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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