Africa’s Banks Work With Fintech Startups to Avoid Being Left Behind
Africa’s banks are running scared. On a continent where traditional banking has clearly failed – 80 percent of the population, around 330 million adults, don’t use formal or semiformal banking services – new services are emerging that could yet render banks redundant.
Banks have already had to cope with the success of mobile money, Africa’s major technological success story. Mobile money transactions in Sub-Saharan Africa hit $656 million in 2014, and could more than double to $1.3 billion in the next four years. Yet African startups are further challenging the unsatisfactory status quo.
Banking executives are clearly aware of this situation. Derek White, chief digital officer of Barclays, admits that startups can execute up to ten times more efficiently than incumbents. David Lynch, MD at Hong Kong-based DBS Bank, goes further, saying banks have a choice: observe and lose their customers, or participate and turn the situation to their advantage.
A number of banks are choosing the latter course. African fintech startups joined the DBS Accelerator programme in Hong Kong, while Citibank ran a Mobile Challenge in Nairobi to identify exciting tech solutions. The biggest step was taken by Barclays, which ran its Tech Lab Africa accelerator programme in Cape Town and has partnered with three startups from the continent already.