• 77.3% of African banks see limited customer digital literacy as the main obstacle to digital services.

• High internet costs, poor connectivity, and cybersecurity concerns add to the barriers.

• Banks are investing in AI, cloud, and personalized digital platforms to cut costs and grow market share.

About 77.3% of African banks say limited digital literacy among customers is the biggest barrier to expanding digital services, according to a report released on August 6 by banking technology provider Backbase and African Banker magazine.

The study, titled Retail Banking: Competing for the Modern African Customer, surveyed 203 banking executives across 40 countries.

Respondents highlighted that only half of African countries have integrated computing into school programs. High internet costs and the price of connected devices also limit digital use.

Access to reliable internet was cited as the second biggest barrier by 51% of bank leaders, nearly half of whom head customer experience and operations departments. About 20% focus on digital transformation, while 34.3% hold senior management positions.

Concerns over cybersecurity weigh even more heavily, with 54.7% saying it prevents them from expanding digital banking services. Fewer executives pointed to the high cost of building and maintaining platforms, noting that digital channels are still less expensive than physical branches.

The report noted that these barriers should ease over time as internet prices fall, electrification improves, and mobile money adoption grows. The spread of mobile money is expected to play a key role in convincing more people of the benefits of digital financial services. Cybersecurity issues, meanwhile, are likely to lessen as banks strengthen defenses and customers become more confident using digital products safely.

When asked about their top priorities, 68% of African banking executives pointed to boosting operational efficiency. Many see digitizing back-office processes and automating lending and sales as key to cutting costs and speeding up services. This includes adopting artificial intelligence (AI) and cloud computing to optimize internal systems.

At the same time, 57% said they aim to grow market share through innovative digital tools that allow banks to tailor services to customer needs. Using AI and customer data, banks are personalizing products and improving support to strengthen loyalty.

Cybersecurity remains a strategic concern, with 41% of executives prioritizing investments in advanced cyber-resilience measures. Banks see this as essential to protecting sensitive client data, preventing fraud, and maintaining trust.

Despite these efforts, digital banking in Africa still has a long way to go. Just 54.8% of surveyed executives said that more than 40% of their customers currently use mobile or online platforms, leaving the majority still outside digital channels.