How can Africa prepare for the future of banking?
Mobile services are a sustainable driver for economic and social growth. They are opening up access to new services in a simple and inexpensive way, encouraging entrepreneurship and employment. Fast to implement, flexible and cost effective, they have a bright future in Africa. The continent is set to become the second-largest mobile market in the world by 2020, with one billion SIM cards in circulation by next year.
Today, mobile phones are as common in South Africa and Nigeria as they are in the US, with 89% of adults in each country owning their device. However, while mobile payments are set to overtake cash and cards within a decade in other world markets, there is some way to go before African countries follow suit. Here, we explore how Africa can prepare for the future of banking.
Paving the way for mobile money
As much as 80% of the African population do not have a bank account, with up to 90% of retail payments still made using cash. This differs considerably from other markets, such as the UK, where electronic payments overtook cash transactions for the first time in 2014. With a lack of banking and automated payment infrastructure in place, there is much innovation required across Africa before it can be considered a champion of electronic payment services. However, on a continent that already has 700 million mobile subscribers and 1.3 billion SIM cards expected by 2020, fintech companies in Africa have an opportunity to bypass the traditional card payment infrastructures used in other markets altogether, creating new ecosystems that solely rely on mobiles as a payment device. This is something that we have started to see in Sub Saharan Africa, with Kenya leading the charge with its, M-PESA service.
Connecting Africa to the wider world
Current efforts to grow Africa’s mobile payment services are being hampered by a lack of network infrastructure connecting the continent to international cables, and inadequate levels of interoperability between those systems that do. While the ACE submarine communications cable links the west of Africa to France, simply bringing capacity to the shores isn’t enough. Providing every African consumer with enough network connectivity to access mobile banking services will require much more robust infrastructure to be deployed to the land. Once this is in place, telecoms operators will have to work together to agree open access principles to distribute this connectivity to homes and businesses at as low a cost as possible.
Securing a mobile-first Africa
As our colleagues, Philippe Duluc and Christian Aghroum, recently addressed, securing a mobile-first Africa is a central issue of concern. According to Nokia’s recent Threat Intelligence report, smartphone infections accounted for 78% of all infections detected in 2016, compared to 22% for Windows/PC systems. Without protection, smartphones are vulnerable to a number of security threats, leaving consumers at risk of cyber fraud or theft. Providing sustainable and secure solutions will therefore rely on systems integrators being able to effectively manage the security of the entire chain, like Worldline, an Atos subsidiary, and key player in this market.
For those players willing to take on these challenges, Africa provides a breadth of opportunities to seize mobile market share. Mobile payments meet the needs of an increasingly connected population that expect basic services (as payment to access water or electricity) and will drive sustainable growth through the creation of jobs. They are an obvious asset to any government looking to drive large-scale digital transformation in their nation, and if we start to see them widely adopted across the continent, Africa has the potential to become a leading digital player.
About Mour Seck
Graduating from Ecole Polytechnique in Montréal in computer science, Mour Seck started his career developing real-time applications at Omicron International, Canada, contributing to system deployment and implementation for large international clients. After Omicron, Mour Seck joined Nortel Telecom (BNR) as an Architect, developing platforms for telco services. He then worked at Bull Group, Senegal, as Head of Network and Telecoms, Commercial Officer. In 2010, he is appointed as the General Manager for Bull Senegal, extending his scope to West and Central Africa in 2013, before becoming General Manager for Atos Senegal in 2014 following the acquisition of Bull by Atos in 2014.