African Banks Understand Africa Better – And That Matters for the Future of Payments

Out of this gap emerged one of the continent’s most striking financial shifts: the rapid rise of mobile-enabled wallets and fintech platforms that gave people a way to transact securely, even without a traditional bank account. Necessity was the primary driver of this innovation – and African banks played a central role in scaling and securing these new channels.

The effect was transformative. Low-value domestic transactions and remittance flows – once slow, costly, and unreliable – could now move quickly across platforms designed for the way African economies actually function. By embedding these flows into formal systems, banks and their partners helped expand financial access, draw liquidity into regulated channels, and demonstrate that Africa could pioneer solutions where traditional models had failed to reach. This was, in many ways, the first phase of Africa’s payments transformation: a demonstration that when solutions are built for local conditions, adoption follows at scale.

That lesson is even more critical for the next phase. The challenge today is more about integration than inclusion – enabling cross-border and higher-value flows that underpin trade, infrastructure, and investment. Here, too, Africa cannot depend on frameworks designed elsewhere. As global correspondent banks recede, it is African institutions that are stepping forward to provide the networks, the credit, and the regulatory alignment to keep capital moving. Just as they helped reimagine everyday payments, African banks are now central to shaping the systems that will determine the continent’s financial future.

Notwithstanding the positive strides that have been achieved in this regard, there is still room for improvement.

An aspect that requires concerted focus pertains to the documentation standards applied across various African markets. To expedite the pace of development and attract broader pools of liquidity, it may require local regulators to embrace the use of master agreements. These documents, which govern derivative transactions, provide frameworks for repeatable and scalable future transactions.

This alignment is especially visible in trade finance. In deals where local issuing banks lack the credit standing or international relationships to support cross-border trade, regional intermediaries are stepping in with the regulatory footing to meet compliance conditions at both ends, and with the institutional reach to hold counterparties to terms enforceable across jurisdictions. This is slowly developing into a payment system grounded in the realities of how African economies actually transact.

Still, building a functioning system on these realities is more difficult than the logic suggests –  because the underlying conditions shaping payments in Africa are volatile, uneven, and often outside the control of the banking sector itself. Foreign exchange availability, for instance, continues to constrain settlement across borders. In many markets, U.S. dollar liquidity is a function of commodity-linked export earnings and is subject to volatility from global price cycles as well as uncertain investor sentiment. Auction-based allocation and flexible exchange rate regimes are being deployed to improve market depth, but for many banks, meeting payment obligations in hard currency is still unpredictable, especially for import-linked trade.

An increasingly important offset to these periodic liquidity pressures comes from migrant labour, with countries such as Mexico, Nigeria, India, Egypt, and Zimbabwe relying heavily on remittance inflows. Providing financial support to extended families, taking advantage of investment opportunities, and securing an asset base for a potential return home require creative solutions to sustain these flows. Importantly, a transparent, reliable, and competitively priced platform could reduce the use of parallel market channels.

Credit capacity is also under pressure. With public debt occupying a growing share of bank balance sheets, the space for private sector lending – including trade and transactional finance – has narrowed, and the resulting concentration has heightened systemic risk as sovereign profiles weaken, as recent restructurings have shown.

These structural limitations are now being met with regulatory counterweights. Across markets, central banks are tightening capital requirements and pushing for stronger buffers to absorb shocks. One way in which banks are responding is through digital investment to reduce cost, improve compliance, and expand access – though this brings additional demands on cybersecurity and skilled capability. In jurisdictions flagged as high-risk by global standards bodies, enhanced due diligence has also raised the cost of maintaining correspondent relationships, limiting the very networks needed to support external payments.

All of this directly shapes the evolution of Africa’s payment infrastructure. At forums like SIBOS,  the next phase of global financial architecture is debated, and African realities such as these must feature more prominently in both design and priority-setting.

African banks are, above all, resilient.

Many continue to generate good earnings and maintain operational stability, even in difficult macroeconomic conditions. That strength comes not from being shielded from risk, but from knowing how to manage it through local knowledge, proximity, and experience. The future of payment infrastructure should build on that foundation. It needs to reflect the institutions that already carry the system forward, every day.