Online banking solutions and mobile wallets started making waves across Africa between the late 1990s and early 2000s. During that period, international financial institutions and regulatory associations took active steps toward matching their words with actions to provide financial inclusion for millions of Africans who had little or no access to banking services.
Apart from the undeniable fact that these financial institutions and investors identified a ready market in Africa – which continued to record great successes in entrepreneurship, start-ups, small and medium-scale business expansions, and financial independence; there was a large market in Africa with a huge amount of liquidity, but near zero access to banking services.
The efforts to provide banking solutions to these teaming populations across the continent were also a result of the World Bank Group’s commitment to Universal Financial Access. The charter was adopted by the World Bank as a means of assisting investors in the Banking Sector to bank the unbanked in Africa.
According to the World Bank, to be branded a success, the initiative should have assisted Banks and financial service providers with the enabling environment and support to create a minimum of 1 billion bank accounts and mobile money wallets by the year 2020. Also, as part of this goal, The International Finance Cooperation (IFC) reiterated its commitment to extend formal financial services to a minimum of 600 million Africans by 2020.
Was the Financial Inclusion Initiative a Success?
In all fairness, the World Bank’s initiative for financial inclusion in Africa was a huge success and helped in providing banking solutions to millions of people across the continent. Within two decades, banking services evolved from being a portfolio for a priviledged few who belonged to the upper echelon of society to becoming an easy access for anyone who desired it.
Through mobile money platforms, many Africans, including those without formal education, are able to save, transfer and pay bills from their mobile phones, even without an active internet connection. There are currently over 22 internationally registered digital financial services receiving IFC advisory support in East and West Africa. These digital financial service providers helped a great deal to provide banking solutions to millions of Africans who were previously unbanked.
However, according to a recent report by the IFC, “despite attention to issues of financial inclusion, an estimated 2 billion adults worldwide still don’t have a basic account.
Globally, 59 percent of adults without an account cite a lack of enough money as a key reason; financial services aren’t yet affordable enough or designed to fit low-income users. Other barriers to account-opening include the distance from a financial service provider, lack of necessary documentation papers, lack of trust in financial service providers, and religion.”
What is the Current State of Online Banking Services in Africa?
Within the last couple of years, online banking services across Africa have continued to battle numerous challenges. There has been the issue of security of funds and poor services, which has continued to cause more hardships and losses for the millions of Africans who depend on online banking service providers for their day-to-day transactions.
In November last year, African Exponent reported How Hackers Stole $11 Million from 12 African Countries Overnight and another case of how hackers diverted as much as a total of $86 million from individual accounts on MTN mobile money service, MoMo PSB.
Although many critics still argue that this is a global challenge, it appears that the African mobile money and online banking service providers have a lot to do in the area of protecting the funds of millions of Africans who have opted for their services. The losses, coupled with the erratic service delivery, have led to the loss of millions of dollars and unimaginable challenges for Africans.
Earlier this year, Britain’s financial watchdog fined GT Bank approximately 7.7 million pounds ($9.3 million) for what it described as repeated failures of the bank in its anti-money laundering systems and controls.
The list is endless, and the result is that more Africans are losing trust in the once-beloved financial and banking intervention solutions.
Why are Online Banking Services in Africa Falling Apart?
In recent times, more Africans have continued to lend their voices to what they say is an unending difficulty experienced in accessing their accounts and delay in the delivery of transfers to recipients. The loss of funds to hackers and the constant threat of the same is another aspect that has left millions of Africans concerned.
Experts, however, disclosed that the challenges facing mobile money and online cum digital banking services could be linked to the activities of unscrupulous elements who are taking advantage of service failures – which have exposed existing loopholes.
These existing loopholes are linked to the shortage of key IT staff and personnel in the continent. Experts say the shortage is a result of the high rate of migration of IT experts from Africa to the United States, Europe, and the UK. This mass exodus has created a vacuum in the continent. Thus, technical and security issues are left unattended to as when due. Thereby giving room for hackers to operate and prolonged downtime on the platforms that often leave customers stranded.
According to a report by TechCabal on a review it carried out on 19 former and current employees of a leading mobile banking service provider in Africa, it noted that “the IT division has suffered a spike in attrition within the last six months. It has resulted in technical gaps and work overload for current employees.
“At least ten team members resigned this year from the application development team, a unit which often consists of 20 members, according to a former software developer with the bank,” the report added.
Quoting a staff member who pleaded anonymity, the report revealed that “there’s a particular team where three members left in the space of one month. Now, four people’s responsibilities are being juggled by one person.
It is evident that the constant loss of experienced talents and key IT personnel without concrete measures to fill the positions has contributed to the lapses that translate to poor services that the banking service providers have experienced in recent times.
What are your thoughts?