Johannesburg, 18 Aug 2005
African banks are investing heavily in the Internet as a channel in a bid to drive down costs and improve efficiency, but the adoption of this channel by customers is slow, says Godwin Emefiele, deputy MD of Nigeria`s Zenith Bank.
However, he says there is still a business case for banks to invest in this channel.
Speaking at Terrapinn`s Banking Technology Africa 2005 conference in Sandton yesterday, Emefiele said Africa was experiencing the fastest growth globally in mobile phone adoption, but Internet usage was growing at a much slower pace.
Emefiele was presenting a paper on behalf of Zenith Bank MD Jim Ovia.
Statistics show that in Africa, less than 2% - or one in 200-300 - of the almost 900 million-strong population uses the Internet, compared with a world average of one in 15.
"Africa has a long way to go," he comments.
Yet innovative Internet banking services are growing, and many banks even offer customised Internet banking services to meet the needs of specific customers. Zenith, for example, offers an automated direct payment system, e-ticketing, embassy solutions and the like.
Positive spin-off
Internet usage in SA has grown ahead of other African countries, with reports indicating that 7.4% of the 47.6 million population using the Internet. More than 26% of Internet users in Africa are South Africans.
Emefiele says the country also has the largest population of Internet banking subscribers in Africa, with a World Wide Worx report showing that at the end of 2003 there were more than a million online bank accounts.
But in the rest of Africa, things look bleak. In Ghana, for example, there are only about 400 000 Internet users in a population of 21 million. The Internet also ranks lowest on a list of preferred e-banking media, with ATMs at the top.
In Nigeria, about 2.4 million of Nigeria`s population of more than 130 million people use the Internet.
Constraints include inadequate ICT infrastructure, inadequate funding, absence of an appropriate regulatory framework, and the high cost of bandwidth, telephone lines and Internet access.
Emefiele says the positive aspect is that Africa can learn from the early adopters elsewhere in the world and leapfrog the process. Steps that would have to be taken would include vigorous development of ICT infrastructure, addressing cyber security threats, and deregulating the ICT industry.
Asked whether it would not make more sense and more profit to invest in the ubiquitous cellphone as a channel instead of the Internet, Emefiele said it was not a matter of either one or the other. Banks needed to give customers a choice and not restrict them to one channel.
"We cannot ignore customers because shareholders want more money. Our banks are not making losses."
Related story:
African banks embrace technology
Share