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Why Digital Banking Is Unique In Africa

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Jaydeep Gupta, the Regional Head of Retail Banking, Africa and Middle East, Standard Chartered, on why banks need to adapt and respond to an ever-changing operating environment in Africa.

Africa’s growth prospects

There is no doubt there is significant opportunity in Africa not just in banking but across many industries. While the banking industry has faced a slight slowdown in other global markets, in Africa, this hasn’t been the case. According to a recent report by McKinsey, Africa’s banking sector is projected to grow significantly over the next five years. In fact, it’s nearly twice as profitable as the global average. Looking at retail banking, in 2017, retail bank revenue in Africa was at $35 billion and, according to McKinsey, it’s expected to increase by 8.5 % per year, reaching $53 billion by 2022.

By bringing both digitization and technological innovations into the economies, we are seeing more companies rival new segments with the progressive application of risk analytics. There is also an increased use of non-bank data for customer behavior analytics and proactiveness in looking at credit extensions over a period of time.

Digital transformation  

We have been exploring opportunities in the market to drive digital banking and, in March, we launched our first digital retail bank in Côte d’Ivoire. This marked the bank’s first digital bank in Africa and the first-of-its-kind launched.

It was the perfect opportunity to launch a fully end-to-end digital bank, with only one physical branch to test our model for future roll-out. The platform allows customers to execute all banking activities from a mobile device, including 70 banking services through the app. In addition, for the first time, the client onboarding journey has been digitised and in under 15 minutes, a client can open a new account through the app. What has also been introduced is the ability for clients to track and trace a request submitted, which is a first for Standard Chartered… We are now preparing to launch digital banks in our other markets across Africa.

Challenges in developing markets

We have faced a number of different challenges in Africa, some of the most common being the heavy reliance on cash and low-banking penetration. The most important challenge in my opinion is to stay ahead of the curve and evolve along with market demands. In today’s digital world, it’s critical that we collaborate with different partners and form alliances in order to provide clients with a convenient and superior customer experience, in line with a rapidly-evolving market.

Investing in technology

We always protect and grow our market share by utilizing our client services and capabilities which keeps us ahead of the competition. We are also putting a heavy focus on digitization, which is one of the key items on the bank’s transformation agenda. We are making strategic investments in technology to stay ahead of the curve and are constantly enhancing our products and services to make banking simpler, more convenient and secure.

A great example of this is the introduction of enhanced digital banking services, including our mobile app, SC Mobile, and Retail Workbench ‘Bank on an iPad’ platform.

READ MORE: Banking On Technology: New Mobile Bank Set To Launch

Promoting inclusiveness

Look at multiple ways of including and empowering women in the banking industry, one of which is providing innovative and tailored products and services designed to suit the needs of women in Africa. This is especially evident in, and made possible by, the digital journey. With enhanced digital and analytic capabilities, we are able to develop solutions which are specifically designed for women, as well as students and entrepreneurs. We are also exploring ways of empowering women and providing them with the necessary tools to succeed in banking and hold leadership roles in the industry. A great example of this is our Women in Technology Incubator originally established in the United States and rolled out in Africa in 2017 with Kenya taking the lead.

Jaydeep Gupta. Photo provided.

Mobile wallets

The digital banking movement in Africa started with the mobile wallet. There are over 100 million active mobile money users in Africa. The mobile wallet has improved the lives of Africans by facilitating participation and accessibility.

We are starting to witness the next generation of products being made available to customers in Africa. A great example of this is the recent widespread use of e-wallets which are beginning to pave the way to less reliance on cash in Africa. Along with less reliance, other benefits like affordability, increased security and greater convenience act as key drivers for customers.

Digital banking in Africa is especially unique because it has the potential to remedy some of the continent’s greatest economic challenges while simultaneously presenting some of the largest opportunities for digital and online banking.

More regulation

Banking in Africa, and the world, has evolved significantly over the last 10 years. Customers are now demanding more convenient, quick, and easy services from banks. Providing online and mobile platforms is no longer a benefit, but a requirement. We have also seen regulators in Africa more heavily, and frequently, enforce regulation across the continent. This, in turn, has forced banks to adapt and respond to an ever-changing operating environment. Looking at online and mobile banking solutions specifically, banks have not necessarily replaced them, but they are definitely exploring options for updating them in line with these changes and ensuring the security of their customers. For many, this has forced them to think outside of the box.

Robotics and AI over people?

There is no doubt that robotics and Artificial Intelligence (AI) will change the people interface, but it definitely does not mean that it will replace it. If anything, leveraging advancements in technology will only complement customer services and help us be more efficient and targeted. For example, banks today are utilizing AI to analyze financial data in order to provide customers with tailor-made and fully-customizable banking solutions, designed specifically to suit customers’ individual needs.

Advanced analytics

It’s critical that these capabilities are invested in and continue to be built on. Without proper analytics, companies will struggle to understand consumer behavior. To provide customers with the best possible service, you must understand where they are coming from. Therefore, it is very important that solid collection strategies and procedures are put in place.

Africa: hotbed of innovation

  • According to a recent report by McKinsey, over 40% of African banking users prefer to use digital channels for their financial needs. This is no surprise and is indicative of the digital shift we are witnessing across sub-Saharan Africa.
  • The African banking sector has been described as a ‘hotbed’ of innovation. As Africa begins to enter an exciting era of digitization, innovation will play a key role in unlocking the future potential of banking.

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