Fintech Financial Revolution: African Traditional Banks Possess An Edge They Can Leverage

CR2 has recently released a report on the ongoing fintech financial revolution in Africa
CR2 has recently released a report on the ongoing fintech financial revolution in Africa

CR2 has recently released a report on the ongoing fintech financial revolution in Africa, and according to the report, the traditional financial institutions can still be a part of the revolution by leveraging their most significant assets, which is client trust.

Traditional Banks Must Enter Into Partnerships For The Fintech Financial Revolution

The report highlighted how financial institutions who wish to fast-track and improve their chances of being successful in the fintech space, need to go into partnerships with some of these fintech startups and other technology based companies. Having such partnerships, together with their client networks of many years and clearly defined regulatory terms, means financial institutions can have their own share of Africa’s growing digital market.

Citing a Nigerian bank as an example, the CR2 report uses the story of Guaranty Trust Bank GTB to illustrate the importance of having banks and fintech partner together. GTB reportedly lost clients following its mobile banking platform going offline. Meanwhile, in a sharp contrast to GTB’s woes, a Venture Capital VC-backed fintech startup Kudabank, saw its customer base rise by over 350% from 300,000 to 1.4 million in less than 3 years.

However, the report also dares to believe that traditional financial institutions can still compete with VC-backed fintech startups if only they choose to leverage their most significant asset which is client trust. This however is not just an assumption, as the client trust advantage is backed up by an independent study carried out in Nigeria by a consulting firm McKinsey Consulting.

Trust Remains Highly Important

McKinsey Consulting found out in the study, that nearly 67% of banked customers in Nigeria would rather stick to their banks than migrate to fintechs. There’s this general apprehension around d the subject matter. For this reason, while convenience and access  are still very important aspects for customers to decide with, trust remains quite critical for them, thus giving the traditional banks the edge.

In conclusion, what these local banks need to do is to seize the opportunity, and leverage their clients’ trust in order to improve their share of Africa’s growing digital finance market.