E-Financial
5 Tips for Designing African Digital Banking Experiences for Young & Old
As mobile internet connectivity grows, African youth are fast embracing the opportunity to connect, converse and transact on the web.
According to the GSMA (Mobile Economy Report 2015), mobile internet penetration in Sub-Saharan Africa was expected to reach 38% by 2020.
This has largely been driven by lower costs of smartphones, which the GSMA says have decreased by 20% since 2008.
A rapidly growing local app market and easy access to games and social media have captivated the youth market.
Although the Millennials generation is a Western construct, African youth (18 to 34) – particularly the urban youth – are displaying similar online behaviour patterns to their counterparts in developed countries.
And, while the older generations may accuse them of being driven by a need for instant gratification, the youth’s expectation of simple, fast and always-on service is shifting how organisations design their offerings.
Banks, meanwhile, have built their credibility by portraying themselves as the bastions of the economy, institutions designed to protect your money, with caution built into their organisational DNA.
While this is important, of course, it isn’t something that necessarily attracts their fastest growing potential customer base.
Here are five pointers to help African banks attract and retain customers, no matter what their age, and to ensure they are preparing for future generational expectations.
1. Prepare to be compared
At the very outset, it’s important for banking institutions to understand that the younger generations are swiftly getting used to having information at their fingertips.
Research published by Pew Research Centre (2015 Global Attitudes Survey) shows that African youth are jumping at the opportunity to engage online.
In Tanzania, those aged between 18 and 34 are 17% more connected to the internet than their elders. This climbs to a significant 31% in both Nigeria and Kenya.
The research also shows that the connected youth are active on social media on a daily basis.
Social media is being used to ask questions and to make comparisons based on experience. Price comparison websites are also making it easier to make informed decisions.
This significantly changes the dynamic of how the youth choose products and interact with brands. It is obvious then, that banks will need to change the way they engage with the younger generation. Designing for a frictionless experience must be priority.
2. Just make it work
User experience becomes a key issue when servicing customers across generations.
Based on their engagement with global sites, the connected youth have an expectation that everything must work immediately, offer real value, in a seamless experience.
While the younger generations have a better understanding of technology, continued literacy challenges and multiple regional dialect demographics adds complexity to the user interface served up by financial institutions.
Complex security terms such as phishing and pharming can cause mistrust of the service. In many instances, this lack of understanding may lead to customers avoiding digital channels altogether, which in turn drives up the cost of delivery for the banks.
Making use of technology that appears exceptionally simple to the user takes away the fear factor.
When it comes to authentication, banks must guarantee their customers’ protection against phishing and other digital fraud vectors without the costly and clumsy use of one-time passwords.
These may give the appearance of good security, but they are less effective and overly complicated, particularly for those accessing services on their phones.
Removing complexities at the very outset of the transaction resonates with both the older and younger generations.
3. No one reads anymore
No generational cohort reads lengthy warnings or instructions.
People will click through to the end of an instalment or process without actually being fully aware of the details – or this may again increase their mistrust of the service.
Moreover, in our experience, when an organisation uses text-heavy instructions, abandonment rates shoot up. When communicating instructions, the “keep it simple” rule reigns supreme.
4. Markets are not the same
Companies also need to understand that new markets work very differently.
What may have worked in Botswana, may not be obvious to those in Kenya.
People use and engage with technology, language and each other differently in every market. This includes generational quirks.
Banks will need to tweak their user engagement depending on where they are operating.
Working with partners who have experience in a region allows a bank to learn from their experiences, which can save time and costly mistakes.
5. Innovating for future generations
We see a lot written about banks becoming simple transaction pipes. To avoid this, they must adapt in order to provide better value for their customers. This can be achieved in three ways:
A simple user authentication, which has excellent security, is a great way to build trust with customers.
Once this is in place, you can confidently open up your channels and add new services.
Banks can then begin leveraging their merchant network in order to start on-selling their products to their customers – essentially becoming an aggregated merchant platform. By nurturing trust, banks are able to capitalise on a captive customer base and bring to bear vast economies of scale.
The complexities of catering across borders and language barriers and for different generations with different user expectations are enormous. However, if banks invest in technologies that are simple, seamless and flexible, they can not only ensure all age groups form trusting, lasting relationships with them, but also take an important step towards building new revenue opportunities for the future.
Dewald Nolte
Co-founder and VP Business Development at Entersekt
Dewald Nolte helped establish Entersekt in 2008, and later took up the position of VP of Business Development for the company.
Having identified an urgent need for innovative new approaches to securing digital transactions and other sensitive data, he and his fellow co-founders set out to build a business that is dedicated to providing transaction authentication using digital certificate technology deployed to mobile phones.
Renaissance Capital Africa (Rencap) has named Zenith Bank Plc its top conviction pick among Nigerian banks, ahead of GTCO and AccessCorp, in a fresh research report highlighting the lender’s robust balance sheet and dividend potential despite sector headwinds.
Zenith Bank
The comprehensive review of the Nigerian banking industry notes that Zenith’s current market valuation lags its improving fundamentals, even as the NGX Banking Index posts strong gains recently.
Rencap upgraded Zenith from HOLD to BUY, lifting its target price by 96 per cent based on a lower risk-free rate from falling government bond yields, refined beta estimates, and expectations of cleaner assets post-forybearance resolutions.
Balance Sheet Strength Drives Outlook
Analysts project challenges to earnings growth from anticipated Central Bank of Nigeria (CBN) rate cuts but foresee higher dividend payouts from resolved forbearance and single obligor loan (SOL) exposures alongside rising cash profits.
“Although we expect banks to face challenges in growing earnings… the balance sheet clean-up… will support higher dividend payouts relative to prior years,” the report states, ranking Zenith first, followed by GTCO and AccessCorp.
Key positives include loan write-offs that bolstered asset quality, enabling sustainable growth amid financial system reforms.
Dividend Recovery in Focus
Sector profitability from 2023-2024 was inflated by unrealised foreign exchange gains, which regulations barred from cash dividends, capping payouts despite headline profits.
Zenith historically led payout ratios in 2021-2022 via strong cash generation and capital discipline; Rencap expects a rebound as pressures ease, attracting income-focused investors.
Tier-1 Leadership Reinforced
Zenith Bank recently topped Nigeria’s tier-1 capital rankings for the 16th straight year, per The Banker magazine (Financial Times), affirming its resilience and positioning for long-term value creation.
CBN
- Access Bank Plc
- Fidelity Bank Plc
- First Bank of Nigeria Ltd
- Guaranty Trust Bank (GTBank)
- United Bank for Africa (UBA)
- Zenith Bank Plc
- FCMB (First City Monument Bank) – currently pushing to raise additional capital to secure its international licence.
- Wema Bank
- Standard Chartered Bank (Nigeria)
- Citibank Nigeria
- Stanbic IBTC Bank
- Sterling Bank
- Globus Bank
- Premium Trust Bank
The Securities and Exchange Commission (SEC) has revised the minimum capital applicable to all categories of regulated capital market entities after 10 years.
The minimum capital review, according to the SEC, is informed by the need to strengthen market resilience, enhance investor protection, align capital adequacy with the evolving risk profile of market activities, and ensure that regulated entities possess sufficient financial capacity to discharge their obligations in a sustainable manner.
“The revised Minimum Capital framework seeks to: enhance the financial soundness and operational resilience of market operators; align capital requirements with the scope, complexity, and risk exposure of regulated activities; promote market stability and systemic risk mitigation; and support innovation and orderly development of new market segments, including digital assets and commodities markets,” SEC said in a January 16 circular to market operators.
The SEC circular was sent to all entities regulated by the Commission, including but not limited to core and non-core capital market operators; market infrastructure institutions; capital market consultants; financial technology (FinTech) operators; Virtual Asset Service Providers (VASPs); and Commodity market intermediaries.
All affected entities are required to comply with the revised Minimum Capital Requirements on or before June 30, 2027, the circular said.
“Entities that fail to meet the prescribed requirements within the stipulated timeline shall be subject to appropriate regulatory sanctions, including suspension or withdrawal of registration, as may be determined by the Commission,” SEC said.
Tier-1 Portfolio Managers (Full Scope) involved in the management of Collective Investment Schemes (CIS) and Alternative Investment Funds (Private Equity, Venture Capital, Infrastructure Funds etc) above N20 billion Net Asset Value (NAV), or discretionary and Non-Discretionary Private Portfolio Management Services above N20 billion Assets under Management (AuM), or exposure to foreign instruments up to 40 percent of the NAV are now required to have a minimum capital of N5 billion as against N150 million.
“Any Fund and Portfolio Manager with NAV/AuM of more than N100billion should have a minimum of 10 percent of the NAV/AuM as capital,” SEC added.
For the Tier-2 fund/portfolio managers (Limited Scope) who are in the business of management of Collective Investment Schemes with limited pooled fund creation of not more than 10 times the required capital (N20 billion) on Net Asset Value (NAV), or discretionary and non-discretionary private portfolio management services of not more than N20 billion, or those exposure to foreign instruments of not more than 20 percent of the NAV, now require N2 billion as minimum capital as against low of N150 million.
Likewise, broker-dealers whose services include: client execution, proprietary trading, margin/securities lending and advisory services no longer require N300 million minimum capital to operate but N2 billion.
The SEC said the minimum capital review from 2015 low is in line with its mandate under the Investments and Securities Act 2025 to regulate and develop the Nigerian capital market.
Also, Tier 1 issuing houses who do non-interest finance services, advisory & arrangement services but no underwriting now require N2 billion as against N200 million; while Tier 2 –issuing houses with underwriting and offers a ‘one-stop-shop’ for issuers, provides underwriting services, and renders advisory and product development services require N7 billion minimum capital for this business as against N200 million.
Also, the minimum capital requirement for brokers (client execution only) has been jacked up from N200 million to N600 million, while that of dealers (proprietary trading only) has been moved from N100 million to N1 billion.
Broker-Dealers’ (client execution, proprietary trading, margin/securities lending and advisory services) has been raised from N300 million to N2 billion, while Sub-Brokers’ (Digital) from N10million to N100million; Sub-Broker (Corporate) has been increased from N10million to N50 million. Also, sub-brokers’ (Individual) now need N10 million minimum capital for the business as against N2 million while inter-dealer brokers require N2 billion as against N50 million.
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