Digital banking is not only perfectly suited to the millennial generation, but it is key to remaining relevant. Pan-African consumers are connected multitaskers who are tech-savvy with an abundance of options. They want instant gratification, appreciate transparency and are price-conscious.

Looking northwards, there's a proliferation of American and European digital banks servicing the type of consumer who is less interested in the mechanics of banking and more interested in convenience. Convenience does not adequately justify signing up for the unbanked, but a digital experience goes a long way towards building the path to financial inclusion.

While digital banking is fast gaining acceptance globally, it has very specific and unique applications on the African continent.

Robert Lane, CIO of Veneka, believes each consumer and community has a specific set of concerns and needs. Only by understanding this can one begin to provide meaningful financial services to the unbanked.

He believes to engage communities, you need to appreciate their needs, wants, aspirations and fears. And these can differ widely. "Financial services is a necessary medicine that can taste bitter, so one needs to responsibly package such services with other value-driving products and services. When you wholly engage someone, then opening a bank account starts to make sense. Until that point, however, putting money into a bank can just look like ATM fees."

Digital banking needs to transcend consumer segments; from simple transactions and payments to budget management and wealth tracking, each consumer has a different story. Let cash-conscious millennials keep track of their spending with interactive graphs. Let farmers access subsidies on their feature phones. Allow SMEs to request business loans without having to resubmit extensive application forms. Let the financial institutions be completely proactive in their approach, using business intelligence and customer insights.

One of the biggest challenges that the incumbent financial institutions have is the inability to react to market demands quickly, owing to outdated systems and the time required to upgrade them.

"Our digital banking solutions allow non-financial institutions to enter the market and enable existing financial institutions to reach markets and communities with new banking products, without having to be dependent on legacy technology and operations," says Lane.

Any digital banking platform that hopes to be successful (in Africa) has to be cognisant of the always connected generation. A GMSA report: "The state of the mobile economy in sub-Saharan Africa (2018)" puts mobile subscriber penetration at 44% (420 million users), with a third of mobile users having a smartphone. By 2020, the region is set to have more than half a billion unique mobile subscribers.

Africa opportunity

In Africa, smartphone users value convenience and functionality over the banking brand; they are interested in what a bank can do for them, and not in who's helping them do it. The whole reason that so many people use WhatsApp is that it's ubiquitous, everyone uses it and it gives people what they need – simple, quick, immediate communication. That's what digital banking should seek to emulate.

One service that's extremely important in the Africa context is the ability to send international remittances. "Africa is characterised by its migrant labour force, all of whom want to send money back to their families. Digital banking can enable this at a lower rate than that charged by traditional banks, as well as allowing the person to do it from their smartphone as and when they need to. Remittances to sub-Saharan Africa alone reached in the region of $40 billion in 2018," says Lane.

Ease of transacting is important to everyone who banks. While the requirements to open a digital banking account differ from country to country, the ability to do so via a smartphone is one of the key value propositions of digital banking. Transactions that require physical interaction are conducted through partner stores that offer a customised basket of services, depending on the territory, usually at a much cheaper rate than offered by the traditional brick and mortar institution. "Banking consumers pay far too much in bank charges on the whole, especially for 'special' services like international remittances and credit, yet in emerging markets in particular, access to credit is essential," says Lane.

Lane concludes by saying: "It's clear that digital banking is well suited to the African consumer. Finally, they have access to agile banking that provides the services that they want, when they want them, on their mobile devices. All they need is a smartphone and connectivity, and they can access banking that offers the right solutions for the local target market in the form of financial services that speak to the consumer."