Online Reporter
South Africa’s major banks are stepping up their push into the rest of Africa as many Western lenders exit or scale down operations, but the race for new customers is increasingly being driven by fintechs and mobile money operators.
Keagan Higgins, investment analyst at Anchor Capital, says players like M-Pesa and MTN Mobile pose a serious threat to traditional payment networks. They dominate peer-to-peer and merchant transactions across East and West Africa, offering millions of unbanked Africans access to digital finance.
“Fintechs matter more in Africa than anywhere else in the world. They are the payment rails. Banks will have to integrate mobile money players and not compete with them,” he says.
In a recent report on African banking, Moody’s noted that the exit of groups such as Standard Chartered, HSBC, Barclays and BNP Paribas has created “a vacuum being filled by an expanding cohort of pan-African banks”.
Local lenders, the rating agency added, are well placed to grow retail and SME businesses, finance infrastructure, and strengthen corporate offerings, given Africa’s rapid population growth and low banking penetration.
However, it warned that digital competitors are already eroding banks’ market share.
“For African countries lacking comprehensive banking networks, mobile banking has become an easy alternative for money transfers and an important vehicle for increasing banking penetration … offering a wide range of financial services to underserved individuals and new markets like the microcredit segment.”
Higgins says Africa has effectively “leapfrogged” traditional banking infrastructure. “Africa went from cash to mobile … millions of people use mobile banking to store their value, send money and pay bills.”
South African banks are investing in digital solutions to keep up, though at different speeds.
Still, Higgins stresses the urgency: “Fintechs fill the gaps that banks hadn’t quite reached or built out yet. They are a serious threat to income from payments, and it would be good to partner with fintechs, rather than compete with them.” — Moneyweb
Bongani Ndlovu