{"id":30688,"date":"2019-12-05T11:58:08","date_gmt":"2019-12-05T11:58:08","guid":{"rendered":"https:\/\/www.intelligentcio.com\/africa\/?p=30688"},"modified":"2019-12-06T09:48:51","modified_gmt":"2019-12-06T09:48:51","slug":"african-banking-transform-innovate-and-succeed","status":"publish","type":"post","link":"https:\/\/www.intelligentcio.com\/africa\/2019\/12\/05\/african-banking-transform-innovate-and-succeed\/","title":{"rendered":"African Banking: Transform, innovate and succeed"},"content":{"rendered":"\n

The banking industry in Africa is experiencing rapid innovation at the hands of new-age non-banking entrants as well as some incumbent banks. But what causes these players, especially the incumbent banks among them, to innovate successfully where so many others have failed? James Buckley, from Infosys Finacle, looks into this in more detail.<\/strong><\/p>\n\n\n\n

Innovation leadership in banking belies the hype and investment associated with it. The 2019 Innovation in Retail Banking<\/em> report presented by Efma and Infosys, which surveyed more than 300 banking leaders globally, states that only 14% of banks think they are innovation pioneers and 35% believe they are fast followers. <\/p>\n\n\n\n

It is no\ncoincidence that the respondents who rate themselves as leaders also lead Digital\nTransformation in their markets. The research finds that banks that are able to\ninnovate effectively are better at leveraging data and technology and also are\nbetter at Digital Transformation. <\/p>\n\n\n\n

Not surprisingly,\ntheir organisations are very customer-centric, with a clear idea of customer\ngoals and how to achieve them. Leaders were also found to be measuring their Digital\nTransformation progress effectively while most mainstream players and laggards\nreported a lack of definite KPIs to measure the success of their transformation\nefforts. A huge factor in their success is that the banks have also transformed\ntheir organisation and culture to suit the requirements of the digital age. <\/p>\n\n\n\n

These\nexpectations are largely borne out in a scan of Africa\u2019s most innovative banks,\nwhich have clearly taken the lead in transforming their systems and\ntechnologies, overtaking not only domestic banks but also those in other\ncountries. <\/p>\n\n\n\n

A number of\nfactors underscore the need and urgency for transformation – the first is the\nconsumers, who are heavy users of online, mobile devices and applications and\ndisplay a rising preference for digital channels. Second is the relentless\npressure from digital players, such as mobile money transfer companies and\nFinTech, which are attracting such consumers with their digital, innovative\nofferings. <\/p>\n\n\n\n

And third,\nAfrican banks also need to transform in order to be able to adopt a platform\nbusiness model and ecosystem banking once Open Banking arrives in the\nregion.   <\/p>\n\n\n\n

Unlike typically\nrisk-averse financial institutions, African banks \u2013 even the big ones \u2013 are\nwilling to experiment early on with new technologies. The innovative Standard\nBank, the continent\u2019s largest, is shifting production workloads, important core\nbanking software and even mission-critical applications to the AWS cloud to\nbecome Africa\u2019s \u2018first bank in the cloud\u2019. <\/p>\n\n\n\n

Kenya\u2019s Equity\nBank is another example of transformation success, having introduced a wide\nrange of banking products on digital channels, such as the Equitel mobile\nbanking service. The bank has also digitised entire customer journeys, such as\ncustomer onboarding. <\/p>\n\n\n\n

Pan-African\nEcobank is planning to transform all its businesses with digital technology;\nits digital strategy is to deploy in-house innovation to meet customer\nexpectations and also leverage alliances with global financial service\nproviders to offer various corporate and retail banking solutions.<\/p>\n\n\n\n

African banking\ninnovators are very customer oriented. For example, Discovery Bank offers an\ninnovative insurance service in South Africa called Discovery Life, which is\npersonalised to a customer\u2019s financial health and behaviour. <\/p>\n\n\n\n

Using real-time\nfinancial data, Discovery Life segments risk more granularly in each\nsocioeconomic segment, to reward customers for demonstrating healthy financial\nbehaviour. Since Africa is still significantly unbanked, many institutions are\ndirecting their innovation efforts at bringing more people into their fold. One\nis the Commercial Bank of Africa, which has launched a mobile bank account\nnamed M-Shwari in partnership with mobile money provider, M-Pesa and telecom\ncompany, Safaricom. For many Africans, M-Shwari is the gateway to formal\nbanking. <\/p>\n\n\n\n

Just like in the\nEfma Infosys survey, the innovation leaders in African banking have transformed\ntheir organisations and cultures as part of Digital Transformation. <\/p>\n\n\n\n

They have\nsucceeded largely because their leadership is committed to driving this change.\nStandard Bank is among these banks; the bank believes in empowering its\nemployees, which not only creates a happy and loyal workforce but also superior\ninteractions for its customers. <\/p>\n\n\n\n

The bank\nbelieves that empowering and educating the people who deliver the bank\u2019s\nsolutions to the clients \u2013 the bank\u2019s workforce \u2013 is one of the most critical\nfactors in ensuring exceptional experience.<\/p>\n\n\n\n

The African\nbanking market is exciting but does have its shortfalls. Open Banking is yet to\nstart in any meaningful way and there doesn\u2019t seem to be any push from either\nindustry consortia or banking regulators, the two agencies driving Open Banking\nin other parts of the world. <\/p>\n\n\n\n

The cost of risk\nis the second highest globally, amid inadequate risk management practices and a\nshortage of credit bureaus. A related problem is security, and banks adopting\nnew technologies will have to ensure their defenses are strong enough to\nwithstand the ever-increasing threat of cyberattacks. <\/p>\n\n\n\n

Africa\u2019s banks\nalso suffer from high \u2013 and worsening \u2013 cost to asset ratios, and while cost to\nincome ratios are decent, the reason is high margins rather than low costs.\nBanks need to improve cost efficiency in the back-office, and productivity in\nthe front-office. Many of these challenges can be addressed with the help of\ndigital transformation and innovation. Luckily, African banks are capable of\nboth. <\/p>\n","protected":false},"excerpt":{"rendered":"

The banking industry in Africa is experiencing rapid innovation at the hands of new-age non-banking entrants as well as some incumbent banks. But what causes these players, especially the incumbent banks among them, to innovate successfully where so many others have failed? James Buckley, from Infosys Finacle, looks into this in more detail. Innovation leadership […]<\/p>\n","protected":false},"author":25,"featured_media":30691,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4950,565,7383,328,6,275,399,19,10675,262],"tags":[619,11928,389,11926,11927,11922,11924,10030,11920,11921,11919,297,941,11929,11923,11925,337,453,6377],"class_list":["post-30688","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","category-banking-finance","category-digital-transformation","category-features","category-insights","category-intelligent-technology-newsletter","category-more-news","category-regional-news","category-thought-leadership","category-used","tag-aws","tag-commercial-bank-of-africa","tag-digital-transformation","tag-discovery-bank","tag-discovery-life","tag-efma","tag-equity-bank","tag-infosys","tag-infosys-finacle","tag-innovation-in-retail-banking","tag-james-buckley","tag-kenya","tag-m-pesa","tag-m-shwari","tag-open-banking","tag-pan-african-ecobank","tag-safaricom","tag-south-africa","tag-standard-bank"],"acf":[],"publishpress_future_workflow_manual_trigger":{"enabledWorkflows":[]},"_links":{"self":[{"href":"https:\/\/www.intelligentcio.com\/africa\/wp-json\/wp\/v2\/posts\/30688","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.intelligentcio.com\/africa\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.intelligentcio.com\/africa\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.intelligentcio.com\/africa\/wp-json\/wp\/v2\/users\/25"}],"replies":[{"embeddable":true,"href":"https:\/\/www.intelligentcio.com\/africa\/wp-json\/wp\/v2\/comments?post=30688"}],"version-history":[{"count":2,"href":"https:\/\/www.intelligentcio.com\/africa\/wp-json\/wp\/v2\/posts\/30688\/revisions"}],"predecessor-version":[{"id":30693,"href":"https:\/\/www.intelligentcio.com\/africa\/wp-json\/wp\/v2\/posts\/30688\/revisions\/30693"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.intelligentcio.com\/africa\/wp-json\/wp\/v2\/media\/30691"}],"wp:attachment":[{"href":"https:\/\/www.intelligentcio.com\/africa\/wp-json\/wp\/v2\/media?parent=30688"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.intelligentcio.com\/africa\/wp-json\/wp\/v2\/categories?post=30688"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.intelligentcio.com\/africa\/wp-json\/wp\/v2\/tags?post=30688"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}