While bankers scrambled to plead with regulators and reassure shareholders, some believed that Covid-19 could fast track the slow movement of African banks to go digital.
Financial institutions saw large scale customer acquisitions on and migration to digital channels.
As a result, Africa’s banks were less severely impacted than expected.
A key factor to warding off the Covid-19 fallout was whether banks managed to implement a move to digital banking.
Several banks in Nigeria, for example, saw impressive growth on digital banking platforms and posted better results than continental counterparts.
United Bank for Africa (UBA), Nigeria’s second largest bank, recorded a 14.14% increase in its e-business revenue in 2020 compared to $102m the year before.
The success has driven the tier-1 bank to capitalise on the shift to digital by releasing a new mobile banking app, which improves the ease of transactions for customers.
Indeed, the migration of thousands of customers onto digital channels during the pandemic will have provided a key source of revenue while other streams dried up.
Mckinsey argues that African banks should focus on three imperatives to “build core strength and resilience”: productivity, risk management and scaling up technology.
The consultancy estimates that Africa’s banking industry could lose more than $48bn in cumulative revenue by 2024 if banks fail to adapt to the Covid-19 marketplace.
Skaleet, a Paris-based company that provides core banking services to financial institutions in Africa, Europe and Latin America, offers a unique view of the move to digitisation by banks in Africa.
The technology-provider has been helping financial institutions digitise across the continent for more than a decade.
Hervé Manceron, CEO, says he believes that “African digital banking is reaching a first level of maturity”.
“We have almost finished equipping the pioneers, the first movers with digital infrastructure. Skaleet has customers in about 25 countries in Africa and we see now a very strong traction with second range banks which have seen the value developed by first movers. They are keen to adopt our technology after witnessing the quality of the services and the way banked and unbanked people are using digital services”.
The main barrier to adopting new technology is unfamiliarity with the services such as the Cloud, he says.
Benjamin Blondeau, Skaleet CFSO, goes further and says that he is expecting to see a “quantum leap” in the digitisation of retail banks and the modernisation of their IT systems.
“Since the beginning of the Covid-19 crisis, African banks have been dealt a cruel blow by the economic downturn. As a consequence, they will try to accelerate their growth and seek productivity gains to return to pre-crisis return on equity (RoE) levels,” he says.
He believes that this should be a huge boon for technology-providers like Skaleet.
“It is a fantastic opportunity. With a strong pressure on price, financial institutions while complying with regulations will need to keep a low cost-to-serve. And in a digital world like today, this could be done only by using modern software and technology, and it is what we do at Skaleet”.
Yves Eonnet, Chairman and co-founder, said: “Every bank board of the continent has put the digital transformation as a priority for 2022 or 2023. The Covid crisis has accelerated this evolution. Legacy banks are aging faster than ever and new architecture like Skaleet are becoming natural to adopt in order to offer new services with very short time to market and optimised cost”.
As a result, the company is taking on new clients across the continent with growth in Africa forecast to increase by 30% in 2022.