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Finding banking's 'Phoenix': how a new industry can emerge from ashes of today's landscape

By , ITWeb
14 Oct 2019

Finding banking's 'Phoenix': how a new industry can emerge from ashes of today's landscape

For some time, many technologists have predicted that new players and new technologies will quickly gain traction in the local banking industry. In this vision, FinTechs, telcos and other agile players will ride roughshod over today's banks.

But it seems that we've cast our gaze too narrowly, too locally.

A hard-hitting report from the World Economic Forum - Beyond Fintech: A Pragmatic Assessment of Disruptive Potential in Financial Services - showed that FinTechs haven't had meaningful impact on the overall banking landscape.

In fact, it's the global digital 'pure-play' giants like Google, Amazon, Facebook and Apple that represent the biggest threats.

Local banks need to rapidly evolve the way they operate and the way they position themselves with their customers to grow in the era of digital transformation, and as a "new age ecosystem" emerges in the financial services industry.

Many go as far as to say that traditional banking models are dead, and that an entirely new array of financial services needs to rise from their ashes.

Now that local banks are gearing up for the digital revolution, they need the right tools, the right digital strategies, the right technologies and the right partners to bring it all to life.

Africa's FinTech industry is heating up, with some wonderful examples of new innovations - from the likes of Piggybank.ng (an online savings platform in Nigeria), to CinetPay (a mobile money payment hub in the Ivory Coast), to i-Pay (an automated EFT payment provider in South Africa), to BitPesa (a blockchain-based mobile money platform in Kenya), among hundreds of others.

Big business

The IDC says that in 2018, firms around the globe will spend nearly US$4-trillion on enterprise technology, with banking being highlighted as one of the top four biggest-spending verticals (alongside manufacturing, telecommunications, and professional services).

However, all of this investment must be focused on the right areas. Technology partnerships are absolutely fundamental to success in the future. Banking's core transactional services are increasingly becoming commoditised, and it is hard to differentiate based on the banking service alone.

In the future, the only way to stay ahead of the curve is through exceptional digital-enabled innovations and experiences.

In this era of Artificial Intelligence (AI), connected devices, robotics, blockchain, the cloud, and so on, one's technology partners must also support these new-age technologies and help organisations move up the value chain.

ICT partner of the future

It's no longer possible for banks to discreetly allocate spend to IT strategy, consulting, and implementation. Projects no longer take a linear and chronological form, where a bank will embark on - let's say (hypothetically) - a 24-month project and request 100 full-time IT resources.

In the future, you may not know what your technology needs will be. You may not know, from one month to the next, what to explore, what to pursue further, and what to abandon.

The ICT partner of the future should also engage closely with the CFO and their team, to develop the financial 'radar' to understand the true impact of one's technology strategy - from a return-on-investment and return-on-equity perspective.

Ultimately, the era of multi-year, master services contracts will give way to a new method of procuring ICT solutions. In the future, banks will draw on specialised services from a broad ecosystem of niche players, entering and exiting partnerships as they need, in a very fluid and agile manner.

To harness the unique potential of such an ecosystem of technology partners, banks must form a strong orchestration capability within the CIOs office. This will allow them to strike a balance between encouraging fluidity and new ways-of-working, while ensuring enough structure to prevent outright chaos – and avoid wasted spend on the wrong programmes.

In the future, there will be a coexistence of legacy and digital, so the name of the game is to harmonise current trends with emerging trends.

The local banking sector is ripe for a total reincarnation, akin to the Phoenix rising from the ashes, in a similar manner to what's happened in the global automotive industry.

The automotive sector is also highly-regulated and weighed down by decades of established legacy structures, but in recent years it has been completely reimagined - with the likes of self-driving cars, high-tech driver assist technology, and even the early prototypes of flying cars.

Who will make the first move and dramatically change the face of banking in Africa?

* By Felix Antonysamy, Business Development Head, Banking vertical - Africa, Wipro Limited.

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