Branches may still be the most popular retail banking channel in Africa, but there are clear and growing signs that Africa’s banking customers are rapidly moving towards alternate channels. The challenge for Africa’s banks will be to increase adoption of existing channels while exploring new ways to meet their customers on their own terms.
On face value, one could be excused for thinking that Africa’s banking customers are highly loyal to traditional channels. Branches are still the most used channel across Africa (98 percent say they use the branch to conduct banking business) and more than two-thirds of Africa’s customers admit to never having used POS terminals, internet banking, mobile banking or mobile payments. Dig a little deeper, however, and it starts to become clear that Africa’s banking customers are on the cusp of a metamorphosis towards rapid adoption of alternate channels. Branch use and ATM use are on the decline (albeit marginally) since our survey in 2013, suggesting that Africa’s banking customers are now starting to move towards ‘cashless’ payments.
At the same time, the use of internet banking, mobile banking and mobile payments has risen significantly. Reported use of mobile payments increased 18 percentage points since our survey in 2013; internet banking usage increased by 8 percentage points; and mobile banking increased by 6 percentage points. While access to high-quality alternate channels varies across the region, access is not the primary challenge for Africa’s banks. More than two-thirds of Africans have a mobile phone and more than a quarter have internet access. African consumers are happy to use their mobile phones to send important messages and buy goods but have yet to transfer this confidence to mobile banking or payments in the same way.
Significant benefits can be achieved by driving adoption of alternate channels. For banks, the shift to alternate channels reduces costs, improves turnaround time and alleviates pressure on branch resources – all of which helps enhance customer satisfaction. Today, more than two-thirds of Africa’s banking customers say they prefer to use the branch to conduct funds transfers; around half say they use the branch to conduct balance enquiries and bill payments, all of which could be conducted more efficiently and at lower cost through digital and alternate channels.
Ultimately, this data suggests that Africa’s banks could achieve significant improvements in margins and customer satisfaction by investing in customer education and alternate channel promotion. Customers using their phones to text while standing in queues at the branch are prime candidates for ‘on site’ conversion schemes while urban customers could be attracted by reduced fees and preferred interest rates.
At the same time, however, our data also suggests that Africa’s banks could be doing more to reach out to their customers through more popular channels such as social media. Indeed, 56 percent of respondents to our survey said they use social media at least once per week, yet just 4 percent said they interact with their bank over social media as frequently. Almost 80 percent said they had never interacted with their bank on social media. Clearly, Africa’s banks face a massive opportunity to develop a highly differentiated customer proposition – one that delivers a consistent experience across the various channels and focuses on building relationships through channel interactions rather than simply ‘selling’ products and services