"Digital transformation and the continuing rise of connected, tech-savvy generations of bank users are disrupting the entire industry and its workforces."
Africa's unique position as a continent largely comprised of young people who are embracing digital transformation provides banks around the world with a glimpse into the future. This new generation favours agility over bureaucracy and online automation over conventional interactions plagued by human inefficiencies, geographical constraints and a lack of adaptability.
In fact, 40% of African bank customers report they prefer to use digital channels for their banking needs.1 This dramatic shift in consumer preference is propelling Africa to the forefront of change and making the African banking sector a hotbed for innovation. In particular, South Africa, Kenya, Nigeria and Cote D'Ivoire are leading the way as they navigate the unprecedented impact and consequences that the digitization of banking and rise of fintech are having on customers, revenue and the future of bank employees.
The Rise of Mobile Usage and Digital Banking
Mobile usage and digital banking go hand in hand. African banking users prefer digital banking, because they've already integrated digital channels into their lifestyles. In 2017, more than 90% of Sub-Saharan Africa was covered by 2G networks, and more advanced mobile broadband networks are being implemented rapidly throughout these regions, where a third of mobile users — 250 million people — have a smartphone.2
This familiarity with mobile technology and trust for digital platforms make adopting digital banking channels easier.
Creating Unprecedented Access to Wealth
Faster, cheaper devices and greater access to robust networks are empowering poor countries across Africa to leapfrog into a new era of connectivity, information and online resources. This profound development not only overshadows the impact of landline telephony but also creates a new reality where, in Sub-Saharan Africa, mobile phones are more common than access to electricity.
Mobile-money systems that allow people to send cash directly from their phones has elevated the economic fates of populations — lifting, for example, 2% of Kenyan households out of poverty between 2008 and 2014.3 Nigeria (where 60% of the population is under 25 years old) combined with China, India, Pakistan and Indonesia will make up 50% of the 1.6 billion mobile internet users projected to be online by 2025.4
The continued rise of connected and tech-savvy generations of bank users is set to disrupt the entire industry and its workforces.
The Challenges of Modernizing Banking Workforces
To understand the impact digital transformation and mobile banking are having on banks and their employees, look no further than the recent developments at Standard Bank: Even as one of Africa's most powerful and influential banks, it announced a plan to close up to 91 branches throughout the country, putting more than 1,000 jobs in jeopardy.5
The digitization of transactions and processes that were once performed by human beings is creating profound challenges for banks and bank employees who make a living from increasingly antiquated skills sets. For the global banking industry, Africa represents an inevitable and very near future, and employees are understandably concerned about the viability of their banking careers.
As major banks are searching for innovative ways to combat increasing competition and drive growth within their portfolios amid complicated trading conditions, a new generation of tech-oriented banks and fintech organizations are emerging, including TymeBank and Bank Zero.
Finding Opportunity in Times of Change
With change, there is always opportunity. Mercer's Global Talent Trends 2019 report details that innovation can often present legacy workforces with significant obstacles, but it can also provide unprecedented opportunities for career development and professional growth.
Mercer can provide CEOs, CFOs and banking executives with the knowledge and resources they need to implement digitization throughout the finance industry, using lessons from Africa's digital banking boom. Africa's intersection of technology and tech-savvy customers has accelerated the rate at which the digital banking industry is growing, and the potential of this growth can elevate the global marketplace.
As tech-savvy consumers across the world demand that banks migrate investments, resources and strategies into fintech and mobile-friendly platforms, Mercer's trusted expertise offers transparency and clear strategies that empower banks — and their workforces — to adapt to a new age of digital transformation.
1Agabi, Chris. "40% of African bank customers prefer digital channels transactions — Report." Mobile Money Africa, 23 Apr. 2019, https://mobilemoneyafrica.com/blog/40-of-african-bank-customers-prefer-digital-channels-transactions-report.
2Radcliffe, Damien. "Mobile in Sub-Saharan Africa: Can world's fastest-growing mobile region keep it up?" ZDNet, 16 Oct. 2018, https://www.zdnet.com/article/mobile-in-sub-saharan-africa-can-worlds-fastest-growing-mobile-region-keep-it-up/.
3"In much of sub-Saharan Africa, mobile phones are more common than access to electricity." The Economist, 8 Nov. 2017, https://www.economist.com/graphic-detail/2017/11/08/in-much-of-sub-saharan-africa-mobile-phones-are-more-common-than-access-to-electricity.
4Kazeem, Yomi. "Nigeria's young population will help drive global mobile internet user growth over the next decade." Quartz Africa, 18 Sept. 2018, https://qz.com/africa/1393908/gsma-nigeria-to-add-50-million-mobile-internet-users-by-2025/.
5Khumalo, Kabelo. "Customer behaviour triggered Standard Bank move to close 91 branches." Business Report, 15 Mar. 2019, https://www.iol.co.za/business-report/companies/customer-behaviour-triggered-standard-bank-move-to-close-91-branches-19896105.