Paper short abstract:

Commercial banks have always played an enormous role in financial development but currently they are likely to be disrupted by the FinTech companies. Africa may develop its own model for financial development built on mobile money and mobile banking so understanding the potential is vital.

Paper long abstract:

In the financial development and banking of the Western world the commercial banks have always played an enormous role. Currently they have many clients and branches but they are less innovative and struggle with organizational inertia. No wonder that they are very likely to be disrupted in the coming decades by mobile money and banking provided by FinTech companies.

Partly because of the lower overall penetration and availablity of commercial banking in Africa, many people are still outside of the financial markets and have no availability of credit at all. In this light, it is quite clear that the role of commercial banks has remained limited in the development of the financial markets in the continent. As an alternative, mobile banking has been booming and - as it seems - the countries may not need to follow that financial development path of the Western World where commercial banks played an enormous role. Based on the young and vibrant population of Sub-Saharan Africa where already one fifth of adults have a mobile money account, the continent may take and alternative path in broadening the financial markets. According to this development model the role of commercial banks would remain largely the same and mobile money would be the main driver of the creation of a larger financial market. May the African model be successful in the long run and is there a need for increased penetration of the commercial banks at all? The paper tries to answer these key questions.