Africa’s banking markets are among the most exciting in the world, according to a new report by the McKinsey Global Banking practice. The continent’s overall banking market is the second-fastest-growing and second most profitable of any global region, and a hotbed of innovation. Nearly 300 million Africans are banked today, a number that could rise to 450 million in 5 years.
The report illustrates four segments of African markets – from the advanced markets like South Africa and Egypt, to fast-growing transition markets such as Kenya, Ghana and Cote D’Ivoire, to sleeping giants like Algeria, Nigeria and Angola, to nascent banking markets like DRC and Ethiopia.
According to the report, Africa’s top quintile banks – the so-called “winners” – are simultaneously 4 times more profitable and over 2 times faster growing than bottom quintile banks. These “winners” are defined by employing one or more of five winning practices, including drawing the right map in terms of geographic footprint; focusing on the right segments offering compelling opportunities; simpler banking; digital first and innovating on risk.
About two-thirds of Africans remain unbanked, presenting a massive opportunity for growth of financial services providers. McKinsey thinks that close to half of all Africans will be using banking services in some form by 2022. With great understanding of their market, especially the potential offered by huge population, African banks are winning; using technology to improve financial inclusion.
Foreign investors are also exploiting opportunities on the continent and for most of them; Africa is too big to ignore.