The Future of Banking in Africa

In the process, there has been a reversal of roles and the national banks are increasingly the dominant banks in their geographies. This is not unexpected and is line with the historical trends in other, developed markets such as the US, the UK, Germany, Italy, France, Brazil, Russia and China, where the largest local banks are domestic.

In the process, the banking industry in Africa has been significantly transformed. And the African banking landscape is segmenting into four distinct groups: a small number of large domestic and regional players; a large number of small domestic banks struggling to survive; a small number of foreign banks focused primarily on wholesale and investment banking activities; and a small but increasing number of disrupters seeking to use digital banking, especially mobile banking, to leapfrog the rest.

If lessons from other markets are any guide, this is the direction banking in Africa will take. On the one hand, 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 than is currently the case and, on the other hand, the industry will be more consolidated with a small number of large domestic and regional players.

In the process, many banks will be acquired or will cease to exist. And, hopefully, new players will emerge that will tap into the huge potential of digital banking. 

The author, Arnold Ekpe, is currently Chairman of Atlas Mara, Chairman of Wari and non-executive director of the Nigeria Sovereign Investment Authority. He is a former Chief Executive of the Ecobank Group, former Vice Chairman of ADC, the parent of Banc ABC Group and former Chief Executive of UBA. He writes in his personal capacity.