WASHINGTON - The traditional model of banking has failed, the CEO of East and Central Africa's largest bank in terms of deposits, Mr. James Mwangi, said today when addressing a workshop on the future of Banking in Africa. The Equity Bank boss said this failure is particularly evident in Africa, which has given his 25 year old bank an advantage in tapping into the continent’s unbanked.

The workshop was part of the 7th biennial US-Africa Business summit held in Washington this week.

Mr. Mwangi told summit attendees that the future of banking in his view lies in the convergence between banking and telecoms."Equity bank has 56% of all bank deposits in Kenya and through its responsiveness to its customers has facilitated a high rate of savings by its customers to the tune of US$900 million", he said. Its success is also due in part to its pioneering role in the micro financing movement in Africa which has won it accolades globally.

Mr. Mwangi was the only African bank executive officially on the summit program to participate in the critical workshops taking place during the week long event.

The Equity bank boss attributed his bank's success to the leveraging of economies of scale and said the sector has been successful in lobbying Kenya's baking regulators to allow for what he called an "agency model". He described the model as one which will allow virtually any storefront with a cash register or credit card terminal to act as an agent for a bank by performing some of the traditional banking functions of accepting deposits and dispensing cash. "This is a great thing as it will save us a lot of expenses". Such expenses he said include the traditional brick and mortar strategy that banks have employed for a long time.

In line with his view that the traditional banking model has failed especially in Africa, he foresees a business model that entails a high volume, low margin scenario especially in developing countries "because in Africa many people have very little money but do a lot of small transactions and as such we have to accommodate that to keep them as customers, and the agency model and the convergence of banking and telecoms will serve us well," he told the workshop. The cell phone boom in the country and the continent has created a scenario that makes it possible for banks to tap into the unbanked as his bank has done in the 25 years it has existed.

This year's US-Africa business summit, organized by the Corporate Council on Africa (CCA), brought together over 1,500 leaders from the private and public sectors in both Africa and the US. CCA is a membership organization of nearly 180 U.S. companies dedicated to strengthening the commercial relationship between the U.S. and Africa.

US Secretary of State, Hilary Rodham Clinton, addressed the summit today.