Digital adoption across financial institutions in Africa is no longer a growth input but a survival necessity, according to the African Financial Industry Barometer 2025.
- •Over 80% of finance executives in the continent now consider digital transformation as a priority for strategic growth in the next three years, alongside financial performance and customer experience.
- •The survey conducted on more than 70 institutions also determined that 45% of banks in Africa consider themselves digitally mature but 35% still believe they need to innovate more of their services.
- •Insurance companies marked the highest growth of confidence in digital maturity, with 59% of the surveyed firms affirming they have advanced compared to 40% in 2024.
“Maturity in 2025 reveals a qualitative shift in African digital technology; technology is no longer a differentiator but has become an operational prerequisite,” the report states.
Institutions are now prioritising core system upgrades, risk controls, and cybersecurity over flashy customer-facing innovation. The report notes that 51% of banks, up from 39% in 2024, regard cybersecurity as the greatest concern outpacing inflation and political instability.
About 65% of the surveyed firms claimed to have installed fully operational fraud prevention systems, with 70% focused on detection. Banks and fintechs have outperformed other financial sectors in equipping their systems with cyber defense. The report also laments that proper cybersecurity requires massive investment of in-house security operations centers, which many financial companies cannot afford. To keep up with the demand, most of them outsource the task to external security providers thus losing control over threats specific to their context.
“This dependency limits organizational learning and internal-expertise building, perpetuating reliance on third parties for strategic functions,” the report added.
The sophistication of Artificial Intelligence is considered as the greatest threat for financial institutions who realize the need to be proactive as new forms of fraud surface. However, the financial sector in Africa is also aware that AI presents a valuable arsenal to protect systems. About 77% of the surveyed firms think that AI will be crucial for fraud detection over the next three years.
Financial institutions are also gearing up to use AI for customer mobilization as 72% of the firms target tools like chatbots to expedite personalized offers and recommendations. Other projected impacts of beneficial AI will be credit risk analysis and optimization of operational processes. Banks with deeper capital are more likely to translate these AI gains more rapidly than fintechs with more pressing short-term priorities.
“Fintechs have moderate expectations for AI (50 - 66%), reflecting budgetary trade-offs; faced with urgent regulatory compliance requirements and the need to demonstrate rapid profitability,” the report also said.
The report also suggests that fintechs are increasingly treated as suppliers rather than disruptors. Partnerships now focus on payments, onboarding, compliance tools, and infrastructure services. Banking-as-a-service platforms are gaining an edge over digital neobanks, which rely on direct customer acquisition.
“Institutions are favouring models that build on existing assets rather than acquiring new customers. Banking-as-a-service and embedded finance let banks turn regulatory and technical infrastructure into revenue by selling access to third parties through APIs,” the report noted.
Shortages of specialised skills remains a strategic constraint across the financial sector, with 64% of executives citing it as a concern. The most acute gaps appear in risk management, data analytics, cybersecurity, actuarial science, and regulatory compliance; crucial skills that underpin stability. As institutions digitise and regulatory expectations rise, the demand for these skills has accelerated faster than supply and competition for talent has intensified.
For 28% of African financial executives, interoperability is regarded as a transformative way to achieve financial inclusion by bridging fragmented systems, inconsistent standards, and uneven regulatory frameworks across markets. Institutions that report that limited interoperability between banks, payment systems, fintech platforms, and cross-border infrastructures continues to raise costs, slow product rollout, and constrain regional expansion. Fintechs and capital markets (each at 50%) regard it as a necessity.
Meanwhile, 23% of the surveyed parties believe an expanded digital infrastructure is enough to achieve financial inclusion. About 14% reported that financial education through tech platforms will achieve the revolution.
