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Home-grown African banks are stepping up expansion across the continent, powered by local knowledge and innovation.

Togo-based Ecobank has been particularly successful in pan-African expansion. It was established through a private-sector business initiative with the support of the Economic Community of West African States in 1985, when few commercial banks in the region were owned and managed by the African private sector. Today it has branches in 33 countries across sub-Saharan Africa. Nigeria-based United Bank for Africa (UBA) and South Africa’s Standard Bank each have a presence in 20 African countries. In North Africa, Moroccan banks are actively expanding southwards.

Nigerian banks have benefitted from a wave of consolidation, triggered by reform in 2005, which left the remaining banks better positioned for transcontinental growth. In Kenya, banks are expanding into neighbouring markets largely through innovation, such as mobile banking. In addition, many banks are finding opportunity in places where wary European and American banks have pulled out. “Banking is a relationship game,” says Ugochukwu Nwaghodoh, Chief Financial Officer of UBA. “We have local knowledge.”

There are challenges to African expansion, of course, not the least of which is the continent’s fragmentation, according to The Economist. Divergent regulations and markets can make it slow and often less profitable for African banks to grow regionally. Olamipo Ogunsanya, an analyst at Renaissance Capital, says that banks are too small outside their core markets to grow organically and would do better to focus on a few key countries.

Certain trends could support further growth of regional banks in Africa, however. Ade Ayeyemi, CEO of Ecobank, points to new technologies – chiefly mobile banking – which enable operation at the continental level. Ecobank can design products and process data centrally, Ayeyemi notes, providing services in places where it has no branches. Its mobile app allows customers to open and access accounts on their phones. Further, Ayeyemi does not see the diversity of African markets as a problem. “You don’t ask Unilever the same question,” he countered.

The spread of their corporate clients is also helping regional banks grow, creating a win-win. Africa’s top 30 companies now operate in an average of 16 countries, twice as many as a decade ago, according to a recent study from the Boston Consulting Group. Standard Bank’s corporate clients range from construction firms to airlines, says Olusola “Sola” David-Borha, CEO of African operations outside South Africa. “They are helping to grow our market share, as we use our expertise to support their expansion,” she adds.

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