Fast-Changing Face of Transaction Banking
How Longer will banks be relevant?
With over 60% of Africa’s population under the age of 25 and a growing middle class in the Middle East, demand for seamless, accessible financial services is surging. The rise of mobile phone penetration is phenomenal. Africa alone has over 500 million mobile money accounts, creating fertile ground for digital banking. Governments and regulators are increasingly promoting financial inclusion and digitization, with initiatives like the Central Bank of Nigeria’s cashless policy, Uganda’s National Payments Regulations 2021 and the UAE’s Vision 2021 driving modernization.
Key Trends
The shift from cash to digital payments is accelerating across both regions. In Africa, mobile money platforms like M-Pesa in Kenya and MTN Mobile Money elsewhere in Africa have enabled millions of the unbanked to use the formal financial system. In the Middle East, contactless payments and digital wallets, such as Saudi Arabia’s STC Pay and the UAE’s e& Money, are gaining traction, supported by robust infrastructure and high smartphone usage. Real-time payment systems, such as Egypt’s Instant Payment Network (IPN) and the UAE’s Instant Payment Platform, are further enhancing transaction speed and efficiency.
Open banking, enabled by Application Programming Interfaces (APIs), is fostering collaboration between traditional banks and Fintechs. In the Middle East, Bahrain and the UAE are leading with regulatory frameworks that encourage data sharing and innovation. This allows businesses to integrate banking services—like real-time cash flow monitoring—directly into their operations.
The M-Pesa evolution in East Africa: Originally a peer-to-peer payment platform, M-Pesa has expanded into a full-fledged transaction banking ecosystem, offering merchants payment gateways, microloans, and savings products. Its success has inspired similar models across the continent. Telephone networks like MTN and Airtel are following.
Saudi Vision 2030 and Fintech: Saudi Arabia’s ambitious economic diversification plan has spurred investments in transaction banking innovations, including the launch of SARIE, a real-time gross settlement system, and partnerships with Fintechs to digitize SME financing.
Cross-Border Solutions: Companies like Flutterwave and Paystack in Africa are simplifying cross-border payments, enabling businesses to transact seamlessly across currencies and jurisdictions.
The Road Ahead
The future of transaction banking in Africa and the Middle East now leads to two fundamental questions and one light-hearted one: a) How much longer shall we have money as a thing? b) What relevance will banks maintain in the far future with all these innovations c) How many people will meaningfully say “I am going to the bank” in the year 2035?” Your guess is as good as mine. So, we all better brace up. Innovations in transaction banking are not just a trend but a fundamental shift in how value is created and exchanged in Africa, the Middle East, and everywhere
Dr. Keren Obara.
Digital Marketing Associate.