African chief executive officers (CEOs) have prioritised digital transformation and operational efficiency for the next 12 months as part of measures to stabilise continental economies in the wake of the COVID-19 pandemic.
The disclosure was contained in a survey titled “African Financial Industry Barometer”, conducted by
Deloitte in partnership with the Africa CEO Forum and unveiled yesterday at the inaugural virtual Africa Financial Industry Summit.
The report indicated that majority of financial institutions had begun digitising their businesses or were in the process of doing so.
The pan-African study highlighted the transformational efforts and goals of the industry, as business leaders grapple with the economic fallout of the virus in the face of pressing need to kick-start economic recovery.
It said the digital age and huge participation of new comers have forced Africa’s financial institutions to review their business models, governance practices and risk management capabilities.
To meet the demand of the day, the report said they have developed a tremendous appetite for innovation by embracing digitalisation initiatives, open banking, insurance or partnerships with fintechs and insurtechs, regarded as accelerators of financial inclusion.
“Traditional financial institutions’ ability to bring partners into their ecosystems and deepen their collaboration with new stakeholders is a key driving force behind these shifts. In addition, Africa’s financial institutions have a positive view of open banking and open insurance – innovations that have primarily helped them develop new businesses and products,” the document noted.
The report pointed out that 59 per cent of the business leaders sampled submitted that the continent’s financial industry had grown increasingly attractive despite recent departure of some international banks, adding that since the COVID-19 crisis, more work had been done to engender sustainable transformation.
Speaking on the document, Senior Partner, Risk Advisory, Deloitte, Aristide Ouattara, observed: “Financial institutions are operating in a changing regulatory landscape and macroeconomic environment. And despite some improvements, they face new challenges. The barometer confirms a tremendous appetite for innovation.
However, there are real areas for improvement on emerging topics such as digital finance and personal data protection.”
He continued: “Convergence with international regulatory standards and the entry into force of the African Continental Free Trade Area (AfCFTA) are additional factors accelerating the pace of financial inclusion. By contrast, restrictive monetary policies and limited access to capital markets continue to hamper the progress of financial digitalisation. That said, leaders welcome regulators’ efforts to transpose international standards such as financial reporting standards and accounting frameworks, while noting certain shortcomings on issues like digital finance, personal data protection and financial market regulation.”
The survey further said risk mitigation and monitoring pose major obstacles, especially in the area of cyber-security, as well as in the financial sphere, operational matters and legal and industrial risk.
Accordingly, it stated that addressing these emerging risks required a new and more innovative approach to their management.