Cloud, Cybersecurity, AI get attention
The banking landscape in Nigeria, South Africa, Kenya, Morocco, Egypt and other parts of Africa is fast changing as 76 per cent of the operators rank digital transformation as either their top priority or among the top three focuses while about 60 per cent have digitally transformed most of their operations.
The 2024 edition of the African Banking Digital Transformation Report published by pan-African publication African Banker and Backbase, creators of The Engagement Banking Platform revealed this.
In the 2024 report, comprehensive data from more than 150 banks across 35 countries, provided analysis of current digital banking trends, key innovations and digital transformation progress made thus far.
The report was launched during GITEX Africa 2024, which took place in Marrakesh, Morocco in the last week of May.
Findings showed that many customers prefer to carry out their day-to-day banking digitally, although some personal contact is preferred in specific instances.
The report observed that expenditure on digitisation does not appear to be rising, while banks report mixed results in the outcome of their transformation strategies.
Although retail banking attracted most of the initial digital investment, the report claimed that almost 40 per cent of banks still regard it as their biggest priority, with another 26 per cent focusing on the SME sector, 13 per cent on corporate and business banking and eight per cent on investment banking.
The report noted that banks aiming to expand into new national markets are increasingly focusing on digital banking to minimise their costs, stressing that banks have varied reasons for driving digitisation but increased customer satisfaction and loyalty are the most popular factors, followed by improved customer engagement and personalisation.
The 2024 edition said banks are increasingly using data analytics to tailor offers to individual customers, adding that most banks rely entirely on third-party developers to build their digital platforms or combine them with their in-house teams.
“The apparent fall in the importance of digitalisation for some banks may simply reflect the fact that they were yet to launch planned digital platforms last year but have now done so, making them a little more relaxed about the process,” the authors of the report explained.
The survey found that 39.5 per cent of banks named retail banking as their biggest priority in terms of digital transformation this year, down from 47 per cent last year and 54 per cent in 2022.
“It seems likely that many have already built mobile apps or internet banking platforms for their retail customers and are now putting more effort into replicating or building the same structures in other market segments, rather than due to any loss of interest in the retail sector,” the authors explained.
The proportion of banks prioritising the SME sector was 26.3 per cent, while 13.2 per cent are focusing on corporate and business banking and 7.9 per cent on investment banking, “as an increasing number of banks seek to ensure that the benefits of digital banking are felt across the full range of their operations”.
The report revealed that cloud computing was the most cited technology being incorporated into digitisation strategies, accounting for 25 per cent of all replies.
This overtakes artificial intelligence (AI) and cybersecurity and resilience as the primary driver in the 2023 survey.
In 2024, AI placed second with 20 per cent of those surveyed saying they were incorporating it into their digitisation strategies, followed by big data and cybersecurity and resilience, which were each cited by 15 per cent of respondents.
“The result can be explained through the growing sophistication of AI solutions, which sees it spill over into other technology areas including cybersecurity,” the authors said.
In the report, Ecobank Group Chief Digital Officer, Nvalaye Kourouma, who was interviewed in the report, said he sees AI as a game-changer, both internally and externally, because AI-powered tools help overcome language barriers for engaging customers in different countries.
“We now can build local natural languages into our AI interactions so that language and writing are no longer barriers. Speech and images can be used to communicate more effectively. AI opens the door for a different level of engagement with our customers, so it’s encouraging,” Kourouma added.
KCB Bank Group Chief Technology Officer, Dennis Volemi, said the bank had already been using data analytics capabilities for credit scoring.
