With the African financial services industry rapidly evolving as a result of advancing technology, which is fuelling innovation and growth in the sector (finance), Vice President of Sales for DHL, Sumesh Rahavendra, has identified Small and Medium Enterprise (SMEs) as the engine for growth in Africa, warning that the lack of access to finance can often hinder their development.

Rahavendra expressed that Africa is one of the fastest growing middle classes in the world and as a result, there is a wave of consumerism for all types of goods and services such as FMCG, electronics and pharmaceuticals.

“The burgeoning middle class and abundance of SMEs in Africa present great opportunities for financial services companies to provide retail banking services to individuals, as well as trade finance to SMEs. We see SMEs as the engine for growth in Africa and the lack of access to finance can often hinder their development. With one of the fastest growing middle classes in the world, there is a wave of consumerism for all types of goods and services such as FMCG, electronics and pharmaceuticals."

The financial sector, being described as mature in most developed countries, is less saturated in Africa, therefore offering many opportunities for new market entrants to challenge the status quo of how business has traditionally been conducted.

Also, financial services in Africa 2015(1) report by PwC described the sector as a marketplace without boundaries. It explains that compared to global markets - where the outlook for financial services are more solid - the risk of disruption in traditional African financial services market has triggered the need for entities to reassess their strategies.

Rahavendra added: “While most international banks are moving towards e-commerce, in Africa, a number of local banks still share information and conduct business with hard copy documentation.

“The local retail banking sector is increasingly making use of new technology such as 'Mobile Money' platforms. Consumers have started to move away from physical cards, instead, relying on their mobile phones to conduct day-to-day banking transactions.”