Four distinct digital strategies for African Retail Banks

McKinsey has broken digital strategies retail banks, in Africa, can take as 40% of African banking customers now prefer digital channels while about the same like branches. The consulting giant in the report offers four distinct digital strategies: digitally transform like Equity Bank (Kenya), partner with telcos like MShwari, become a digital bank like ALAT, and build an ecosystem of non-banking services like Alipay.

. Some 40 percent of the African banking customers we surveyed prefer to use digital channels for transactions, roughly the same share as those who prefer branches. In four of the continent’s major banking markets, the share of customers who prefer digital channels is significantly higher than the share preferring the branch channel. Banks can adopt one of four distinct digital strategies:

1. The first is to digitally transform their existing operations, to increase their share of digital sales and transactions to beyond 60 to 70 percent on each measure, as Kenya-based Equity Bank has done.
2. Second, banks can partner with telcos or fintechs to deliver mobile financial services to their clients at a cost below that of the branch network. An example, also from Kenya, is MShwari, the mobile-based loans application formed in partnership between Commercial Bank of Africa and Safaricom.
3. The third digital strategy is to build a digital bank from scratch— as Nigeria’s Wema Bank did in launching ALAT,Africa’s first fully digital bank, in 2017.
4. Finally, banks can build an ecosystem or platform of non-banking services. Alipay in China and the Commercial Bank of Australia have applied this approach at scale in areas such as travel and hospitality (Alipay) and home-buying (CBA).

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