Powering the next phase of growth in the competitive retail banking landscape of West Africa

As we enter 2016 the financial services industry of West Africa will increase its reliance on retail banking for growth in the sector. Nigeria is experiencing shrinking net interest margins largely to due to falling yields from the bond market and increased cost of funding. The Central Bank of Nigeria has limited the commission on turnover a bank can charge and 2016 the bank has mentioned implementation of a free banking.  Overall, the sector is still outperforming the economy with growth in earnings above the GDP rate.

Retail banking in West Africa will expand as banks look to capture the growing middle class and accessing the unbanked population.  The middle class now is requiring more sophisticated products providing opportunities to deepen customer wallet share through product bundling and existing relationships.  Also, the SME segment is rapidly expanding as they transition into corporates, the banks benefit from higher returns on this segment which will help drive non-interest revenue.

For emerging markets, infrastructure plays an important role in banks’ technology decisions and explains the slow adoption of internet banking verse mobile banking in Africa. West African banks are looking for technology solutions that enable them to have the same kind of service across all channels with greatest emphasis being placed on mobile banking. Banks are behind on payments and collection as Telco’s are quickly becoming more prominent and first players to provide payment platforms across Africa.  New competition will come from brands like Paypal, Paga, Ali Baba, Amazon and ApplePay who are the new game changers. 

Mobile banking in north Nigeria presents a unique opportunity for banks as there are over 40 million adults who remain unbanked due to the conditions in the area. While almost everyone has a mobile phone in North Nigeria, a small percentage of those phones are smartphones, making penetration in mobile banking extremely low. In this region, telecom operators can be partnered with to reach these people. Banks will need to be innovative in order to capture new markets and compete with new industry disruptions.

The Asian Banker will be organising the 3^rd Annual West Africa International Retail Banking Dialogue in Lagos, Nigeriato discuss key trends and challenges faced by decision makers in the West Africa retail banking landscape.

The dialogue will bring together an advisory panel from other parts of the world who will contribute their own insights into the experiences of leading decision makers in the region. This includes, Eric Tachibana who currently works at Amazon in Platform Strategy & Transformation. Tachibana has held senior banking roles at Barclays Capital, Merrill Lynch, Bank of America, and COO of the Asia Pacific chief technology office at UBS. David Millar a partner with DXL Risk Consultants with over 40 years’ experience in banking who was an operational risk manager at a global British bank and subsequently Chief Operating Officer at the Professional Risk Managers’ International Association. Raphael Hukai, Chief Technology and Information Officer, Equity Bank Kenya, behind the bank’s agency banking technology strategy.