Morocco’s Banking Sector Sees Slowing Growth, Fintech Emerges as Key Player

Casablanca, Morocco - The number of bank cards in circulation in Morocco reached 15.1 million in 2018, a 7.2% increase from the previous year, according to latest figures. However, the growth rate has slowed down significantly compared to earlier years.

Fintech Drives Digital Transformation

The banking sector’s expansion has been fueled by the rise of fintech, which is changing the way people conduct financial transactions. “The digital transformation of Morocco’s banking sector is well underway,” said Mamoun Tahri Joutei, head of the Economic Intelligence Centre at BMCE Bank. “We are seeing banks consolidate their branch networks and only selectively opening new branches. Fintech is starting to take over: mobile payments are growing and new developments such as blockchain are on the horizon.”

Crowdfunding and Mobile Money

One area where fintech is having a significant impact is crowdfunding. The government has approved a draft crowdfunding legislation, which aims to regulate the industry and provide a framework for it to grow. “Morocco needs to strengthen its ecosystem to encourage local talent to stay in the country,” said Rachid Bekkar, director-general of Adria Business and Technology.

Another fintech segment with significant potential is mobile money. Morocco introduced the M-Wallet mobile payment system in November 2018, which aims to take advantage of the country’s high mobile phone penetration and robust telecommunications infrastructure. “Morocco has already been successful with several digitalisation efforts, such as Customs, which are now completely paperless,” said Youssef Largou, associate executive director of PowerM.

Leasing and Financial Inclusion

The leasing segment is also an important part of Morocco’s financial sector, particularly for small businesses and sole traders who may not have the track record or collateral to access traditional bank lending. “SMEs are at the core of the leasing business and represent about two-thirds of all clients,” said Mohamed Amimi, managing director of Maroc Leasing.

Despite the challenges facing the banking sector, experts believe that there is room for growth as initiatives to boost financial inclusion through fintech, mobile money and participatory banking continue to progress. “An expected uptick in economic activity from 2020 onwards should allow for a gradual acceleration in lending coupled with a reduction of NPLs,” said Taoufik Rabbaa, managing director of Citibank Morocco.

Challenges Ahead

However, to consolidate growth it will be necessary to provide more financing alternatives to SMEs. “SME financing is one of banking’s key challenges, and new businesses without strong financial guarantees often find it difficult to access credit,” said Youssef Bencheqroun, managing director of Al Amana Microfinance. “Micro-credit has the potential to bridge the gap between financial firms and start-ups.”

In conclusion, while Morocco’s banking sector is facing slowing growth, fintech is emerging as a key player in driving digital transformation and promoting financial inclusion. By providing more financing alternatives to SMEs and fostering innovation through crowdfunding and mobile money, the sector has the potential for continued growth and development.