FINAL WORD
“
SINCE AFRICA IS STILL
SIGNIFICANTLY UNBANKED, MANY
INSTITUTIONS ARE DIRECTING THEIR
INNOVATION EFFORTS AT BRINGING
MORE PEOPLE INTO THEIR FOLD.
financial behaviour. Since Africa is still
significantly unbanked, many institutions
are directing their innovation efforts at
bringing more people into their fold. One is
the Commercial Bank of Africa, which has
launched a mobile bank account named
M-Shwari in partnership with mobile money
provider, M-Pesa and telecom company,
Safaricom. For many Africans, M-Shwari is
the gateway to formal banking.
Just like in the Efma Infosys survey, the
innovation leaders in African banking have
transformed their organisations and cultures
as part of Digital Transformation.
They have succeeded largely because their
leadership is committed to driving this
change. Standard Bank is among these
banks; the bank believes in empowering
its employees, which not only creates a
happy and loyal workforce but also superior
interactions for its customers.
The bank believes that empowering and
educating the people who deliver the
bank’s solutions to the clients – the bank’s
workforce – is one of the most critical factors
in ensuring exceptional experience.
James Buckley, from
Infosys Finacle
A number of factors underscore the need and
urgency for transformation – the first is the
consumers, who are heavy users of online,
mobile devices and applications and display a
rising preference for digital channels.
Second is the relentless pressure from
digital players, such as mobile money
transfer companies and FinTech, which are
attracting such consumers with their digital,
innovative offerings.
And third, African banks also need to
transform in order to be able to adopt a
platform business model and ecosystem
banking once Open Banking arrives in
the region.
Unlike typically risk-averse financial
institutions, African banks – even the big
ones – are willing to experiment early on
with new technologies. The innovative
Standard Bank, the continent’s largest, is
shifting production workloads, important
core banking software and even mission-
critical applications to the AWS cloud to
become Africa’s ‘first bank in the cloud’.
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INTELLIGENTCIO
Kenya’s Equity Bank is another example
of transformation success, having
introduced a wide range of banking
products on digital channels, such as the
Equitel mobile banking service. The bank
has also digitised entire customer journeys,
such as customer onboarding. The African banking market is exciting but
does have its shortfalls. Open Banking is yet
to start in any meaningful way and there
doesn’t seem to be any push from either
industry consortia or banking regulators, the
two agencies driving Open Banking in other
parts of the world.
Pan-African Ecobank is planning to transform
all its businesses with digital technology;
its digital strategy is to deploy in-house
innovation to meet customer expectations
and also leverage alliances with global
financial service providers to offer various
corporate and retail banking solutions. The cost of risk is the second highest
globally, amid inadequate risk
management practices and a shortage of
credit bureaus. A related problem is security,
and banks adopting new technologies will
have to ensure their defences are strong
enough to withstand the ever-increasing
threat of cyberattacks.
African banking innovators are very
customer oriented. For example, Discovery
Bank offers an innovative insurance service
in South Africa called Discovery Life, which is
personalised to a customer’s financial health
and behaviour.
Using real-time financial data, Discovery
Life segments risk more granularly in
each socioeconomic segment, to reward
customers for demonstrating healthy
Africa’s banks also suffer from high – and
worsening – cost to asset ratios, and while
cost to income ratios are decent, the reason
is high margins rather than low costs. Banks
need to improve cost efficiency in the back-
office, and productivity in the front-office.
Many of these challenges can be addressed
with the help of digital transformation
and innovation. Luckily, African banks are
capable of both. n
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