that have leveraged Africa’s mobile growth to break into the region in recent years. 

One industry that has seen particular disruption is banking. Powered by the rise of mobile, the number of Africans with bank accounts has increased from 170 million in 2012 to 300 million in 2017, with 450 million expected by 2024. Drilling down further, in 2018 approximately 346 million mobile money accounts were registered in Africa compared to 120 million registrations for traditional bank accounts. All of this has catapulted Africa to become the second fastest growing market in the world for electronic payments, with 40% of Africans now preferring to use digital means for their banking transactions.

Consequentially, the last few years have seen a massive influx of digital banks enter the market looking to scoop up customers, in addition to the rise of homegrown start-ups/scale-ups who have the advantage of deeper knowledge and understanding of local customer and demographic nuances compared to outside entrants.

Just two years after launching in 2016, L’Banka Lik, the mobile bank of Moroccan Attijarwafa Bank, was able to capture 7 million connections per month, in doing so grasping a 31% market share. In South Africa, Jumo has quickly enabled partners such as Barclays to provide 50,000 per day, whereas digital payment startup ChipperCash has attracted more than 70,000 active users, processing 250,000 transactions less than a year after a launching, recently expanding into Nigeria.

Many Africans now face a plethora of digital banking options whereas a few years ago there were none. But while those local banks should be applauded for jumping onto the digital wave so quickly, fierce competition has heightened their need to differentiate themselves by offering smarter, more innovative services to attract new customers and better engage existing account holders.

This is where products like Upgrade Pack are worth their weight in gold. Easy to roll out to customers and designed to offer a more valuable reward compared with traditional customer incentives, Upgrade Pack empowers banks to really stand out in a competitive market. And with digital banking enabling Africans to improve their financial wellness, having access to exclusive, discounted travel upgrades couldn’t be a smarter offering in 2020.

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