transforming african banking through increased digitisation african b… · banks’ obsession with...
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Transforming African
Banking Through
Increased Digitisation
Alex Kwiatkowski
Senior Marketing Strategist
2© Misys 2015 21 July, 2015
Prediction is very difficult,
especially if it’s about the future.
Niels Bohr
3© Misys 2015 21 July, 2015
Pan-African operational trends
Increased financial
inclusiveness
Expand consumer access to financial
products to help make social improvements
Development of microfinance initiatives
Increased focus on
GRC
Institutions are paying greater attention to
their GRC processes due to ongoing
operational and regulatory developments
Expansion in new
geographies
More advanced institutions will expand their
commercial footprint to increase revenue
Internal (domestic) and external growth
Greater use of self-
service channels
Along with the continued development of
mobile services, institutions also need to
provide access to ATMs and online banking
as part of an overall omnichannel strategy
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What does the future hold in store for Africa’s banks?
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A future defined by overcoming the industry’s biggest challenges
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Success built on four pillars
Customer
Experience (CX)Performance
management
Regulatory
ComplianceRisk
Management
Mandatory Mandatory Discretionary Discretionary
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Meeting the demands of retail banking’s main outside-influencers
Customers
Customers’ demand:
Improved user
experience
Increased satisfaction
level
Ease of access to
relevant products &
services
Greater trust in their
chosen provider(s)
Regulators
Regulators’ demand:
Increased visibility of
regulatory compliance
Mandatory reports
delivered faster and with
greater accuracy
Greater confidence that a
bank is aware of all risks
Investors
Investors’ demand:
Improved Return on
Equity and Return on
Capital Employed
Increased confidence in
bank’s long-term future
from improved financial
performance indicators
Evidence of investing in
restlessly innovative
market leader(s)
Create
Strategy
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• Encouraging signs for South Africa’s banks
The challenge of turning promised strategic vision into reality
Source: 2014 World Retail Banking Report, Capgemini & Efma
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Delivering a high quality digital experience
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Digital transformation trends in Africa
Investment budgets
increasing
Increasing optimism that sufficient funds
will be released to meet business
objectives
Overhaul of legacy IT
infrastructure
More mature African institutions need to
replace existing hardware and software
Opportunities remain for innovation &
differentiation
Big Data is not yet
‘big’, but will grow Institutions are aware of the concept of Big
Data and view it as a game-changer
Growth of SMBs will
drive use of social
Creation of bank-run portals where
businesses can interact with one another
Basic financial products offered via social
“Investment in digital channels software will
see a 9.2% CAGR between 2015 and 2018”
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Banks’ obsession with customer centricity and user experience heightens
61% of surveyed*
banks have a
dedicated Customer
Experience Team.
20% will introduce this
in the next 3 years.*n = 74
Source: Efma, 2014
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Making extended use of digital channels to grow revenue
How important do you expect digital
channels to be for product sales in 2018?
Channel Simple Complex
Online 5.89 4.78
Mobile 5.53 4.13
Telephone 4.42 3.87
1 = Very Low / 7 = Very Highn = 78
Source: Efma
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Investing in innovation to improve performance
65%
86%
78%
58%
70%
5%1% 1%
6%3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Products Channels Customerservice andexperience
Sales andmarketing
Processes
Increase
Decrease
No Change
Don't Know
Do you expect to increase or decrease the level of
innovation in 2014 compared to 2013?
n = 110
Source: Efma
Function Rating
Channels 5.10
CX 4.79
Products 4.61
Sales 4.52
Processes 4.281 = Very Low / 7 = Very High
How do your rate your bank’s
innovation level?
n = 32
Source: Efma
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Operational harmony between Sales and Service activities improves
5.97 5.91 5.66 5.59 5.55 5.40
4.72
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
n = 32
Source: Efma
How important are the following management priorities for your bank’s consumer business?
1 = Very Low / 7 = Very High
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The search for innovation and differentiation demands experimentation
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• Digital banking involves:
– Delivery of a customised but
consistent FI brand experience to
customers across all channels
and points of interaction…
– …underpinned by analytics and
automation…
– …and requiring a change in the
operating model, namely products
and services, organisation,
culture, and skills & IT…
– …in order to deliver demonstrable
and sustainable economic value.
Digital banking’s evolution
1983
Launch of world’s first
digital banking service
2015
Launch of China’s latest
online banking service
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Digital-only challenger banks are emerging to challenge incumbents
U-Direct
(Benin)
(Burkina Faso)
(Chad)
(Congo Brazzaville)
(Congo DRC)
(Cote d’Ivoire)
(Gabon)
(Ghana)
(Guinea)
(Kenya)
(Mozambique)
(Nigeria)
(Senegal)
(Sierra Leone)
(Tanzania)
(Uganda)
(Zambia)
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Cyber-attacks relentlessly seek to exploit vulnerabilities in banks’ systems
Misys’ opinionCyber-attacks will disrupt banks’ strategic plans
unless adequate protective measures are put in
place. Banks will be compelled to dedicate greater
resources to combat an increasingly sophisticated
enemy, whose motivation is not purely financial.
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• Drive deeper transactional engagement
through mobile banking by focusing on
customers making deposits, payments and
money transfers
• Provide an increasingly segmented service
aimed at specific demographic groups
• Development of tablet specific applications
• Enhance mobile payment value proposition to
stimulate usage
• Shift from multichannel to omnichannel,
making greater use of transaction and
interaction data
Summary of digital trends
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Greater use is made of advanced analytics to extract full value from data
Volume
Variety
Velocity
Value
32%
24%
30%
8%
5%
24%
14%
27%
19%
16%
0%
5%
10%
15%
20%
25%
30%
35%
Current Plan < 1 yr Plan 1-3 yrs No Plans Don't Know
Business intelligence New products or services
n = 37
Source: Efma
Does your bank have any Big Data projects for collecting
and using unstructured information from digital channels?
Big Data Big Privacy
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The evolution of alternate payment channels
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How will African banks create success?
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Banks must differentiate the brand, increase profitability & be more competitive
Efficiency
Agility
New sales
opportunities
Cost – serve
ratio
Efficiency
Consistency of
experience
Competitive
edge
Customer
satisfaction
New sales
opportunities
Brand
image/value
Shareholder
value
Customer
acquisition
Competitive
edge
Efficiency
Cost of branch
network
Profitability
Lifespan of IT
architecture
Development
costs
Partner
network
Sales
opportunities
New sales model:
H2H -> H2M
Create an Omni
Experience
Be a trailblazer in your
market
Improve cost-to-
serve while
maintaining
standards
Create ‘open’ systems
with future-proof
architecture
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Final thoughts
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