Technology finance accounts for more than 50% of the 270 mobile banking offerings sold worldwide, 134 million active accounts listed in 2017, of which more than 84 million are in Sub-Saharan Africa. Since 2010, the African continent has been experiencing an upheaval in its financial ecosystem. Both banks and FinTech and other mobile banking operators compete for technological know-how to gain share in the vast digital finance market on the continent.
Defined as the fact of developing financial services using electronic means of transaction, especially through mobile financial services, allowing transactions via mobile phone, digital finance is very dynamic on the continent even if, moreover, it is still far from the dynamism of Eastern markets. Like the so-called developed countries, digital is becoming a valuable area of value creation on the continent. Africa therefore has assets in a context, more than favorable, marked by a rate of banking often low and very variable depending on the country, for example a low rate of 1.5% noted in Niger. Côte d’Ivoire is defending itself with an honorable rate of 25%, far however from the 80% of bancarisation posted by Mauritius.
On the continent, it is estimated that 80% of adults (out of a total of 330 million) do not have access to conventional banking services. On average, only one in five African families has a current account in a banking institution. In this context, many people do not have access to so-called traditional banking services.
Meanwhile, telephony continues to emulate the continent with a market that is dynamic and constantly changing. According to the World Association of Mobile Operators (GSMA), with a mobile penetration rate of 43%, Sub-Saharan Africa remains the most dynamic mobile market in the world with its subscriber base croissant. By the end of 2016, the region had 420 million subscribers. For these professionals, by 2020, the zone will record more than 1/2 billion unique mobile subscribers.
The continent’s mobile money potential is clear: more than half of all mobile payment accounts in the world are in Africa, especially as Internet usage has increased dramatically. According to the Global Digital 2018 report, the continent recorded a penetration rate of 82% for 1,040 billion mobile connections recorded on the continent in 2017, for an annual increase of 4%, or 45 million new mobile users.
The low rate of banking and the high rate of penetration of mobile telephony push the actors of the sector of the continent to develop parallel financial services to respond favorably to the very strong demand. For example, in the particular case of Côte d’Ivoire, a country in West Africa, digital finance has become a lever for financial inclusion. Currently, nearly 42,827 mobile money points are installed throughout the country and more than 12,845,970 mobile money accounts. In rural areas, the adoption rate of mobile money is 26%, slightly higher than that of urban areas, which is 22%.
In this western part of the continent, in its annual report on financial services via mobile telephony – 2016 published in 2017, the BCEAO reports 36.5 million subscribers of electronic purse accounts in the Union and around. In addition, about 2 million transactions were processed on average per day, with a value of these transactions estimated at 11.5 billion CFA francs.
Digital transformation of banks
For specialists, the healthy market for eBanking on the continent is more profitable for telecom operators who seem to impose their products (e-payment, online money transfer, online bill payment, online registration) to bankers. But for African banks, the integration of this type of offer within their strategies of development of the means of payment is inescapable to retain existing customers, to conquer new ones and not to be doubled on their niche by d ‘ other non-bank businesses.
Aware of this, they have begun their digital transformation. For example, since 2017, banks are more likely to close agencies to accelerate their restructuring, like the pan-African bank Ecobank which, to optimize its costs and invest more in digital to be able to attract more customers on digital platforms, has announced the gradual closure of some of its agencies. In Nigeria, the bank has grown from 479 branches to 405 with its reduction plan. At the same time and surfing on innovation, Ecobank has updated its digital platform. By partnering with Visa and MasterCard, financial electronic payment methods, the Pan-African bank plans to make life easier for its customers and expand its customer base by targeting non-bank players with a mobile phone. With its application, Ecobank Mobile, the bank has processed 9 million transactions, representing a total of more than $ 1 billion since its launch just 18 months ago and claiming five million users.
In Kenya, the African country par excellence witnessing this innovation, the digital fever has seized banking groups that are investing more to catch up in the field of mobile payment and online financial services. Thus, each of the major financial institutions, such as Barclays Bank of Kenya, Kenya Commercial Bank, Standard Chartered or Equity Bank, now has its own application. Equitel (Equity Bank) now has 4.5 million customers and holds a 20% share of the market, behind M-Pesa (78%).
This transformation is not only limited to the launch of money transfer services, but also take charge of opening an account. This is the case of Standard Chartered Bank, which launched its first digital bank in Africa on 14 March 2018 in Abidjan (Côte d’Ivoire). An innovation that allows from a mobile phone, open an account and perform banking if you are connected to the internet.
In Morocco, digitalization is taken very seriously. Almost all banks in the country have their own mobile banking app. Moreover, BMCE Bank, Crédit Agricole Group of Morocco and Société Générale Maroc have just been awarded for encouraging achievements in terms of digital transformation within their respective organizations. In other cases, it was in 2016 that Attijariwafa bank launched its mobile bank, the bankalik which offers the possibility of opening an online account and benefiting from an international Mastercard credit card free of charge.
Other actors in the sector
Like banks, microfinance institutions are also experimenting with the use of mobile technologies for a better proximity to the services they offer to their customers. This new approach explains for example the use of tablets to serve savings groups or partnerships between microfinance institutions and issuers of electronic money to digitize the collection of savings and the reimbursement of mobile loans. This is the case of CAURIE-MF in Senegal, ALIDE in Benin, Advans Microfinance in Côte d’Ivoire … and the only development of a network of banking agents in the region by Microcred Senegal.
Like banks and other players, the money transfer companies, true pioneers of this digital transformation on the continent, are not left out. In Kenya, the telecom operator M-Pesa start-up Safaricom, pioneer of mobile payment in Africa and undisputed leader in the country, has grown rapidly since 2007 and, in 2010, it became the financial service by phone the most successful mobile phone in developing countries. Currently, they would be more than 210 million active users on the online payment platform. According to Safaricom, the platform generated some 860,000 jobs and about $ 1 billion in economic activity (€ 925 million) and contributed 6.5% of Kenya’s GDP. At the same time, the group’s sales grew steadily, led by M-Pesa, which contributed 21%. In 2016, Safaricom’s net profits reached 347 million euros.
