International logistics group DHL Express said Friday that significant growth in Africa's financial services sector is providing great opportunities to drive the continent's economic growth and development.

In a report released in Johannesburg, DHL Express Sub-Saharan ( SSA) Director Sumesh Rahavendra said growing economy, increased political stability and willingness to trade with international partners is making the continent more investor friendly.

This presents significant opportunity for financial service entities to expand their customer base and derive revenue from traditional banking products, he noted.

"Retail banking, in particular, is a key focus for both international and regional banks, and requires these entities to extend their footprint and make financial services products available in regions previously unexplored," Rahavendra said.

Retail banking in Sub-Saharan Africa is projected to grow at a compound annual rate of 15 percent between now and 2020, bringing the sector's contribution to the continent's collective gross domestic product (GDP) to 19 percent from an estimated 11 percent in 2009.

Opportunities for financial service companies moving into Africa include trade finance for corporate customers and retail banking for private individuals, which appear to be the most immediate needs in the region.

"Retail banking in particular is a key opportunity," Rahavendra said.

He noted that in the region there is also a trend where multinational banking institutions partner with local entities who are familiar with the region, which allows them to meet the needs of their customers across diverse regions.

"Similarly, having access to partners that are familiar with the continent is the key to success for many banks expanding into the region. It is necessary to partner with suppliers that have the security, flexibility and reliability to offer quality and reliable service, despite the many challenges that the region may present," he added.

In his view, being open to opportunities in historically unattractive countries is also key to success in Africa. Whilst perceived risks may be high, the rewards are equally so since Africans are discerning consumers and readily pay for quality products and services..

The report explained that despite many opportunities, financial service providers are also likely to experience challenges in the region.

Such challenges includes customs clearance, varying regulations and tariffs that may impact the movement of physical goods such as IT equipment, marketing material and bank cards.

"Understanding these regulations, anticipating the impact of customs clearance and the related customs charges such as VAT and duties will assist the sometimes difficult processes," Rahavendra said.