OP-ED: The banking sector, like many industries, stands at a crossroads, grappling with a tidal wave of shifting consumer expectations driven by emerging technologies and disruptive business models.
Financial institutions across Africa are now racing not only to acquire new customers but also to retain existing ones—the majority being tech-savvy individuals under the age of 40.
East Africa’s youthful population holds immense potential, particularly as they constitute the majority of those excluded from formal financial systems.
For instance, the 2021 FinAccess Household Survey by the Central Bank of Kenya (CBK) reveals that individuals aged 18–25 are the most underserved when it comes to accessing financial products and services. At the same time, the survey also highlights that most banking customers in Kenya are aged 26–40 and have at least completed secondary education. This is largely attributed to advancements in financial technology and innovations, particularly mobile money and mobile banking, which have made financial services more accessible and appealing to younger consumers.
In today’s fast-paced, technology-driven world, younger customers no longer place significant value on brand loyalty. Instead, they prioritise personalised, seamless, and accessible banking experiences—often available at the touch of a button. The challenge for banks, therefore, is to stay relevant to this tech-savvy demographic while maintaining strong relationships with their more traditional, loyal customer base.
One potential solution lies in conversational banking—an innovative approach that integrates digital technologies with customer service to foster long-term loyalty and engagement. Conversational banking, or engagement banking, enables customers to interact with their bank through real-time conversations, allowing them to make inquiries, perform transactions, and resolve issues seamlessly via platforms like WhatsApp. Automation in these interactions accelerates processes, streamlines services, and enhances efficiency, benefiting both banks and customers alike.
However, not all customer queries can be addressed by bots. For more complex issues, human agents must remain readily available to provide that essential personal touch. By combining automation with human interaction, banks can deliver superior, customer-centric services that appeal to a diverse range of clients.
The African Digital Banking Transformation Report 2023 highlights engagement banking as a key trend in the industry, defining it as the use of digital technology to cultivate long-term relationships between financial institutions and their clients. This approach prioritises the customer experience, ensuring satisfaction and loyalty over time.
Banks that embrace conversational banking will be well-positioned to attract the tech-savvy younger generation while retaining their traditional customer base. A unified, integrated platform that offers a seamless, personalised banking experience is fundamental to the success of engagement banking.
Looking ahead, the future of banking lies in adaptability. By adopting emerging technologies, embracing new platforms, and understanding evolving consumer behaviours, banks can overcome existing barriers and transform into dynamic ecosystems that redefine the banking narrative.
To thrive, banks must not only leverage innovative technologies but also remain flexible in adapting to shifting business models. Above all, they must place the customer at the heart of every strategy, ensuring the banking experience remains relevant, accessible, and customer-centric in an increasingly digital world.
The writer is George Muhia, Head of Enterprise Business, East Africa at Infobip
