The first African Financial Industry Barometer, developed by Deloitte in partnership with the Africa CEO Forum, reveals how, in the exceptional context of the Covid-19 pandemic, financial institutions operating in Africa are undertaking a transformation of their business model, governance and risk management capabilities.
The survey reveals that the top three priorities for financial institutions over the next 12 months are digitisation, being the top priority for a large majority of respondents, with 56% having started a digitisation programme and 31% of respondents set to start one within the next 12 months.
The second priority is operational efficiency, followed by mastering emerging risks.
Financial institutions are facing significant pressure on their profitability, especially in the context of increasing claims.
For 59% of participants, the African financial industry is increasingly attractive despite the recent departure of international groups. However, the crisis has led to an average level of sustainable transformation, regardless of the type of institution.
Insurance companies have fewer opportunities for growth, while banks express a risk of weakening their business model.
One of the key factors in the success of the financial industry transformation is the level of interaction between traditional players and new entrants. The ability of a traditional financial institution to open its systems to a partner is critical, and in some jurisdictions such as Europe, even mandatory.
The survey results show that African financial institutions have a positive perception of Open Banking-Insuring (58%).
Moreover, 42% of the financial institutions said they already have initiated partnerships with fintechs or insuretechs, and 42% plan to do so in the short term. Also, for more than 70% of participants, these partnerships are intended to develop new activities or new products.
It is now essential to include qualified independent members on boards of directors: close to 60% of the respondents intend to have more than 25% independent members in the medium to long term.
The majority of financial institutions have set up the traditional specialised committees and are gradually installing new board committees such as the technology committee or the ethics and public relations committees.
The survey also shows a growing interest in traditional green and sustainable finance.
The survey shows that 42% already cover the integration of environment, social and governance criteria in their investment portfolios, 23% already integrate socially responsible investments and 41% are considering it in the short term. Only 19% cover Green Bonds and 35% do not consider it a priority.