There is no doubt that Covid-19 has accelerated digital and technology adoption across the Continent, driving banks and other businesses to fast-track their digital transformation efforts and expedite creation of solid platforms for innovative solutions. One obvious manifestation of this has been the growth of online transactions and ongoing embedment of 24/7 banking. But the question remains: What lies ahead, as we approach what is expected to be a “better normal”?
Digital Banking in Africa
While cash is still predominantly used for payments across the African Continent, great strides have been made towards the realisation of the so-called “cashless society”. Of course, Covid-19 has been a key catalyst, with lockdowns, health and safety protocols, and merchant / commercial restrictions significantly limiting physical interactions and thus reducing cash-based transactions. The fact is, going cashless, or at least “cash-lite”, is possible and remains a likely future scenario, given the development and trends we are seeing.
Banks and other financial institutions, however, will need to provide incentives and demonstrate unparalleled convenience in order to encourage consumers to make the switch in a sustainable way. Additionally, and perhaps more importantly, regulators will need to create the requisite policy frameworks that stimulate and support adoption, as well as safeguarding consumer interests.
Indeed, Rwanda is one of the African countries leading the charge, with a goal of being a cashless society by 2024. Significantly, in alignment with this goal, the Rwandan government recently provided free meters to all taxi drivers, ensuring that only digital payments could be made. Kenya is following suit, with some fees on mobile money transactions being waived during the pandemic, coupled with a surge in online shopping. As a result, experts estimate that Kenya could become a cashless economy by 2033.
Ghana is also making important and progressive strides, driven by the government’s digitization agenda, which has seen the introduction of Mobile Money Interoperability (MMI), the launch of National Universal QR Code, and other payment systems projects in partnership with Banks, Telecos and Fintechs. Just like Kenya, the waiver of some fees on mobile money transactions during the height of Covid-19 and the sustained incentives from some organisations, including Absa Bank, continues to encourage and promote digital payments. In addition to higher daily transaction limits, Absa offers customers transfers from mobile money wallets to bank account at highly competitive rates ad-free contactless payments, which save customers time and hassle while assuring their safety and security.
Overall, sector players are acknowledging the benefits of digital payments, noting that they are more convenient and safer for customers and that they will inevitably reduce crime and fraud while promoting the inclusion of more people into formal financial services. In addition to further increase in mobile and online transactions, indications are that we will see a notable shift to contactless payments, QR codes payments, and eventually even wearables.
Customers will want personalised digital journeys
Think of a personalised Netflix profile, but for banking! Of course, personalised customer experiences in banking are far more complex as there are multiple factors and important regulations to consider; but they are entirely achievable. Logging in should be a breeze and user interfaces should be intuitive and easy to navigate, complemented by specific product insights and recommendations. Round the clock, expert support, whether it be live chat or a click-to-call option will be non-negotiables. Consequently, banks will need to come to the fore with reliable, secure and integrated digital technology systems in order to meet ever-evolving customer expectations.
Furthermore, it is pivotal that financial institutions view technology as an essential enabler, and that artificial intelligence (AI) and machine learning (ML) are not only considered for internal processes, but also as an effective way to boost self-service options. Chatbots are fast becoming the norm when it comes to automated client queries (such as Absa’s Abby on WhatsApp), while machine learning can deduce user intent and match digital products with specific needs.
Regulation and Resilience will be key
With new technology comes the requirement for appropriate regulation. The EU’s General Data Protection Regulation (GDPR), for example, currently emphasises the ‘right to explanation’ if an AI algorithm deems a customer ineligible for a loan or financing. Banks will need to understand legislative expectations around emerging innovations and be in a position to meet them.
While there is still some regulatory ambiguity in some African countries, overall, policymakers have made noteworthy progress in implementing customer-centric frameworks that promote governance, support tighter lending requirements, and encourage financial inclusion and innovations. Further to this, the rise in cyber-risk exposures as a result of increased digitisation lends itself to an increased focus on building business resilience, as well as an increased need for specific cybersecurity legislation – particularly when it comes to data and privacy laws. As this risk increases, policymakers are bound to take notice, with possible regional frameworks coming to the fore.
The banking sector as a whole is expected to be stable and healthy in order to kick-start economies and stimulate growth, especially post-pandemic. To achieve this, banks will need to discard legacy infrastructure in favour of smarter, integrated and more resilient cloud-based platforms. This will enable institutions to manage and access data quicker and bring products and solutions to market much faster. Ultimately, digital banking should be viewed as a meaningful way to connect with customers across each stage of their life journeys. What certainly won’t abate going forward, is customer-centricity, and the desire to meet customers at their point of need.
