How Technology is Disrupting Financial Sector in Africa

Julius Bizimungu

The pace of adoption of emerging technologies across regional countries has increased in recent years consequently impacting lives of end users.

For instance, Emmanuel who resides in Nyabugogo, a Kigali suburb, is able to pay for food at the market as well as moto fare via his mobile phone.

This is partly thanks to mobile solutions such as Ecobank’s application which enables clients to make payments by simply scanning the Quick Response (QR) code.

In partnership with MasterCard, a global payments and technology company, the bank designed a QR code that allows account holders like Emmanuel who have the Ecobank Mobile Banking App on their smartphones to make payments at sales points by just scanning the Ecobank QR at a merchant’s place.

This enables merchants like shops, restaurants, bars, food vendors, moto-taxi drivers among others to accept payment from mobile phones without having to use a point of sale (POS) device.

By rolling out such technology solutions, banks and other financial institutions are aiming at attracting and retaining new clients.

“We are targeting to attain 100 million new customers in a profitable and sustainable way by 2020. Obviously we cannot do this in a traditional way. What we have realized is that we have to go digital to achieve it,” Alice Kalonzo Zulu, the Managing Director of Ecobank Rwanda told an audience at a scientific conference in Kigali last week.

At the recently held Next Einstein Forum (NEF) Global Gathering hosted in Kigali last week, there was optimism by participants from different industries and parts of the continent that technology will turn around the financial sector, further driving financial inclusion for the unbanked population.

Current trends such as the QR solutions indicate that this could be achieved sooner if investments are maintained.

Another technology driven solution Tala, a Kenyan mobile loan application, is enabling clients access credit.

The platform relies on alternative data to deliver instant credit and help customers build their financial identities.

The financial technology (fintech) firm is using technology to serve the financial sector, which Rose Muturi, the company’s Regional Manager in East Africa says  is rapidly being disrupted by technological advancements

“People are using phones more than ever. Technology is disrupting the way financial services are delivered and the trend continues to pick up pace,” she said.

Tala is already present in other countries like Tanzania, Philippines and Mexico with Muturi revealing that they intend to expand to other African markets which bear potential.

“We are targeting developing countries and at the moment we have more than 1.5 million customers who we have been able to give loans to. In terms of amount, we have also been able to disburse more than USD300 million,” she noted.

According to Muturi, the data collected by Tala show that more than 70 per cent of those who borrow money either start a business or expand existing businesses. Most of them are in the age bracket of 18 and 35 years old.

“With such information, you are able to certainly facilitate the youth and avail the resources guided by the precise data you have about them,” she said.

Tala is not the only firm seeking to disrupt the financial sector, Danapay a decentralized transfer and payment service, developed by Malian entrepreneurs, Moussa Dembele and Gaoussou Keita has similar ambitions.

The relatively unique operator uses blockchain technology to enable interconnectivity among financial institutions in Africa and others across the world.

“A lot of transactions in Africa are in cash and when operators offer transfer and payment services, the proposed rates are often relatively high. We want to make financial transactions cheaper, faster and secure using technology,” Dembele said.

As a Danapay user, one has an electronic wallet whereby they are able to recharge the ‘electronic wallets’ of those they wish to send money to at a relatively low fee compared to traditional money transfer options. The service is now in Mali, Niger, Togo, Cote d’Ivoire, Senegal, Burkina Faso, and Benin.

Across Africa, there are hundreds of companies like Tala and Danapay that are trying to leverage technology to deliver financial services.

Increasingly mobile banking and e-wallets which most fintech businesses are offering  have been said to have a significant impact in helping to reduce banking logjam, offering a range of alternative payment methods as well as lending and savings services to formerly unbanked people.

A recent study by McKinsey and Company indicates that digital finance has the potential to reach over 1.6 billion new retail customers in emerging economies and to increase the volume of loans extended to individuals and businesses by $2.1 trillion.

However, the progress and ambition has been amidst some resistance from some countries to adopt new technologies.

For instance, Blockchain technology continues to face widespread resistance in a number of African countries despite potential benefits in the technology promises.


Alice Kalonzo Zulu, the Managing Director of Ecobank Rwanda said that the bank has experienced a lot of restrictive regulations mostly in some West African countries which makes it harder for them to leverage latest technologies in the banking sector.

Rwanda’s experience in using technology in financial sector

The Minister for Finance and Economic Planning, Amb. Claver Gatete, says that is not disputable that digital technologies have potential to radically transform the financial sector and drive overall economic growth.

“In 2008 access to finance was at 48 per cent only. We then had to assess the situation and found out that about 27 per cent of broad money was outside the banking system. At the same time, more banks were concentrated in urban areas than rural areas. It was hard and untimely to make transactions and to access financial services,” he said.

“What we did was to set up the Rwanda Integrated Payment Processing System, and we asked banks to have systems that were standard. Things started moving faster; we introduced card system and mobile payment system, and banks begun introducing more digital innovative products,” he added.

The adoption of digital technologies within the banking sector, the minister said has seen access to formal and informal financial inclusion increase from 48 per cent to 72 per cent in four years before reaching 89 per cent in 2016.

“The things we used to teach people like the use of cards are no longer the things they want. They went beyond and now many are using mobile solutions. We are seeing this as a transformation,” he noted.

Ecobank’s Zulu said that it is such success stories that can serve as a basis upon which other African countries can adopt latest technologies to accelerate financial inclusion and provide gateway to the digital economy.

She noted  that such a philosophy is leading players such as banks move from opening up new branches to becoming branchless as technology is enabling clients access services without the need for physical infrastructure.

“Today, in Rwanda you can open a digital account using your mobile phone without going to the bank. As a bank, we see digital space as a key one. The way we are doing business is changing at a largest extent,” she noted.


According to the McKinsey and Company study last year in which different chief executive officers from across different markets in Africa were interviewed, 40 per cent of them indicated that digital space is currently their number one priority.

However, Gatete sees the change in technology as a challenge in itself.

“Today you invest in a technology and before finishing to implement it, a new technology comes. You invest in card payments, and tomorrow people want to use mobile phones. The speed at which technology is changing can be a challenge,” he said.

However, he said that blocking new technologies is not the solutions.

Rather, he backed allowing new technologies to emerge and setting regulations based on the experience and to foster their growth.

The government and the private sector are investing USD100 million in a new innovation fund, which Gatete said will help improve existing technologies, but also help customize new technologies coming up.