What evolving digital technologies mean to banking sector in Africa

Online banking remains a major replacement to the long queues in the banks. PHOTO/Courtesy.

KAMPALA: Africa is a vital world region. It is the second largest continent with some of the fastest growing economies in the world.

The continent has hundreds of languages and cultures, unparalleled eco-diversity, and over a billion vibrant and innovative people.

Real-life applications of technologies are becoming increasingly visible in Africa.

Technological innovations are creating new ways for consumers to interact alike.

Despite all the buzz surrounding the disruptive impact of new technologies like blockchain, Artificial Intelligence (AI), Cloud computing and biometrics, many argue that advancements in the field of future technologies have the most immediate impact in sectors such as agriculture, financial services, healthcare, education, water, and energy in Africa.

Technology is playing an increasing role in the way financial services are delivered across the globe and particularly in Africa.

Digital solutions, low-cost operating models and supply-chain integration have moved to the top of the business agenda with non-traditional players pursuing various aspects of these trends, enabling them to provide their customers with in-house banking solutions.

In terms of size, Africa’s current banking market is approximately $86 billion in revenues before risk cost.

Africa’s banking sector markets are fast growing. They are nearly twice as profitable as the global average as Africa’s retail-banking penetration which stands at just 38 percent of GDP.

This is half the global average for emerging markets.

Along with the mobile revolution in consumer payments, banking in future will be more inclusive, with mobile banking playing a transformational role in bringing banking to the majority of the population at much lower cost.

Mobile money is a threat to bank notes; forget about coins and bank cards.

Cell phone banking has changed the banking sector; the banks still bill for transactions including Automated Teller Machine (ATM) deposits.

A latest developed transaction system, the M-Pesa, is one threat to the conventional banking sector in the country of Kenya.

M-Pesa (‘M’ is for mobile, ‘pesa’ is Swahili for “money”) was launched by Safaricom, Vodafone’s Kenyan associate, on March 6, 2007.

The service is designed to safely send, receive and store money via a simple mobile phone.

The service also allows customers to make bill payments and top-up airtime.

In order to use M-Pesa, customers have to register for the service at an authorised agent and deposit cash in exchange for electronic money which they can send to their family or friends.

All transactions are secured by entering a Personal Identification Number (PIN) and both parties receive a Short Message Service (SMS) confirming the transferred amount.

The recipient receives the electronic money in real-time and then redeems it for cash by visiting an agent near him.

With that simplicity, this has left bank tellers with no busy attendees.

In the nearest future, this service may completely replace the existing traditional banking models with more appropriate modes to addressing the urgent issues of financing much-needed development and infrastructural projects.

And, hopefully, new players will emerge that will tap into the huge potential of digital banking.

The biggest hurdles that countries have across the continent are largely connected to overcoming the technology and data infrastructure that is currently in its infancy.

However, having technology hubs across the continent serves as places to co-work and facilitate innovation.

Good news is that there are rising numbers of providers supporting money transfers in Africa!

This includes the notably high fees for African remittances that are significantly decreasing!

In East Africa, majorly Uganda, Kenya and Tanzania, there are mobile money services provided by operators: MTN, Mobile Money, Airtel Money, Africell Money, Smart in Uganda, then M-Pesa, Airtel, Tigo and other network providers.

When one wants to send money fast and cheaply to the mobile phone of the receiver, the so called mobile money gets to effect without needing it to be in a bank account.

One could also choose to use a money transfer operator like WorldRemit or Azimo, or use cryptocurrencies and send Bitcoin or Ethereum (in future: Libra) to the receiver.

Here one cashes the bitcoins into legal money, for this case using a P2P marketplace like Paxful or Local Bitcoins.

In evolved African countries, there is use of PayPal for sending money by email.

PayPal supports only a limited number of currencies.

WorldRemit is also greatly used, supporting USA/ Canada and most African countries.

Azimo is strong for sending money from Europe (GBP, EUR) and offers very low fees (GBP – Nigeria /Naira).

CurrencyFair provides best currency exchange rates for many African countries; it is an underestimated Irish peer-to-peer marketplace with excellent services.

TransferWise is the market leading peer-to-peer marketplace for currency exchanges, but it supports only a few African remittance corridors and countries.

Traditional methods have been used for transaction, identity management; procurement alongside.

MTN and Airtel issued Mobile Financial license by the Bank of Uganda. PHOTO/Courtesy.

Investments in the above sectors are not well suited for the level of agility and scalability required for the digital age.

With technology securing its stance in the future, organizations will be able to remodify themselves to be more analytical and responsive to marketplace needs.

Banking is one of the industries that are growing pretty fast in Africa.

With the right partnerships and benchmarking and following the laid down practices, the sector can do even better.

That’s why we have set standards like International Organization for Standardization (ISO).

In the near future banks will bear little resemblance to their present-day counterparts as algorithms grow more intelligent, currencies become less centralized and banks become more “digital platforms” than physical locations.

Businesses need to efficiently handle payments in large volumes, accepting payments from customers in a variety of ways.

Commercial banking helps make this happen and also offers basic investment products like a savings account, current account, among others to individuals and corporates.

Along with that, it provides a range of financial services to the general public such as accepting deposits, granting loans and advances to the customers.

Incorporating emerging technologies with the current bank models will have flexibility and benefits to both organizations and customers.

Data security, governance, and compliance will be existent in both private and public cloud storages.

The benefits run into back-office operations, compliance, customer experience, product delivery, risk management, marketing, taking input source from data collection, analysis and application of existing data to be more and efficient.


Daniel Tusiimukye K’abaasa.

Daniel Tusiimukye K’abaasa is a 20 year old entrepreneur who has overtime learnt the essence of applying classical strategies to modern-day projects.

Based in Kampala Uganda, he is currently a first year engineering student at Makerere University, Kampala majoring in Mechanical Engineering.

With a passion for innovation and high quality manufacturing, he intends to apply homegrown engineering concepts to automated systems at a global stage.

Daniel is a leading design engineer at HypasoftInc, a Fintech company that provides finance and technology research aimed at embracing the daily digital transformations.

In an entrepreneural mindset, he also partakes a strong literature acumen. He currently runs Iconic Publications that aims at ignition of dreams and imaginations of young writers.

At Iconic, their aim is to bring to light the potential in the literature of the youthful African writers as a solution to the continental synchronized crises. This they do through mentorship, marketing and publishing.

He is also a co-founder at Listen To Africa and an International Ambassador of Peace with the Global Forum for Literature and Human Rights.

A writer of two books, Golden Arrow and Culture of Silence, together with other two African authors, Daniel founded The Academy of Literature, an e-school that trains young writers in editing and freelancing.

He was nominated as a Semi finalist in the poetry books Category on the first Annual Mulher Forte African literature awards, Botswana in 2020.

In the same year, he won an international poetry award at the 2020 Antarag International Poetry Festival in Mumbai, India, for his poem, Blessed By a Woman.

In June 2021, he was nominated for the Mulher Forte Africa Literature Awards in Mahalapye, Botswana.

In July 2021, he was awarded the AfriCan Honoree Author’s Award in Lonehill, South Africa for the impact that his book, Golden Arrow, has left to the literature society.

He is a columnist at The Scholar Media Africa.

At the independence day of the Republic of India in 2021, his poem, Your Name I Wrote In Sky, published in the Abhuday- The Rising Magazine was granted a special recognition and recited by Dr. Suparna Banerjee of the GurudevRavindraNath Tagore family.

His poetry works and articles have been published in many international blogs and  anthologies including the PoetiClub Wise Sayings Anthology 2020 in Nigeria and the Classico Opine Magazines in India.

He believes that every writer needs to idealise that writing can be an avenue to address societal changes or concerns that deeply affect lives of people, these pieces could heal traumatized and wretched minds.

In ten years, Daniel sees himself among the leading mechatronics engineers on the continent and one of the answers to the leadership crisis in his country, Uganda.

CONTACT: d.tusiimukye@scholarmedia.africa

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Daniel Tusiimukye is a columnist with The Scholar Media Africa, is an award winning author, and a Ugandan based publisher. He is the founder at The Iconic Publications and currently pursuing a Bachelor of Science in Mechanical Engineering at Makerere University, Kampala. His contact: d.tusiimukye@scholarmedia.africa



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