USA Today: Africa’s banks are doing what U.S. banks aren’t: Winning
USA Today, February 27, 2018: Africa’s banks are doing what U.S. banks aren’t: Winning
The traditional bank has been under threat for years. In the U.S., branches have been closing at a rapid pace — 1,771 in 2017, according to a National Community Reinvestment Coalition study — as they exit less profitable rural areas and try to lower costs, boost profits and regain trust in the aftermath of the financial crisis.
However, Africa’s banks are thriving. In fact, the continent is the banking industry’s second-fastest growing market and profitable region.
McKinsey says that in 2017, banks in Africa had a return on equity—a measure of profitability — of nearly 15%, second only to banks in Latin America and more than double that achieved by similar institutions in developed markets in Asia, Europe and the U.S. Further, Africa’s banking industry is also expected to grow at a faster annual rate over the next five years compared to its counterparts in developed markets: 8.5% in Africa, versus about 4.5% for banks in advanced countries.
African banks are doing well because they are innovating in how they are meeting huge unmet needs among African consumers, according to Mutsa Chironga, a partner in McKinsey’s office in Johannesburg, South Africa, and one of the authors of its report.