Africa needs major advances for universal banking inclusion, says Standard Bank

The CEO of Africa regions at Standard Bank, Yinka Sanni, says a lot of ground still needs to be covered in creating a universal and inclusive banking system on the continent. 

According to Sanni, challenges in promoting equal access based on gender, income, education and age are still prevalent and demand attention if the goal of universal access for financial services is to be achieved.

He said this highlighted that financial institutions still had a lot of work to do to build on the progress that led to 49% of Africans joining the formal banking sector between 2011 and 2022.

“Among the issues that need to be addressed is the uneven acceptance level of digital solutions across different countries. In SA, the acceptance rate is 85%, Mauritius has 91% account ownership, and Kenya at 79% also stands out. South Sudan, by contrast, has a penetration of only 6%. Of 16 out of 36 economies surveyed, well over 50% of adults have financial accounts,” Sanni, said. 

“This points out that for inclusive banking to break across the 50% barrier and soar further, several things must be achieved. Attention will have to be given to infrastructure development in regions where poor internet and mobile phone networks cause connectivity to continue to lag. Building financial literacy and trust in digital systems is still crucial in some regions.”

Digital banking tends to gain greater acceptance in areas with competitive and forward-thinking telecommunications and fintech firms.

However, in countries where regulatory barriers and infrastructure limitations restrict communication outside urban areas, promoting inclusive banking becomes more difficult. 

The differing levels of acceptance of digital banking across Africa are influenced by a range of complex and interconnected factors. These include infrastructure quality, economic conditions, regulatory frameworks, financial literacy, cultural attitudes and market dynamics, all of which shape the distinct digital banking environment in each country. 

“Addressing these factors holistically is key to increasing digital banking adoption across the continent and must be ongoing if Africa is to become a competitive, digitally enabled continent,” Sanni said. 

Sanni highlights that it is crucial to focus on the core advantages of inclusive banking. These advantages include minimising the risk of theft or loss, simplifying transactions by eliminating the need for branch visits, offering secure payment options, and allowing access to credit and savings through ATMs.

According to Sanni the most important gains are the building of a credit and financial history. For communities, the emergence of entrepreneurs promotes access to goods and helps build communities.

To create financially inclusive societies, the following pillars must be maintained: financial literacy, customised solutions, building trust and financial wellbeing. 

“For Standard Bank, adhering to these guidelines has achieved many milestones in Africa. These have included a total of R148.9m granted for enterprise development funding, while in SA, 893 enterprises preserving 3,508 jobs and generating 2,107 new opportunities. In Uganda, the creation of business opportunities for 1,116 people and 27 businesses through seed funding,” Sanni said.

In addition to that, 36,000 women in Kenya have tailored accounts and receive secured loans worth R2.6bn. In SA, the WalletWise radio drama, which promotes financial literacy, is reaching 28.6-million people.

“Changing technology and the advent of artificial intelligence (AI) will allow data generated by economically disadvantaged customers to be shared among financial institutions. Sharing this data with customers’ consent will enable competitors to collaborate in key areas and offer improved and more affordable products. In addition, AI-based educational platforms could promote financial literacy and empowerment,” Sanni said. 

majavun@businesslive.co.za