Banks : fintech to accelerate financial inclusion in Africa

With the lowest banking penetration rate in the world, Africa has so far relied little on traditional banking services to improve financial inclusion. That situation could be changed by digital transformation in banking, according to the fintech TagPay and its banking partners. 

How can the majority of the African population finally access the financial services they need? This was the focus of a recent webinar organized by the French start-up TagPay, a digital banking services platform with a strong presence on the continent. The findings are clear: by relying on traditional processes, African bankers have so far only covered a small part of the continent’s population (less than 20% in most countries). It is this bottleneck that digital banking is now seeking to overcome, notably by building partnerships with fintech players. 

“All companies are now becoming tech companies, be they banks or not

Indeed, participants in the interactive meeting all stressed the opportunity offered by the digital transformation of banks in Africa and the importance of working with fintechs to meet the challenges of financial inclusion. Djiba Diallo, a fintech expert from Ecobank Group, insisted on the need for banks to « adapt to the development of the continent. »That context of transformation makes partnership with fintechs “essential”, according to him.  The same urgency to keep up with change was reflected in remarks made by Obinna Ukwuani, Chief Digital Officer for the Bank of Kigali (Rwanda), who stresses that « all companies are now becoming tech companies, be they banks or not. » The head of BK confirmed that his financial institution – like others on the continent – have already « invested in this transition to [embark] on this new era ».  

Participants also recalled the major challenge posed by the predominance of cash on the continent, a payment method with complex traceability and real costs (printing, storage, transport…). In contrast, digital payment solutions are transparent, secure and affordable. Guest speaker Carl Manlan, Vice President, Inclusive Growth, Global Social Impact at Visa – the global leader in digital payments – said the heavy reliance on cash only reinforces « the opportunity to introduce digital payments to improve financial inclusion. However, it is essential to ensure that there is adequate training and skills development in finance so that more people can access it,” he warned. That call for more financialization can only fit into an increased collaboration with African fintech players. 

Africa, the Silicon Valley of banking

This is certainly good news for Yves Eonnet, the CEO of TagPay, who sees Africa as «the Silicon Valley of banking», the continent where “the bank of the future” is being built. This optimism has convinced investors: the French fintech, launched in 2005, raised €25 million from the American investment firm Long Arc Capital early this year. This is a new cash injection to further accelerate the path of digital transformation in banking.

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