A recent survey has shown that forty percent of bank customers across Africa now prefer digital banking, even as the same percentage of bank customers still like to visit their local bank branches to queue in order to carry out transactions.
However, across the four main banking markets on the continent, there are more bank customers who now prefer digital banking than those who prefer branch banking.
These revelations are according to a report compiled by McKinsey & Company and titled Growth and Innovation in African Retail Banking.
“Some 40 percent of the African banking customers we surveyed prefer to use digital channels for transactions, roughly the same share as those who prefer branches. In four of the continent’s major banking markets, the share of customers who prefer digital channels is significantly higher than the share preferring the branch channel.”
The report also made recommendations to banks
Based on the findings in the report, McKinsey & Company suggested that going forward, African banks can do the following in order to ensure better performance:
- Transform their digital operation: This will enable banks to take advantage of the opportunities availed by technology by increasing their share of digital sales and transactions to more than 60 or 70 percent. It gave the example of the Kenyan bank Equity Bank, which has already done exactly this.
- African banks should partner FinTechs and Telcos: The report went ahead to recommend that banks across Africa should consider partnering telecom service providers and financial technology firms to deliver mobile financial services to their customers. Using Kenya as example, the report again cited the partnership Commercial Bank of Africa, Kenya’s biggest telco Safaricom, and M-Shwari, a mobile-based loans application firm.
Note that it is unclear whether this suggestion will work in Nigeria, seeing as banks, telecoms operators and fintechs see each other as competitors.
- African banks were also advised to consider building digital banks, just as Wema Bank Plc built ALAT in Nigeria.
“Finally, banks can build an ecosystem or platform of non-banking services. Alipay in China and the Commercial Bank of Australia have applied this approach at scale in areas such as travel and hospitality (Alipay) and home-buying (CBA).”