The financial services industry is changing at a fast pace in francophone Africa.

This accelerated transformation is primarily the result of an intensifying competitive pressure on markets where the banking penetration remains generally low (under 20% on average). The industry experienced during the last decade a consolidation process from which emerged a handful of key institutions with a multi local footprint. At PwC, we have distinguished three families of competitors that have a card to play in the banking market of francophone Africa:

• the French giants (Société Générale, BNP Paribas and BPCE),
• the Moroccan pioneers (Attijariwafa bank, BMCE/Bank of Africa and BCP group),
• the sub-Saharan challengers (Ecobank, Orabank, BGFI)

French giants

The international French banks have a long track record in the region and remain in leading positions in key markets such as Ivory Coast, Senegal or Cameroon. These banks offer very competitive solutions in corporate banking but also on high end segments of retail banking. They have already deployed multi-channel strategies and have tested mobile banking on most of their operating markets. They now invest heavily in talent management and have started to share some of their operations at regional level.

However since the 2008 crisis, they became much more risk averse and that could be a handicap to address key segments, such as the SME banking, where it isn’t always easy to collect reliable data and to apply international compliance rules.

Nevertheless, regarding the exceptional ROE level and growth figures of some African subsidiaries, this region is full of promises for French players. A valuable strategy consists on strengthening existing position through equity injection or targeted acquisitions in the anglophone or Portuguese-speaking markets.

Moroccan pioneers

The last five years have been an intense period of geographical expansion for the three main Moroccan banks: Attijariwafa bank, BMCE/Bank of Africa and BCP group. Since their home market has already reached a certain level of maturity, they have developed an impressive know-how to address the diaspora segments (natives living abroad). They now intend to leverage this expertise in sub-Saharan countries, like Senegal or Ivory Coast. And in just a few years, they have established operations in most of the key countries of francophone Africa through external growth, with the right formula between corporate alignment and local agility.

Nowadays, their challenges are mainly twofold: bringing equity to sustain this growth and appetite; and managing efficiently the risk exposure by implementing the proper safeguards and governance in these new countries.

The sub-Saharan challengers

Whether they have a pan-African ambition in their DNA, such as Ecobank, or they are pushed by their shareholders for regional expansion, such as Orabank, the region has gave birth to new contenders who have serious ambitions in francophone Africa. Their African roots are a strength since it allows them to be more reactive. Also, their deep understanding of local customer behaviours and needs make them more innovative in terms of products, services and solutions, especially for SMEs or low-income clients.

Their main challenge for the future is to become bigger. To do so, the best strategy consists in investing on core banking systems, processes alignment and streamlining, compliance and internal audit.

These three groups of players who are often fighting for the very same clients have to transform themselves. The next challenges for all of them are to broaden their customer base (therefore contributing actively to the banking penetration) and to secure profitable growth.

Pierre-Antoine Balu is partner with PwC France and PwC Francophone Africa. This article was first published on PwC’s Africa Upfront blog.