Banks adopt digitization amidst the COVID-19 pandemic
The number of people having bank accounts rose from 170m in 2012 to 300m in 2017. It is expected to reach 450m by 2022. However, access to physical branches and manual processes for most services still remain a concern for most Africans. Digital or online systems can help banks fill the gap and offer better services to users during the COVID-19 pandemic.
African banks focus on digitizing their service and operations in the wake of rising dependence on technology. A survey conducted by African Banker (2020), published by Backbase, shows banks’ great interest in digital transformation.
The COVID-19 pandemic and the resulting containment measures have created a spur in the banking sector. Now, banks are accelerating their efforts to move towards digital transformation.
Central banks pushing online transactions
Visiting bank branches or ATMs for deposits, withdrawals, and other essential services is still the norm. Paperwork is still involved in many services, though people can mostly avail these services through mobiles. However, COVID-19 mobility restrictions have made it difficult for anybody to reach out to bank branches.
Central banks and regulatory authorities have been pushing online transactions, rather than cash, to reduce the spread. The suggestions have been coming to prevent the transmission of the coronavirus through banknotes.
Speeding up digitization plans
Banks in Kenya and South Africa are leading the way to digital transformation. The pandemic prompted them to move towards cloud-based operations at a much faster pace. They are also promoting digital banking services to their tech-savvy customers. They plan to bring many processes like answering FAQs, printing statements, and providing insurance programs online.
Banks are planning to integrate their online and offline operations to ensure they are as digitally enabled as possible and offer face-to-face interactions when required.
Partnering with fintechs
Fintechs are emerging in the African financial market with better technology and progressive mindsets. It has led the financial landscape to evolve rapidly. Increasingly, banks are opening up to partner with fintech to speed up their journey towards digital-first banking.
It is also one of the growing trends in the banking industry over the past few years. According to the same survey by African Banker, a total of 80% of banks either see fintechs as a partner for growth or directly invest in them. We expect to see more of such partnerships emerging in the near future as the virus continues to affect our daily lives.
Today, digitization has become a necessity for banks rather than an alternative. The pandemic has shown the true importance of digital services to the banking world. It has also unlocked new possibilities for eliminating paper-based manual processes and bringing them online. The COVID-19 pandemic presents a chance to aspire banks to become a hub of innovation.