Banking is necessary; banks are not.”Bill Gates
Research by McKinsey found that banks in Africa that had reset their strategy in the advent of COVID19, now face enormous opportunities in the new commercial landscape we find ourselves in. The consulting firm projected that the number of banked Africans will hit 450 million by 2022, up from 300 million in 2017, prompted by the rise in new retail customers and the opportunities being offered to them.
COVID19 has undoubtedly accelerated global trends towards remote working and digital banking strategies. Organisations have had to embrace new technologies and processes to keep financial institutions, businesses, and society functional while so many more people are spending more time at home.
There was a 300% rise in online account openings among Citi’s commercial clients, while JPMorgan Chase saw a 10% increase in mobile users in 2020. Essential regulatory updates needed to be approved globally to tackle the impact of the pandemic situation with some of them having a lasting effect in shaping the ‘new normal’ digital landscape, using E-Signatures and unique digital identities for each customer.
As the number of physical banks in Africa diminish, can current institutions keep up with the rising demand and the challenge of digital banking, or will bank branches, powered by next generation technology, be the future for African banking? McKinsey suggest that the Coronavirus pandemic could result in banking revenues falling by roughly 23 – 33%, accelerating the collapse of some incumbents in the African banking sector.
Undoubtedly the space will become more competitive and the banks who do not respond to those younger competitors rising up to offer digital options, will be the ones who will fall by the wayside. We are certainly seeing far more digital product offerings from gleaming new apps to instant spending alerts, as well as rapidly improving the mobile experience for their existing customer base.
“Smart branches” or “digital branches” could be the way forward and a solution to appeal to both the more traditional as well as the digitally savvy customer. A digital branch manages simple customer activities by assisting self-service formats and merging the physical branch activities with digitally smart solutions. Customers should be able to come into a smart branch, any time of the day or night, and get anything they need, from new products, such as loans or credit cards, to service on their existing accounts, utilising a user experience that is consistent, quick, and easy to use.
However, these changes, both in products and in operational models, also have a huge impact on how businesses are run and how they are managed. They require changes to processes and systems at all levels in addition to the externally visible tech changes in order to be able to deliver the required governance and financial security of transactions.
Here at Executives in Africa, we delivered on two senior Digital Banking roles in December 2020 which involved mapping candidates across the continent in this space as well as further afield in the Diaspora. We are already seeing further demand in 2021 for leaders with an agile approach and expertise in digitalisation and change management.
The development of new technologies will empower bank outlets by allowing them to become more intelligent, with assigned new functions and different objectives, maintaining customer relationships in a thoughtful, smart, and futuristic manner. Success will, however, be achieved by having the right Digital Leaders in place.
Nicki Halle is an Executive Search Consultant.