Banks in Africa Struggle with Customer Centricity
BRUSSELS, 31 January 2019 – Focusing on the needs of customers remains a challenge for savings and retail banks in Africa, according to a new report issued today by WSBI’s Scale2Save Programme, a partnership between WSBI and Mastercard Foundation.
Based on a survey of 34 WSBI Africa institutions in 2018, the 50-page report finds that member banks offer a variety of transaction and savings accounts as part of their drive to attract and satisfy customers. But it also found their product and service mix still falls short of customer needs. That shortfall could decrease account activity and hamper take-up by potential customers. If this persists, banks surveyed could face weak financial performances.
WSBI Programme Director Ian Radcliffe said: “WSBI banks offer a broad service, which shows a real commitment to widening financial access to low-income people, especially when it comes to women and those in rural areas. Reform of bank business models, for example through greater customer-focused bank leadership and culture, would improve the customer experience when opening an account and actually using it. Doing so would allow banks to satisfy customers more, which would lead to more sustainable services from the banks themselves.”
The report also identified a persistent “affordability gap”, which makes it difficult for low-income populations to access financial services. More than 40% of the population of Sub-Saharan Africa lives on less than the internationally recognized poverty line of $1.90 daily. The study adds that any business case that includes high account charges for account maintenance is bound to fail for this segment of the population.
Radcliffe added: “Lack of customer centricity drains the bottom line for banks, and ultimately the sustainability of financial services for poorer people, especially given razor thin margins in serving these segments. Services have to be convenient, secure, affordable and accessible to deliver value for the customer while keeping the bank on a sustainable footing.”
High-tech accessibility hampered by start-up costs; customer reach suffers
Survey results show appetite by respondents to scale-up alternative delivery channels for financial services, such as through ATMs, agents and mobile phones. Some 45% of respondents remain interested in spending on mobile banking. Designed to make it easier for customers to carry out banking, alternative channels have a costly price tag that weighs down on the already limited operating budgets of banks. The survey indicated that banks see upfront investment costs as an especially heavy burden, while outlays for continuous training and monitoring are often neglected.
Radcliffe concluded: “As mobile banking continues to explode in Africa, WSBI member banks will need to spend more on digitally driven platforms. To keep costs in check and speed up service delivery, the report recommends that the banks consider partnering with mobile network operators, or new players such as fintech companies.”
See full report here.
Notes to editor:
Scale2Save is a partnership between WSBI and Mastercard Foundation to establish the viability of small-scale savings in six African countries. The six-year programme aims for 1 million more people banked in those countries through projects using innovative models.
The World Savings and Retail Banking Institute (WSBI) represents the interests of 6,000 savings and retail banks globally, with total assets of $15 trillion and serving some 1.3 billion customers in nearly 80 countries (as of 2016). Founded in 1924, the institute focuses on international regulatory issues that affect the savings and retail banking industry. It supports the achievement of sustainable, inclusive, balanced growth and job creation, whether in industrialised or less developed countries.
About Mastercard Foundation
Mastercard Foundation seeks a world where everyone has the opportunity to learn and prosper. The Foundation’s work is guided by its mission to advance learning and promote financial inclusion for people living in poverty. One of the largest foundations in the world, it works almost exclusively in Africa. It was created in 2006 by Mastercard International and operates independently under the governance of its own Board of Directors. The Foundation is based in Toronto, Canada. For more information and to sign up for the Foundation’s newsletter, please visit www.mastercardfdn.org. Follow the Foundation at @MastercardFdn on Twitter.