The Covid-19 epidemic has largely affected companies. Banks are not exempt from the effects of prolonged lockdowns and decreased business activity, as many of their commercial clients have seen firsthand. The benefit is that bank clients have been forced to use online channels as a result of lockdowns. Digital product consumption will rise as cashless purchases become commonplace. A boom in fintech has resulted from the extraordinary acceleration of the shift to online financial services. In the past two years, the payments industry has become genuinely global as a result of the growth of these neobanks and non-traditional financial service providers. Africa has become a new fintech hotspot as a result of this phenomenon (Mistry, 2022).

African fintech businesses have expanded their services throughout the continent as a result of rising foreign investment. African fintech companies raised USD 906 million in Q3 2021, according to Digest Africa, a database of early-stage investments, which accounts for more than 60% of all venture capital spent in Africa during that time. Nigeria, the largest economy on the continent with a population of close to 210 million, got more than 60% of inbound fintech investment in Africa last year although more than 50% of its citizens do not yet have a bank account.

Particularly in Sub-Saharan Africa, where 40% of the population is under 15, and where there has historically been little access to financial services, the potential is great. Only one privately held start-up worth more than $1 billion was located in the continent in 2018: Jumia. Seven African fintech startups have now joined the unicorn club, four of which became unicorns last year. These startups include Wave, a Senegalese mobile money network; Flutterwave, a Nigerian business service; OPay, a Nigerian mobile payments company funded by SoftBank Japan and Chinese investors like Sequoia Capital; and Chipper Cash, a peer-to-peer payments provider backed by Jeff Bezos.

Open banking, which would grant unbiased access to consumer banking, transactions, and other financial data to outside financial service providers, is crucial to the future of the banking industry in Africa. This has previously been accomplished in other places using application programming interfaces (APIs), an open-source technology that enables third-party developers, like fintech, to access the data stored by banks and to create apps or services based on it. Customers of open banking have access to the products that are most suited to their needs thanks to this smooth data connectivity. In turn, this reduces expenses while promoting inclusivity and creativity (Mistry, 2022).

However, the banking industry must implement a wide range of fintech solutions to address the unmet need for open banking. There has already been some growth. Open infrastructure was recognized as one of the Central Bank of Kenya’s (CBK) primary strategic objectives in its 2021–25 plan, which was published in December 2020. At the height of the epidemic, two of the biggest banks in South Africa adopted open banking. Six South African banks now provide open banking services, up from two in January 2022. Other startups, TrueID from South Africa and Okra from Nigeria, respectively, also disclosed that they had obtained sizeable financing to create an open banking infrastructure (Mistry, 2022).

The banking industry in South Africa has continuously placed among the top 10 worldwide. It supports a foundation of financial and money management options, promotes inclusiveness and access to the formal economy, and employs over 150 000 people. The Banking Charter and Empowerment Act guarantees adherence to progressive principles in the areas of human resources, corporate social investment, finance, ownership, and economic change. For instance, RMB has spent R36 billion in transactions promoting black economic empowerment since 2009, while FNB has committed R10 billion to housing for the mainstream market since 2012. More than 80% of the population may access financial inclusion within 15 km of our banks’ combined 30 000 access points, which include branches and ATMs (Peter Alkema- CIO at FNB South Africa).

The financial technology used in South Africa is equally well-regarded internationally. Additionally, several nations are successfully digitizing every aspect of their financial systems. By 2023, Turkey won’t have any notes or coins in circulation and Sweden will be almost cashless. Driving the adoption of digital money has three primary advantages: it encourages more individuals to participate in the formal economy; it lowers costs generally in the public and retail sectors; it allows creative enterprises to acquire market share with new goods and services. In most business sectors, established banks and start-ups are utilizing so-called “Fintech” to create this disruption through new technology. Newly licensed businesses are joining the market locally, increasing competition and expanding the options for consumers (Alkema).

The financial services sector has seen an increase of unexpected participants, leading to the creation of a “marketplace without limits.” New opportunities are being explored by non-traditional companies more and more, giving them the chance to take on market leaders and transform the condition of financial services in South Africa (Wayne Jansen-PwC South Africa).

Since non-traditional companies are pursuing different facets of these trends, they may offer their clients in-house banking solutions. Digital solutions, low-cost operating methods, and supply-chain integration have risen to the top of the business agenda. The “four universal banks” (Barclays Africa, Standard Bank, Nedbank, and FirstRand) are steadily coming up with new strategies to help them stay competitive in the market in response to the rising challenge in retail banking sector. Banks may create solutions to better serve their retail customers and effectively compete with new entrants by prioritizing important operational trends like data mining and digital transformation. (Jansen).

Since old business models must be fundamentally redesigned and disrupted, digitization also necessitates inside-out thinking in all sectors, not only the financial sector. New ways of working that are successfully implemented can guarantee that an organization’s internal cultural evolution keeps up with the digital migration. Customers demand shorter lines and less paper, while staff wants workflow convenience that frees them up to provide greater service. Security is also influenced by digitization; properly implemented smart authentication is more secure and practical than passwords or even physical access cards (Alkema). The COVID-19 epidemic continues to highlight the importance of institutions’ services being relevant to customers’ requirements in the digital environment (Lungisa, 2021).

The enterprise of the future is intelligent and social, and cognitive computing can complete tasks more quickly and effectively than people. However, technology also produces new employment, so the businesses that thrive in disruption will be able to upskill their workers and redistribute capacity. This will be disruptive in heavily manual labor sectors. At FNB, self-disruption is a strategic need rather than just a defensive strategy (Alkema).

The most recent episode of Huawei’s educational and much-anticipated Future of Finance series premiered at the end of August. Lungisa Fuzile, the CEO of Standard Bank SA, spoke extensively about what the future of banking holds for South Africa during this episode and what these changes would imply for both the financial services industry and clients.

Amazon and Google are two examples of large technology companies with growing platforms. They are technologically advanced and have the data, customers, and geographic reach (both real-world and virtual) to be able to stand in the way of banks’ relationships with their clients and disintermediate them. It would be disastrous if you couldn’t contact clients directly and had to rely on other parties to do so (Lungisa, 2021).

According to Lungisa, their digitalization effort has already begun, having been supported by significant expenditures. Standard Bank is now in a better position to be speedier and can build and deliver solutions and features a lot quicker when they identify any consumer pain points. Ten services that formerly needed individuals to enter a branch were converted to digital form before they altered their branch network (such as statements). It was crucial to alter the way people saw the bank.

They were able to introduce an account with entirely new features: MyMo—thanks to technological investments and internal organization. This account enables anyone to sign up and initiate a loan digitally and is inexpensive to own. Lungisa said that as a result of MyMo and other pivots, Standard Bank is experiencing a little increase in its client base—a gain of 3%—which is noteworthy given the status of the economy and the restrictions placed on mobility during a lockdown.

When discussing Standard Bank’s brand-new platform banking product, Shift, which took three months to develop, Lungisa said that the platform business model is increasingly influencing how financial products are created, disseminated, and provided to customers. Furthermore, one of the recent announcements involving Standard Bank’s partnership with Pick n’ Pay gives and enables Standard Bank, when fully implemented, to have 100 points of presence that will vary in size but will ultimately be significantly smaller than a typical branch and sell products that were only offered at the branches.

Banks are unquestionably becoming high-tech enterprises, according to Lungisa, who was speaking about the process of acquiring the skill set necessary for a process that is future-oriented and technology-enabled. Examining the types of skill sets that will be required is one of the modifications that have been made. To realize their goals, a lot of engineers, behavioral scientists, data scientists, and other professionals are employed.

Lungisa spoke about cryptocurrencies and inventions like blockchains as well as other new items that have entered the market as being significant, relevant, and all serving a purpose. He continued by saying that the Treasury and SARB, the two main regulators, are highly modernizing and on the cutting edge of how the financial services sector should be governed internationally. Fortunately, they have very developed views on cryptocurrencies, and Standard Bank prefers to follow changes quickly rather than take the lead because these new evolutions and innovations are still little understood and represent hazards.

A renewed focus on technology and digitization should be part of South Africa’s inclusive growth strategies, not only in the banking sector but throughout all sectors and government operations, particularly where there is contact with customers and citizens. Due to lost production, waiting in lines and filling out paperwork hurts the economy (Alkema).

A large portion of Africans is still underbanked or unbanked in the meantime. Following South Africa’s example, banks in other African nations have a wonderful potential to participate in open banking solutions, serving their clients’ demands while also revolutionizing the continent’s banking industry. In the end, African lawmakers must recognize the great opportunity that open banking presents for them to promote financial inclusion, particularly its favorable effects on accessibility and affordability (Mistry, 2022).

The bank of the future will need to integrate developing technologies, maintain flexibility in adopting changing business models, and place consumers at the heart of every plan to be successful. Banking will appear substantially different in the future than it does now. To be ready for banking in 2030 and beyond, banks will need to start developing strategies today. These strategies will help them deal with shifting customer expectations, evolving technology, and new business models (Delloite, 2022).


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