One of UK’s biggest banks is going digital in Africa for a share of the mobile money market

Doing things differently.
Doing things differently.
Image: Reuters/Baz Ratner
We may earn a commission from links on this page.

The success story of mobile money and payments in several African countries has been a boon for financial inclusion and a significant victory for telecoms companies like Safaricom and MTN. In contrast however, that success has caught major traditional banks off-guard, leaving them to play catch-up.

UK bank, Standard Chartered, is making a play for the mobile financial services market in Côte d’Ivoire—where it has no physical presence—with the the launch of its first digital-only retail bank. The bank will offer digital services allowing users make transfers and pay bills.

Standard Chartered currently has retail banking operations in 10 African countries, but is opening up in the West African Francophone country because without a legacy commercial banking business it hopes to start from scratch by redefining itself as a digital bank there. If successful in Côte d’Ivoire, Standard Chartered is expected to replicate the digital bank model in other major African markets including Kenya, Nigeria and Ghana.

Côte d’Ivoire has been one of the world’s fastest growing economies in the last few years although it is expected to slow somewhat due to falling cocoa prices, as the world’s largest producer. The country’s rapid economic growth has attracted a variety of international investors beyond France.

Standalone digital banks are one of the recommendations by consulting firm McKinsey for traditional banks to “strengthen their position” in mobile financial services across Africa. In trying to snag a larger share of the growing market across Africa, banks have resorted to other approaches including partnering with telecoms operators. For example, in 2015, Equity bank, one of the biggest in East Africa, kicked off a mobile money service in partnership with Airtel to rival Safaricom’s M-Pesa. Other recommendations include developing mobile banking apps and partnering with fintech startups some of which have grown to become major drivers of financial inclusion across the continent.

The competition for Africa’s mobile money market is just as high as the stakes: in the 2016-2017 financial year, M-Pesa and MTN Mobile Money, Africa’s two biggest biggest mobile money operators, earned $750 million in revenues.