Africa’s banking sector is entering a critical phase of digital transformation. The joint report, “Retail Banking : Competing for the Modern African Customer”, surveyed 203 senior banking executives across 40 countries. It reveals that while the future of digital banking looks promising, significant obstacles still stand in the way of mass adoption. The study points out that only about 54.8% of banks report that more than 40% of their customers actively use digital platforms. This highlights both the opportunity for growth and the distance yet to be covered.

Digital literacy: the most significant issue

A staggering 77.3% of African banks identify limited digital literacy among customers as the top barrier to greater adoption of digital services. This skills gap is fueled by structural factors: only half of African countries currently include computer science in school curricula, and the cost of connected devices remains prohibitive for large segments of the population. Another 51% of bank executives cite limited internet access as the second key challenge. High data costs and uneven electrification continue to slow the rollout of inclusive digital financial services. Beyond access and literacy, cybersecurity remains a pressing worry for the banking industry. Over 54% of executives surveyed say concerns about fraud and data protection prevent them from expanding digital services.

Banks are highly aware of the risks: they act as custodians not only of customer deposits but also of sensitive financial data. Cyber breaches could undermine trust, cause heavy financial losses, and damage reputations. As a result, nearly 41% of respondents report prioritizing investments in cyber resilience.

Operational efficiency as the top priority

Despite these hurdles, banks see digitalisation as a powerful lever for growth and efficiency. Nearly 68% of respondents list operational efficiency as their top priority, pointing to automation of back-office processes, customer onboarding, and credit applications as key areas for improvement. The deployment of artificial intelligence (AI) and cloud computing is also on the rise, enabling banks to streamline processes, reduce costs, and speed up service delivery.

Personalisation and customer centric banking. Alongside efficiency, 57% of banks are focused on gaining market share through customer-centric digital strategies. Instead of requiring customers to adapt to rigid banking structures, new digital platforms are designed to evolve with client needs. By leveraging AI and customer data analytics, banks are now offering personalised products, targeted financial advice, and AI powered customer service strategies expected to boost client retention and loyalty.

Mobile money as a gateway

The report underlines the central role of mobile money in Africa’s digital banking future. As the continent’s most widely adopted financial technology, mobile money is expected to act as a gateway, convincing more customers of the benefits of digital services and paving the way for broader adoption of online and mobile banking. Falling internet prices, increasing electrification rates, and the growing penetration of smartphones are set to further accelerate this trend in the years ahead.

The African Banker Backbase report makes clear that while digital banking adoption is still relatively low, the momentum is building. If the twin challenges of affordability and digital literacy continue to ease, and if banks strengthen cyber defenses, the sector could soon witness a quantum leap in financial inclusion. For African banks, the next frontier is clear: transforming digital challenges into opportunities for scale, efficiency, and customer trust.