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21 Aug 2023

Embrace, Challenge, Transform: The Future of Digital Banking and Transacting in Africa

Mpumelelo Makhubu-Mukogo, Head: Digital at Standard Bank Global Markets Digital Solutions

21 August 2023, Johannesburg: Banking in Africa is on the brink of its next transformative era. Gone are the days of discussing the Fourth Industrial Revolution as a concept; we are already immersed in a world augmented and powered by artificial intelligence (AI), Big Data, and cloud computing. Now, the next frontier beckons, with generative AI, secure online watermarked fingerprints and cryptocurrencies taking centre stage.

Africa has demonstrated its propensity for embracing technology, particularly in the financial services sector. With around 8 out of 10 people on the continent owning mobile phones and over 570 million people online in 2022, up 470% from 2010 (a significant contrast to the global increase of 159%), access to information and services has become easier. Now more than ever before, digital access to financial services in Africa is at a ripe stage. However, to further and continue this digital transformation journey, we must solve the existing infrastructure challenges, collaborate more and strengthen institutional connections.


To remain relevant, banks and central banks must evolve to embrace and adopt the opportunities presented by new technologies such as blockchain, mobile money and cloud technology. However, new opportunities also come with risks, which require updated regulations that are effective but do not stunt innovation especially those that are being driven by fintechs. Fintechs should not be seen as threats, but as partners that could help established players in meeting the needs of customers. 

On a continent where physical cash still accounts for more than 70% of transactions, there is a tremendous opportunity to apply lessons learned from Mobile Money adoption and get more people into the banking economy in a safe and accessible way.

Mobile Money solutions are among the fastest-growing payment methods on the continent, and we can make the next exponential step by leveraging these Mobile Money solutions beyond just payments or peer-to-peer transactions. Africa has a young, digital-native and rapidly urbanising population, the continent is a hotbed of start-ups and fintechs helping solve financial challenges and many countries and territories are easing regulations to speed up technological adoption in banking. 

We need to embrace technology as we always have, while learning from the other early adopters to produce the best new-age solutions for our customers. Mobile Money solutions have vast potential to evolve into more complete banking products, including lending, saving and investing – and banks must lead in that charge. 


There is arguably no market in which the growth of - and demand for - more inclusive and accessible financial services is more prevalent than in Africa. Our rapid commercial growth and globalisation over the past decade have made more inclusive financial services even more critical. The growth of Small to Medium Enterprises and entrepreneurship in several African countries and accompanying innovation in fintech - particularly blockchain technology – has the potential to drive the improvement of financial infrastructure across the board. 

As Standard Bank, we are no strangers to peer-to-peer (P2P) payments, which have been widely used to enable informal and small business ventures at the heart of many African economies by easing the logistics and cost of payments. It no wonder that Africa’s cryptocurrency adoption rate was 1 200% between June 2020 and July 2021, with more than $100bn worth of cryptocurrency payments made to Africans during that period – the bulk of which were remittances.

Another key area that needs development is efficient and lower-cost cross-border payments to facilitate Intra-Africa trade as well as trade outside of the continent. One solution which seeks to address the Intra-Africa need is the Pan African Payment and Settlement System (PAPSS), which enables cross boarder instant payments across African countries, without the complexity, time and money it takes to make these payments using traditional correspondent banking methods. 

With PAPSS, participants do not need to first convert local currency to a hard currency like USD as an expensive, time-consuming intermediary step when making a payment to a participant in another African country. Wide adoption of PAPSS across the continent will revolutionize payments on the continent and contribute towards economic growth. It is for this reason that we as Standard Bank South Africa, have signed a memorandum of understanding to be one of the banks providing settlement of these transactions. We also aim to be a participant bank in most of the markets we operate in. 

 Several African countries have seen a rapid uptake of cryptocurrencies as a means to access more efficient payment rails provided by blockchain networks and yield returns on income with assets like Bitcoin or Stablecoins, which are designed to maintain stable value through being pegged to an asset such as the US Dollar.  

Because of the volatility of cryptocurrencies, the real potential for increased financial inclusion in Africa lies in the blockchain infrastructure that underpins them, rather than in the currencies themselves – Stablecoins aside. The distributed ledger system can instantly eliminate fraud and human error in transactions and foster transparency in financial records, which can enable the creation of corruption-resistant and robust welfare systems. It can also provide mechanisms for fair and transparent microfinance and increased purchasing power, to support the creation and growth of small enterprises that serve communities. Blockchain technology can kickstart new trade opportunities between nation-states and give Africans the opportunity to take part in a technological revolution and form part of the decentralised economy.

At Standard Bank, we are starting to make significant progress in leveraging blockchain and smart contracts via our Aroko payment platform. This end-to-end digital payment solution uses distributed ledger technology, with its smart contract capabilities, to enable businesses to have automatic foreign exchange (FX) payments and settlement. We also provide FX and money markets products to innovators via our world-class application programming interfaces (APIs), where we are able to provide both indicative or executable FX and money market rates through direct integration with customers’ systems.


Where, then, does that leave traditional banking? It’s clear that the answer is not to compete with fintechs nor ignore these 4IR technologies, but rather to complement and use these technologies through participating in our own right, and via partnerships. 

Digital Banking solutions which will matter now and, in the future, are those built by not only leveraging emerging technology but through collaboration between traditional incumbent banks, central bank regulators, and fintechs in solving the challenges which inhibit access to financial services in and outside of Africa at true scale. 

Ultimately, the aim is to contribute towards sustained economic growth and development in Africa, and we are likely to move towards this faster through partnerships with these start-ups, MNOs and fintechs, which are often more innovative and agile in solution delivery. By layering a culture that supports agility and measured risk-taking on top of a base of sound technologically innovative solutions, we can set alight the true potential of Africa.