Feflections and Facts.
Upon his return, Marius shared his views on some of the key topics he encountered during the three-day conference.
It gave me the opportunity to reflect on the opportunities that we have in this continent, as well as the challenges that we face. In this blog, I will share some of these reflections and facts with you.
During my recent attendance of the AFSIC conference in London, I had the privilege of listening to several experts, analysts, investors, and business owners, working in- and dealing in Africa. It gave me the opportunity to reflect on the opportunities that we have in this continent, as well as the challenges that we face. In this blog, I will share some of these reflections and facts with you.
It seemed to me that, although investor interest in Africa has declined in recent years due to factors such as corporate governance, there are still many opportunities for investors. Take for example; the fact that five of the fastest-growing economies are African-based; Egypt, Ghana, Botswana, Rwanda, and Nigeria. In Kenya, 82% of the population have access to banking services through the vibrant mobile money networks, Nigeria is sorting out foreign currency issues making business more attractive, Angola is currently part of an IMF programme to fix governance issues, and Rwanda is promoting a digital economy with many multi-nationals now placing their regional head offices in Kigali.
This is backed by the fact that the UK's objective is to be the top G7 investor in Africa by 2020, and speakers from the UK government made significant commitments to this process. I found it interesting that according to studies, the major predecessors to economic growth are literacy and access to electricity - and for this reason, Ghana is now predicted to be a major growth point in Africa during the coming years. However, the sentiment is that unemployment and job creation remain one of our continent's biggest challenges and therefore new investments and solutions need to benefit the communities in which they operate, by not only increasing efficiency, but also by nurturing local talent and imparting valuable skills.
In Kenya, 82% of the population have access to banking services through the vibrant mobile money networks.
This then brings up the 'FinTech vs Brick & Mortar Bank' debate.
On the one hand, we see the FinTechs with their innovative models able to address the points of friction as described above. These include offerings ranging from new credit scoring models utilising data science, through to ultra-fast onboarding, low-cost money transfer services, and fast small-loan approvals - all of which use digital channels. I've also found it interesting that many FinTech companies are still not profitable after some years of active operations; obviously having less funds to invest. If not profitable, are they really solving true friction points, or just replicating existing processes in a better-looking way under the guise of digital transformation?
...22 Billion Euro investment in their digital offerings...
On the other hand, we see the traditional banks spending major cash on developing their digital offerings. One such example is Spanish lender Santander, who have announced a 22 Billion Euro investment in their digital offerings over the next few years - and, as many analysts predict, may still find it impossible to convert their legacy models and technology to comply to the requirements of the up-and-coming customer.
In closing, my personal view is that the future solution is one where the already-trusted banks partner with FinTech providers to create a 'best of both worlds' scenario. Digital banking has untapped potential, and combined with new innovative products, the financial services industry will play a major role in unlocking so much of our continent's potential.