Backbase’s report reveals digital transformation as African banks wager large on SMEs

A brand new landmark report launched by Backbase, a worldwide chief in AI-powered banking expertise, in partnership with African Banker journal, has highlighted the fast transformation of small and medium-sized enterprise (SME) banking throughout Africa. Titled Small Enterprise Banking: Africa’s Subsequent Progress Section, the report attracts on insights from over 200 senior banking executives from throughout 40 African international locations and affords a data-driven have a look at how banks are reimagining their assist and choices for SMEs by way of digital-first options.

SME banking strikes to centre stage

The findings are placing: 83% of African banks now view SME banking as “very” or “extraordinarily” essential, with important or main investments deliberate within the phase. This marks a decisive shift, as banks more and more recognise SMEs because the spine of Africa’s economies and a key driver of future progress.

Cell banking has change into the dominant channel for SME companies, with 84% of banks now serving SMEs primarily by way of cell platforms. This mobile-first strategy helps banks attain beforehand underserved companies, notably in distant or rural areas.

Nonetheless, the report additionally highlights ongoing challenges. Solely 42% of banks at present supply full digital account opening for SMEs, revealing a persistent bottleneck in monetary inclusion. Digital onboarding stays a crucial hurdle, limiting the power of many SMEs to entry formal banking companies shortly and effectively.

Bridging the digital divide

To deal with these gaps, 70% of banks surveyed are offering workshops and coaching to SMEs, aiming to bridge the digital literacy divide and speed up adoption of latest applied sciences. This academic push is seen as important for making certain that digital transformation advantages companies of all sizes, not simply the tech-savvy.

AI-driven lending is one other space of fast progress. Almost half (47.7%) of African banks now supply digital lending merchandise, leveraging synthetic intelligence and predictive analytics to make credit score selections extra inclusive and correct. That is notably important in markets the place conventional credit score scoring has excluded many viable small companies.

The report options compelling case research of establishments main the cost. South Africa’s African Financial institution, for instance, has built-in AI-powered analytics into its SME platforms, enabling extra personalised and environment friendly companies for enterprise shoppers. In the meantime, Nigeria’s Moniepoint is processing a staggering 800 million transactions month-to-month for small companies, underscoring the dimensions and velocity of digital disruption within the sector.

Heidi Custers, International Technique & Transformation Director at Backbase, emphasised the importance of those developments: “SMEs are the spine of Africa’s economies, and digital innovation is lastly making it viable for banks to serve them at scale. What this report reveals is that SME banking is not a distinct segment, it’s the subsequent progress engine for the business. By combining mobile-first platforms with AI-driven insights, African banks are turning monetary inclusion right into a worthwhile, sustainable technique.”

Trying forward

As African banks proceed to put money into digital-first options and AI-driven companies, the SME sector is poised to change into the continent’s subsequent main progress engine. The total report is out there at Backbase’s web site and affords additional insights into the methods and improvements shaping the way forward for African banking.