Fintechs will massively disrupt African payments over the next few years but there is still a very bright future for banks.
Quite simply, banking revenues are growing faster in Africa than anywhere in the world and returns on capital are among the highest. Banks may experience some loss of business from fintech competition in areas such as money transfers – this is a business that seems to elude banks everywhere – and some payment services. But the lucrative opportunities from working with fintechs in promoting financial inclusion and lending to micro enterprises, for example, will far outweigh losses elsewhere.
Regional African lenders will do best of all. The development of new trade blocs such as the new Continental Free Trade Area and accompanying payments infrastructure will bring in a slew of fresh business.
At the same time foreign banks are retreating and cutting correspondent lines due to compliance issues. Picking up this business is another golden opportunity for African banks who have the local knowledge to do the compliance.
These and other issues will be discussed at Swift’s African Regional Conference in Accra, Ghana this week.
Brian Caplen is the editor of The Banker. Follow him on Twitter @BrianCaplen
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