Banking in Africa: The secret to success

By : Robert Johnston

August 14, 2014 10:26 PM

Serving the "underbanked" across Africa is an ongoing challenge. How do we offer more people across the continent access to banking and financial services?

An obvious answer is that we need more ATMs and branches in Africa, but that’s an expensive route, and a lack of infrastructure makes it incredibly hard. Have we already hit a point where it’s simply no longer cost-effective for banks to install more ATMs? Nigeria is a good example. The country’s installed base of ATMs has barely increased in the last six years, staying at around 11,000 machines, roughly equivalent to 11 per 100,000 adults.

Lack of ATM growth in Africa’s largest economy doesn't fit with what’s happening elsewhere. In the same period China’s installed base has almost doubled, according to World Bank data. Indonesia has seen even greater growth, more than doubling its ATMs in just one year, from 16,700 in 2011 to 36,500 in 2012. The point is that ATM penetration remains weak across Africa, let alone comprehending where a whole new bank branch infrastructure could come from.

But there is more than one way to reach the unbanked. M-PESA in Kenya has been a shining light, opening up all kinds of transaction services to people without bank accounts via their mobile phone. While few people have access to traditional banking, most adults own a mobile phone. Rather than worrying about an expensive physical presence, banks can focus on this area for rapid gains.

It's a principle that is being built on. BNP Paribas and Orange Money are rolling out a similar system to M-PESA across Africa, starting with the Ivory Coast. The existing network of Orange Money distributors will act like an ATM-cum-branch where consumers can withdraw cash.

Orange Money customers will enjoy new banking services, while BNP Paribas customers will have access to “an extensive withdrawal/deposit network and the possibility of paying bills or buying telephone credit from their mobile phones,” explains François Benaroya, retail director in the International Retail Banking branch of BNP Paribas.

ATM growth may be challenging, but there are other ways to offer financial services to consumers in Africa. The job of banks is to be responsive and flexible - the sort of model that works in the US or Europe needs adapting for Africa.

On a related note, First National Bank and NCR Corporation, the global leader in consumer transaction technologies, won the award for “Best ATM and Kiosk Project in Africa,” at The Asian Banker’s Middle East and Africa Country 2014 Award ceremony.


Robert Johnston

NCR Financial Services

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Based out of NCR's R&D center in Dundee, UK, Robert Johnston is a global evangelist for NCR’s retail banking software strategy. Here, Johnston shares his insights on the banking industry and how consumers are driving today's conversation.