The African financial industry is at a crossroads, facing an era of unprecedented transformation. Driven by digitalisation, evolving governance, and a growing emphasis on sustainability, the industry is rapidly adapting to new realities but not without challenges.
The 2024 edition of the African Financial Industry Barometer by Deloitte and AFIS paints a picture of both momentum and challenge. It shows a sector navigating a delicate balance between innovation and mounting economic and regulatory pressures. The challenge now is whether financial institutions can evolve quickly enough to meet the needs of a changing market while ensuring financial inclusion for all.
The State of the Financial Market and the Digitalisation Gap
Africa’s financial sector is evolving, but a significant gap remains between ambition and execution. While financial institutions are eager to embrace digital transformation, many are still struggling with outdated infrastructure, limited connectivity, and a shortage of digital expertise.
Banks, fintechs, and insurers are increasingly investing in cloud computing, artificial intelligence, and big data to streamline operations, enhance fraud detection, and improve customer experiences. However, adoption remains inconsistent. For instance, only a small fraction of financial institutions have fully deployed AI. The report showed that while 71% are in the process of AI integration, only 2% have deployed AI projects.
At the same time, the continent’s financial ecosystem is shaped by external pressures. Inflationary trends and fluctuating interest rates force institutions to reassess their strategies. Faced with rising costs, 88% of financial institutions have had to adjust their investment priorities, while 76% are bracing for increased operational expenses.
These pressures have kept true digital maturity out of reach for most—only a few financial institutions have fully transformed their operations, highlighting the need for greater investment in technology and workforce training.
Efforts to address these challenges are underway, with initiatives aimed at fostering financial integration across the continent. Programs such as the Pan-African Payment and Settlement System (PAPSS), the African Continental Free Trade Area (AfCFTA), and the African Exchanges Linkage Project (AELP) are working to create a more connected financial ecosystem. However, their impact has been slow to materialize, with financial institutions citing regulatory inconsistencies, infrastructure limitations, and low adoption rates as major barriers
Strengthening Governance and Leadership
With digitalisation and financial complexity on the rise, governance structures are evolving to ensure resilience and accountability. More institutions are establishing audit and risk oversight committees, with 87% already having audit structures in place. Ethical leadership is also gaining attention, and innovation committees are becoming more common, reflecting a shift toward proactive decision-making in a rapidly changing environment.
Yet, diversity in leadership remains an area for improvement. Women remain underrepresented at the board level, with only 23% of institutions having more than a quarter of female board members. This figure is expected to rise as institutions make efforts to build more inclusive leadership teams.
Financial institutions are also expanding governance frameworks beyond traditional oversight. More organizations are forming innovation and ethics committees, recognizing that strong governance is crucial not only for managing risks but also for aligning digitalisation and financial inclusion strategies with long-term sustainability goals.
Adapting to a Shifting Risk Landscape
As financial institutions digitize their operations, the risk landscape is shifting. Cyber threats have become the most pressing concern, with over half of institutions citing significant cybersecurity risks. Operational risks, including system failures and fraud, are also major issues, with 45% of financial institutions reporting high exposure, signalling an urgent need for stronger security frameworks.
The regulatory landscape is also under scrutiny, with 66% of institutions believing current frameworks do not adequately support innovation. Many are advocating for more adaptable regulations that keep pace with digital transformation, ensuring both security and flexibility in an evolving market.
Expanding Financial Inclusion Through Innovation
Despite ongoing digitalisation efforts, financial inclusion remains a major challenge, particularly in underserved communities. Traditional banks and insurance companies continue to struggle with expanding access, whereas fintechs and telcos have emerged as key players in bridging this gap. A striking 94% of financial institutions recognize telcos as essential in expanding financial access, with fintechs developing innovative solutions to reach unbanked populations.
Despite these efforts, barriers remain. Low financial literacy, high transaction costs, and limited digital infrastructure hinder widespread adoption. Regulatory roadblocks and insufficient funding for fintech-led initiatives further constrain progress. Meanwhile, global tech giants such as Google, Apple, Facebook, and Amazon remain on the sidelines, perceived as potential disruptors but not yet deeply integrated into Africa’s financial landscape.
A Future Built on Collaboration and Inclusion
As the industry evolves, financial institutions are focusing on four key pillars for sustainable growth. Digital transformation remains a key focus, with accelerating investment in AI, cloud computing, and fintech partnerships. Enhancing financial performance is also another priority, with institutions optimizing profitability and operational efficiency.
Human capital development is also in focus, as institutions work to close the digital skills gap through training and workforce modernization. Additionally, risk management and regulatory adaptation are becoming essential, with firms strengthening compliance measures and cybersecurity resilience.
Sustainability also plays a growing role, with 43% of financial institutions integrating ESG principles into their strategies. Green finance is emerging as a promising area of growth, particularly in impact investing and renewable energy financing. However, carbon tracking and reporting remain underdeveloped, requiring further alignment with global sustainability standards.
Ultimately, all these efforts—from digitalisation and governance reforms to risk management and regulatory evolution—are deeply connected to financial inclusion. The future of Africa’s financial industry depends on how well institutions, regulators, and technology providers collaborate to create a more inclusive financial landscape. The decisions made today will determine whether Africa emerges as a leader in digital finance or struggles to keep pace with global advancements.