Post financial crisis, the 2,300 pages of the Dodd Frank Act and the European Union documents that have been published in 2010 were assumed to pave way of how the banking industry should do business, that is being more responsive, more risk adverse, with more capital cushion. 7 years onwards, it seems that the US and the EU financial networks have operated quite safely.
But the evolution has not been without a price for the banks. A sizable share of corporate credit comes from specialized funds of debt, or from lending platforms. And the payment systems may be soon revolutionized by Fintechs and IT service companies. In other words financial technology is developing inside the banking profession as well as outside it.
From this point of view, African banks may be well positioned to take advantage of the situation in their market. They have access to information technology as much if not better than their European or American counterparts. Just like telephone operators who have gone directly to the mobile phone, African banks can overcome certain standards of practice and build an offer consistent with the needs of their local customers, businesses as well as individuals. The M-Pesa mobile phone-based money transfer and (micro) financing system developed in Kenya is one example ot this. The IT tech overhaul of the Central Bank of Somalia may be another example to monitor.
In its June 16th – 22nd release, The Economist draws our attention to “Banking in Africa Making waves” where banks with sizable assets ($ 22bn of otal assets for Ecobank from Togo) are just doing what their local customers are waiting from them : “standing at both ends of a commercial transaction”. It is maybe a far cry from securitization of assets but in so doing these African players are showing their US and European counterparts that there are opportunities in (re) building local franchises taking advantage of new IT technologies insofar as to stick to the local consumer and to the local corporate needs.
Towards an african way of doing banking business ?