Innovations emerging from East and West African banking hubs are enabling the sector to take a lead in reaching Africa’s unbanked population but much remains to be done.
February 24, 2016 | Farrah BrakeWithin Africa, the South African banking sector has long been viewed as benchmark setters for industry best practice within the continent. However, other emerging markets may soon become real competitors as new banking hubs develop. Although the transaction banking business continues to be the backbone of the banking industry in Africa, retail banking is now edging into the forefront of growth, with huge potential in the region’s large unbanked population.
Sub-Sahara Africa, which can be subdivided into three distinct regions—West Africa, East Africa and South Africa—has one country in each of these regions that is showing strong economic and banking development. South Africa still serves as the benchmark for East and West Africa, but the latter have developed their own banking hubs with Nigeria and Kenya playing significant roles.
It’s all about the data
Historically, retail banking markets have moved through four distinctive evolution phases, transiting from a product to a relationship-based focus along an account-to-customer-centricity spectrum. Driven initially through the first two phases—product focus and sales focus—by market opportunity, e.g. the ability to provide banking services to unbanked populations, the subsequent two stages—market share focus and relationship focus—are mainly driven by net margin pressures as competition increases.
Traditional retail banking market developments are being undermined by technological advancements enabling non-bank players to enter the space and take ownership of retail customer data, a key component for relationship-based banking to occur. In fact, given the technological developments, banks in the future may look at becoming asset light businesses where fee generation is more profitable than balance sheet portfolio developments. This will further underline the need for banks to be able to access and analyse customer data to create fee earning, value-adde...
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Retail BankingKeywords:Africa, Retail Banks, Customer-centric, ROA, GDP, Branches, GCB, Barclays, FNB, Stanbic, Nedbank, Equity Bank, ATM, CBN, MPESA, Mobile
