Africa and the Middle East share many common features: young populations, high smartphone penetration rates, and problems with unequal access to banks and banking services, particularly in rural areas. These demographically young and fast-growing regions include hundreds of millions of consumers who are growing up with a deep attachment to their phones and the benefits that the internet has to offer. Historically, banks across the Middle East and Africa may have been slow to react to the demographic and technological changes around them, but this is no longer the case. Over two-thirds of African and Middle Eastern bankers (68% v 58% globally) now say adapting to new demands will have the biggest impact on their businesses.
When it comes to who African and Middle Eastern bankers see as their biggest commercial rivals to 2020, it is payment players (cited by 42% of respondents v 53% globally).
However, across the Africa and Middle East region, bankers now worry that new entrants will be better at attracting retail borrowers, with 52% citing lending and leasing as being the main area where they expected new entrants to gain the most market share. Another area for concern is savings and deposits, cited by 40%, as well as payments, selected by 35% of bankers, along with SME financing (selected by 20% of respondents).
Across both regions, banks are very keen to develop their own niche propositions, with 65% of respondents citing this as how they see their business model evolving. However, 57% of regional bankers are looking to develop banking as a digital ecosystem and 51% say they are opening services to third-party developers. It is clear, given the growing dependency of the younger generation on mobile and digital sources, that banks, non-financial providers and popular platforms will need to work together to not only retain their own customers, but to also reach new ones.
