Africa has come a long way in developing new digital payment and banking services, mainly thanks to mobile money products, and the new offerings have helped alleviate problems related to financial exclusion \u2014 many people on the continent still do not have traditional bank accounts.\n\nSome experts, however, believe that there has not been enough innovation and deployment of emerging technology to expand digital finance beyond basic withdrawals and deposits. While there has been some innovation across a wide variety of finance-related services, deployment and usage have not taken deep roots.\n\nMost financial institutions have launched digital products that enable companies and individuals to initiate and receive payments. Clients have also grown accustomed to paying in digital format, especially through mobile money payment options. But services such as digital insurance, virtual bank accounts, digital investment products and e-commerce are undergoing a slow shift.\n\nWhile the growing digitization of financial services products in Africa, especially in the banking sector, is in line with global technology trends, other financial services including insurance and regulation technology, are not seeing as much growth, according to Deloitte's African Financial Industry Barometer.\n\nLarge-scale financial services projects have failed\n\nIn some cases, projects to expand the use of digital payment systems have failed. A classic example is the botched plan to digitize the transport system in Kenya. There have been several attempts in persuading public transport players to adopt digital payments but the efforts have failed.\n\nIn 2014, banks were licensed to produce transport payment cards, which could be topped up by mobile money or over the counter. In the end, the product did not appeal to the industry, despite its clear advantages. \n\n"Digital payment in mass transit has failed in Kenya," said Victor Malu, a financial services consultant and chairman of the Digital Finance Practitioners Association of Kenya. "You have a mobile and bank account in your hand but no usefulness in the transport market."\n\nLegacy banks slow to innovate\n\nOne of the growing trends, especially with young people, is increasing use of online payments in global marketplaces like e-commerce sites. South Africa, Nigeria and Kenya are advanced in terms of using debit\/credit cards online. However, some banks will still insist you either call them or set up a maximum payment amount if you want to use your cards online.\n\nSending money across borders has also been an issue with banks. To fill the gap in such services, fintech companies such as Chipper, MFS Africa, Bitsika have moved into this sector. \n\n"While conditions across Africa are ripe for digital finance adoption, there are signs some traditional banks are missing the moment," according to Africa's Fintech Transformation, a report from digital financia platform developer CR2. "To meet the moment and hedge disruption, traditional African banks need to pursue just the right product innovation to grow (and not lose) digital finance market share to fintech ventures," the report said.\n\nPreference for cash creates hurdles\n\nThe preference for cash by both users and some merchants is the number one hurdle in innovating financial products despite the efficiency of digital services. Compared to mobile money payments (which require at minimum the purchase of a phone), using cash is "free" for users, leading to many having a preference for it, Malu says.\n\nDespite the uptake of mobile money, most transactions in Africa are offline. Online mobile money payments have not taken off as expected despite developments around APIs.\n\nSafaricom's MPesa, for example, has a full-fledged API enabling businesses to take up online payments. Some of the companies and organizations that use its API include Kenya Revenue Authority, online e-commerce site Jumia and payment gateways Flutterwave and DPO Payments.\n\nDue to growing cybersecurity risks, though, most traditional businesses seem to still keep open doors for offline and cash-based payments.\n\nThe trial run of the cashless transport payments in Kenya showed distrust in the system, with many bus-system managers citing reversal of cash payments by riders once they disembark from the vehicle.\n\nBanks should start to listen to their customers to find out where their pain points and concerns are, in order to find innovative ways to address their issues, says Kuldip Paliwal, managing director of First Alliance Bank, Zambia.\n\nFinancial system interoperability has been on top of the wish list for most users of mobile money in Kenya, he says. The industry needs to find a way to inculcate a culture that leads to the development of different mobile money products that can communicate with each other, for the benefit of the customer.\n\n"Customers are always waiting for the right solutions," Paliwal emphasizes.\n\nBanks urged to partner with fintech companies\n\nBanks can fast track innovation across their products by collaborating with fintech start-ups who have a faster way to the market than established financial institutions, according to Paliwal.\n\n"Over 40% of African don't have banking accounts and identity (verification) is still manual," Paliwal says, explaining the extent of the challenge the banking sector faces in Africa. Some fintech start-ups such as Kudabank are already providing virtual bank accounts for 1.4 million Nigerians.\n\nAt least some fintech organisations agree that banks should accelerate innovation and partnering with start-ups is a prime way to do so.\n\n"Africa's banks shouldn't make this journey alone, however. Partnering with fintech start-ups and technology partners can accelerate their route to success," said the CR2 Africa Fintech Transformation report.\n\nThere are a variety of success stories in Africa that prove the point. For example, Amole, a payments and money transfer service set up by Ethiopia's Dashen Bank and Addis Ababa-based Fintech Moneta Technologies, has more than 3 million users. And in Nigeria, the country's open banking regulatory framework, launched last year, has helped give birth to tens of start-ups, making banking easier through the use of open APIs.\n\nDespite the growing number of partnerships between banks and start-ups , some big financial establishments have opted to innovate on their own terms, creating smaller units within their business to work on innovative products.\n\nAbsa Bank's chatbot, Abby, is bringing banking services to the population of millennials and Gen-Z on chat platforms that they are familiar with. Via Abby, users can access their banking information including balances and short mini-statements.\n\nWhether through partnerships or in-house led innovations, financial institutions have a myriad of opportunities to make their services useful to consumers and other clients. Listening to customers and finding out how they would like to interact with banking or financial products appears to hold the key to extending these services.