This article was produced with the support of Backbase
A new landmark report released by Backbase, a global leader in AI-powered banking technology, in partnership with African Banker magazine, has highlighted the rapid transformation of small and medium-sized enterprise (SME) banking across Africa. Titled Small Business Banking: Africa’s Next Growth Segment, the report draws on insights from over 200 senior banking executives from across 40 African countries and offers a data-driven look at how banks are reimagining their support and offerings for SMEs through digital-first solutions.
SME banking moves to centre stage
The findings are striking: 83% of African banks now view SME banking as “very” or “extremely” important, with significant or major investments planned in the segment. This marks a decisive shift, as banks increasingly recognise SMEs as the backbone of Africa’s economies and a key driver of future growth.
Mobile banking has become the dominant channel for SME services, with 84% of banks now serving SMEs primarily through mobile platforms. This mobile-first approach is helping banks reach previously underserved businesses, particularly in remote or rural areas.
However, the report also highlights ongoing challenges. Only 42% of banks currently offer full digital account opening for SMEs, revealing a persistent bottleneck in financial inclusion. Digital onboarding remains a critical hurdle, limiting the ability of many SMEs to access formal banking services quickly and efficiently.
Bridging the digital divide
To address these gaps, 70% of banks surveyed are providing workshops and training to SMEs, aiming to bridge the digital literacy divide and accelerate adoption of new technologies. This educational push is seen as essential for ensuring that digital transformation benefits businesses of all sizes, not just the tech-savvy.
AI-driven lending is another area of rapid growth. Nearly half (47.7%) of African banks now offer digital lending products, leveraging artificial intelligence and predictive analytics to make credit decisions more inclusive and accurate. This is particularly significant in markets where traditional credit scoring has excluded many viable small businesses.
The report features compelling case studies of institutions leading the charge. South Africa’s African Bank, for example, has integrated AI-powered analytics into its SME platforms, enabling more personalised and efficient services for business clients. Meanwhile, Nigeria’s Moniepoint is processing a staggering 800 million transactions monthly for small businesses, underscoring the scale and speed of digital disruption in the sector.
Heidi Custers, Global Strategy & Transformation Director at Backbase, emphasised the significance of these developments: “SMEs are the backbone of Africa’s economies, and digital innovation is finally making it viable for banks to serve them at scale. What this report shows is that SME banking is no longer a niche, it is the next growth engine for the industry. By combining mobile-first platforms with AI-driven insights, African banks are turning financial inclusion into a profitable, sustainable strategy.”
Looking ahead
As African banks continue to invest in digital-first solutions and AI-driven services, the SME sector is poised to become the continent’s next major growth engine. The full report is available at Backbase’s website and offers further insights into the strategies and innovations shaping the future of African banking.
