This has led to a widespread financial inclusivity and education among the public, thanks in particular to mobile phone operators who have been the first to promote digital financial transactions.
On average, 53 out of 100 people have a mobile phone contract in Africa. Around 60% of the 400,000 villages in Africa are covered by telecoms networks, while bank branches are typically present only in large towns.
First generation models (Celpay, M-Pesa, Wizzit) focused on money transfers launched by mobile operators.
They then developed towards financial, that is, banking, products. Now, financial services on mobiles are available in almost all countries on the continent, and allow unbanked people to carry out financial transactions once reserved for bank account holders. Banks often enter the market first by relying on mobile telephone operators’ solutions and have extended their range to distance banking operations.
The dynamism injected into banking competition has, furthermore, led to growth of the customer base and to the introduction of digital financial inclusivity solutions
When it comes to the mobile-orientated solutions that are found frequently in Africa, the operator controls the whole value chain from the creation and management of the account through to payment.
But now a new generation of digital financial services is developing for banks to rely on, and they are regaining their place as an intermediary, with services offered without a mobile telephone operator and on the basis of very agile and elaborate à la carte solutions. The solutions supported by InBox, or the TagPay solution, are good examples of this.
Africa at the heart of development
The stakes are high for the banks: a financial element (to free themselves from the high costs and obligations imposed by the telcos); an economic element (to be ready to offer high added value digital money products to their corporate clients, such as for paying salaries, etc.); and to ensure the sustainability of locations to convert fiat money into electronic money, while telcos have, conversely, an economic interest in reducing their number of branches.
Pan-African banks are pursuing their development on the continent. The four largest South African players therefore continue to put Africa at the heart of their development strategy, whether through acquisitions of smaller establishments, diversifying into insurance and specialised financial services, or financing South African blue chips to support them in their efforts to capture the continental market, in particular in infrastructure.
Gabon’s BGFI, after needing to spend two years digesting recent acquisitions, has also announced a reprise of its expansion into central and western Africa.
In parallel, and taking into account new paradigms, smaller but more agile banking operators or payment processors will develop.
These are complementary to large establishments, with interoperable solutions (or not), but are focused on the client as the end-user and no longer just businesses. With an economic model based on mass effect, much like the digital economy, it is no longer just B to B or B to C, but also H to H, (Human to Human).