Yasmin Masithela | Managing Executive | Transactional Banking | Absa Corporate and Investment Banking | mail me |
Before we can unpack the operating challenges and opportunities in transactional banking, we need to emphasise this point. The global economy has faced a re-set of sorts as inflation has spiked higher and global interest rates have risen from historical lows.
It is certainly not ‘business as usual’ in the world of financial services and banking.
Economies are getting stronger across Africa
Emerging markets – including South Africa – face a myriad of challenges but too often, a negative narrative overshadows real progress being made.
In 2022, we were part of a delegation attending an event coordinated by the International Monetary Fund (IMF) where the topic was focused around sovereign risk on the African continent. This particular event was intriguing as we had analysts from across the globe who were assessing sovereign risk on the continent but at the same time having to grapple with structural issues in both the US and European financial systems.
The reason that this particular event stands out is the impressive recovery in African markets with the likes of Tanzania and Zambia leading the way while Ghana is showing early signs of green shoots after a particularly challenging year.
As representatives of the African continent, it became increasingly clear that we have a very real place to play in the global economy and in many ways, we are more agile and able to respond quicker to changing levels of economic activity. Our global peers recognise the opportunity and if we focus more on the opportunity – and less on the challenges – we will unlock significant value.
What does this mean for transactional banking?
We need a shift in mindsets if we are going to operate alongside our global peers. The competitive landscape has evolved such that it is not enough to be competitive in the domestic banking sector, African banks are competing against global peers and a whole host of world-class fintech businesses who are fundamentally changing the financial services landscape.
This means that we need to attract and retain world-class talent that have a combination of skills encompassing global technology best-practices alongside an understanding of financial services in both emerging and developed markets.
The single biggest risk that we are currently facing is the “semi-gration” and emigration trends. Global recruiters are snapping up the best and brightest technology talent and this holds back our ability to develop and rollout local technology solutions to enhance the transactional banking landscape.
Promising trends
Despite these challenges, there are two trends which we are quite excited about. The first is around the payments journey and real-time payments in Africa.
In recent months, we have made significant progress in technology to facilitate cross-border payments. This means that individuals and businesses can transact with far less friction and at much lower costs.
The second area where we are getting quite excited is the emergence of a “hub” model when it comes to regional banking. This has been catalysed by the African Continental Free Trade Area (AfCFTA) which aims to enhance intra-Africa trade and ease of doing business.
East, West and Southern Africa offer very real growth prospects but are faced with a variety of different operating and regulatory environments which leads to quite a fragmented financial service offering.
South Africa, for instance, has a very advanced banking and financial services sector and should be a catalyst for growth in places like Mozambique and Botswana through the deployment of solutions that support these regional hubs. As a universal bank, we cannot view our value proposition in isolation.
In conclusion
We cannot have an advanced personal banking environment and then a high-friction business banking offering which is ultimately servicing the same client. If our customers and partners are doing more transactions, we are helping them grow their businesses and drive economic activity.
We are entering an exciting era for transactional banking in Africa and technology innovation is driving us to build stronger, lower-friction and more efficient markets. We see our value proposition increasingly being delivered through a regional model, where the local environment nuance is supported by the strength of the Pan African expertise.
African economies are stronger despite the challenges on the continent, and we look forward to being a key role player that unlocks even more value in the coming years.
