When the pandemic hit African economies in 2020, the continent’s leaders knew the banking industry would never be the same.
As bankers scrambled to gain support from regulators and reassure shareholders, some thought Covid-19 could accelerate Africa’s struggling digital transition of banks.
And, indeed, financial institutions have seen large-scale customer acquisition on their electronic channels and migration to these services.
As a result, African banks were less severely affected than expected. The ability of financial institutions to transition to digital banking has proven to be a decisive factor in overcoming the repercussions of Covid-19.
Several banks in Nigeria, for example, have seen tremendous growth in digital banking platforms and have outperformed their competitors as a result. Thus, United Bank for Africa (UBA), Nigeria’s second largest bank, saw its digital-related revenues jump 14.14% in 2020, compared to $102 million the previous year.
This success prompted the tier-one bank to capitalize on the digital transition by launching a new mobile banking application, which facilitates transactions for customers. The migration of thousands of customers to digital channels during the pandemic will have provided a major source of revenue as other sources have dried up.
According to Mckinsey, African banks should prioritize three imperatives to “strengthen their strength and resilience » : productivity, risk management and technology development.
The consultancy estimates that the African banking sector could lose more than $48 billion in cumulative revenue by 2024 if banks do not adapt to today’s market.
Acceleration of digitalization
Skaleet, a Paris-based company that provides Core Banking services to financial institutions in Africa, Europe and Latin America, offers a unique perspective on the digital transition of banks in Africa. The technology provider has been helping financial institutions digitalize on the continent for more than a decade.
Hervé Manceron, CEO, felt that “the African digital bank has reached a first level of maturity “.
“We have almost finished equipping the pioneers, the first movers, with digital infrastructures. Skaleet has customers in some 25 countries across Africa and we are now seeing strong interest from tier 2 banks who have seen the benefits they bring. They are eager to adopt our technology after seeing the quality of services and the enthusiasm of the banked and unbanked for digital services m».
According to the CEO of Skaleet, the main obstacle to the adoption of new technologies is the lack of knowledge of services such as the cloud. Benjamin Blondeau, Director of Finance and Strategy at Skaleet, goes further: he foresees a spectacular acceleration in the digitalization of retail banks and the modernization of their IT systems.
“Since the onset of Covid-19, African banks have been hit hard by the economic downturn. They will seek to boost their growth and achieve productivity gains to return to pre-crisis return on equity (RoE) levels “, he analyzes. A boon for technology providers like Skaleet.
“It’s a fantastic opportunity. With strong pressure on prices, financial institutions, while complying with regulations, will have to maintain a low cost of service. In the digital age, this can only be done using advanced software and technology, and that’s what we do at Skaleet. “, he adds.
” All the boards of directors of banks on the continent have made digital transformation a priority for 2022 or 2023. Thea Covid has accelerated this development. Traditional banks are aging faster than ever and it is becoming natural to adopt new architectures such as Skaleet’s to offer new services in very short timeframes and at optimized costs. “, explains Yves Eonnet, president and co-founder of Skaleet.
Result: the company has new customers across the continent, and its growth rate in Africa is expected to reach 30% in 2022.