The continent’s economies are continuing to expand at a rapid pace and have demonstrated resilience to both internal and external market shocks. The financial sector, in turn, is responding to the region’s continued economic success. While large portions of African adults continue to be denied access to the formal financial system, accelerated growth towards inclusive financial systems is promising.
The recent advances in mobile telephony, cloud computing, social media and data analytics have enabled the development of entirely new business models. Sub-Saharan Africa is on the leading edge of many of the abovementioned digital disruptions. The financial sector is especially vulnerable to these disruptive forces, but traditional institutions have been slow to adapt to these disruptive trends and are facing tough strategic decisions. In growth markets such as Kenya and Tanzania, many banks are diversifying into new segments, expanding branch networks and launching mobile money platforms to remain relevant in the marketplace. In more mature markets, leading banks such as South-Africa’s “Big Four”, have worked to solidify and defend their positions of strength in existing customer segments. In many ways, this re-entrenchment has negatively impacted financial innovation. In addition to the economic drivers of change, there are company-specific and structural factors that affect change in financial institutions. In order to understand how priorities are driven in an organisation, it is important to keep in mind the relative power of business areas. Most of the institutions reviewed were found to be product-oriented in the sense that product units are profit centres and are ultimately responsible for delivering revenue and profitability. As a result, customer segments are often seen to have less impact on budgets, and priorities are driven towards the largest revenue contributors within each product unit.