financial institutions become more customer centric by investing in advanced technologies
TRANSCRIPT
Research PREVIEW for
ICT Spend in South Africa—Financial Services Sector
Financial Institutions Become More
Customer Centric by Investing in
Advanced Technologies
Key Highlights
• Banks and insurance companies, in particular, are becoming more customer-centric in
their drive to boost their revenues and improve customer loyalty.
• As a result, they are investing heavily in digitising their service delivery by augmenting
their branch presence through mobile and online service channels.
• They are increasingly adopting the omni-channel approach to service delivery and
engaging with their customers.
• Leveraging big data solutions, they are positioning themselves to more closely match
the needs of their increasingly tech-savvy and demanding customer base.
• In order to keep their operations lean and contain costs, financial services companies
are turning to cloud computing services.
• However, due to concerns over security, they mostly favour private and hybrid cloud
models over the public models, despite the relative cost advantage of the latter.
South Africa’s Financial Services Sector at a Glance
• South Africa’s GDP per
capita: $6,617.9; ranked
82nd highest in the world
• Financial services sector:
$67.7 billion, or 19.3% of
GDP
• Bank penetration: 27.4
million bank accounts (75%
of people aged 16 and
older)
• Digital penetration:
Mobile penetration – 146%
Internet penetration – 41%
ICT in Financial Services:
Macroeconomic Trends,
South Africa, 2014 Financial Services Sector in South Africa
• Financial service providers are looking to
differentiate themselves by offering increasingly
personalised offerings.
• This requires increased understanding of the
needs of sophisticated and demanding financial
services customers.
• The sector has a focus across a range of
services, including commercial, merchant and
retail banking, insurance, investment, and
mortgage lending.
Source: ITU; Stats SA; Ventures Africa; World Bank and Frost & Sullivan
Market Drivers
Drivers 1–2 Years 3–4 Years 5th Year
Advanced technology is helping the sector improve
operational and financial efficiency H H H
Integration of multiple service channels is growing
in order to be more customer-centric H H H
The move towards digitisation of services and
work resources is driving security investment M H H
An increasingly technology-savvy customer base
is driving the uptake of digitised service models M M H
Impact Ratings: H = High, M = Medium, L = Low
ICT in Financial Services: Key Market Drivers, South Africa, 2015–2019
Source: Frost & Sullivan
Market Restraints
Impact Ratings: H = High, M = Medium, L = Low
ICT in Financial Services: Key Market Restraints, South Africa, 2015–2019
Restraints 1–2 Years 3–4 Years 5th Year
Security concerns and a lack of trust in third-party
services are limiting the adoption of cloud and bring
your own device
H H M
Service delivery on mobile devices is still an
unproven business model H M M
Implementation of analytics and cloud services is
limited by a shortage of skilled support staff M M L
Source: Frost & Sullivan
• Secure service delivery platform
• Digital presence
• Ubiquitous connectivity
Technology Trends Shaping ICT Spend in Financial
Services
ICT Trends
Shaping the
Sector
• Mobility
• Social media
• eCommerce
• Low-cost connectivity
• Cloud
• Data analytics
• Security
Key Business
Priorities
Enabling
Technologies
• This move is driven by both revenue
generation and cost reduction
objectives.
• Online and mobile channels allow banks
to reduce costs of brick-and-mortar
channels, while also allowing them to
cross-sell other products.
• Banks and insurers are using big data
solutions to effectively leverage the
growing volume of data from the
different touch points with clients.
• The migration to digital service channels
has sharpened the focus on security
services and big data analytics.
Source: Frost & Sullivan
Cloud Services in South African Banking (Trends)
• Given the technology intensity in financial
services, cloud computing has been touted
as a natural fit for the sector.
• South African banks are consolidating their
data facilities in preparation for increasing
migration to the cloud.
• However, due to concerns over the security
of the public cloud, adoption has been
limited to the private cloud.
• Moreover, they are planning to only place
non-core, non-mission critical applications in
the cloud.
• As a result, cloud vendors will need to put
security and reliability at the centre of their
service offering in order to get financial
institutions to trust the cloud with more of
their applications.
ICT in Financial Services: Technology Steps into
Cloud Computing, South Africa, 2014
Transforming information systems for the cloud
Consolidation of data centres
Virtualisation of the data centre
Source: Frost & Sullivan
Overview of Enterprise ICT Spend by Sector
5-y
ea
r G
row
th F
ore
ca
st
Magnitude of ICT Spending
• Agriculture
• Construction
• Energy and
utilities
• Manufacturing
• Mining
• Transport and logistics
• Financial
services
• Public
sector
• Information and
communication
technology
• Retail
• Healthcare
Key Takeaway: Overall ICT spend by large enterprises across all industries in South Africa was $5.0
billion in 2014, and is expected to grow at a compound annual growth rate of 2.7% reaching $5.7
billion by 2019.
• Oil and gas
ICT in Financial Services: Enterprise ICT Spend by Sector, South Africa, 2014
High
High Low Source: Frost & Sullivan
The Full Analysis Features the Following Content
Section Slide Numbers
Executive Summary 3
Research Overview 5
Market Definitions 11
Overview of the Financial Services Sector 15
ICT in the Financial Services Sector 20
ICT Spend in the Financial Services Sector 25
Drivers and Restraints 30
The Last Word 37
Appendix 39
The Frost & Sullivan Story 43
Key Questions the Analysis Answers
What is the current spend on ICT in the South African financial services sector?
What main ICT categories are financial services companies spending on?
How is this spend expected to evolve over the next five years?
What technologies are shaping the current and future investment in ICT?
Which financial services sector needs are driving ICT investment?
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Research Authors
Lehlohonolo Mokenela
Research Analyst
Information & Communication
Technologies
http://za.linkedin.com/pub/lehloh
onolo-mokenela/41/269/30
Samantha James Corporate Communications – Africa
(+27) 21 680 3574
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