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Peter Amangbo at CPN IT Assembly 2019 invokes thoughts on digital infrastructure for finance in 4.0 world

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As former Group Managing Director/CEO, Zenith Bank Plc., Mr. Peter Amangbo, right captured in his keynote address to the Computer Professionals (Registration Council) of Nigeria (CPN) IT Assembly 2019, globally, the Fourth Industrial Revolution (also referred to as Industry 4.0 with regards to  the financial sector) is well underway.

The new age is typified by the speed of technological breakthroughs, the pervasiveness of scope and the tremendous impact of new systems.

This is the Fourth Industrial Revolution, aptly described by Professor Klaus Schwab, Founder and Executive Chairman of the World Economic Forum.

Mr. Amangbo, then stressed on the need to enhance Digital Infrastructure for the Fourth Industrial Revolution in the country.

CPn IT Assembly

former Group Managing Director and CEO, Zenith Bank Plc., Mr. Peter Amangbo

The Keynote Speaker who was represented by the Executive Director, Zenith Bank Plc., Maitama Branch, Mr. Umar Ahmed, said that this new era is going to witness shifts of monumental proportion, enabled by the convergence of the physical environment and digital space – driven by ubiquitous connectivity, virtual reality, artificial intelligence, robotics, and cloud computing, combining to enable the “Internet of Things”.

In his presentation titled ‘Digital Infrastructure: Defining the Next Step; a Financial Services Perspective’, he said “It may not be heavily prevalent in our local environment currently, but this wind of change is intensifying. It will bring massive disruptions to the traditional ways we have been doing things.

CPN IT Assembly

Umar Ahmed representing Peter Amangbo

“Making the appropriate investments and adjustments is key to our relevance in the global economy of the future. One major area to invest is in digital infrastructure both at the public and enterprise levels.

“The enabling environment for entrepreneurship and development of start-ups should also be created through progressive regulation of sector players.

“Access to finance will also spur the growth of digital infrastructure entrepreneurs.

“Collaboration between the public sector and private sector players is paramount. While we may consider it appropriate for businesses to compete, we must also collaborate to collectively break new frontiers and maximise the opportunities that digitalisation offers”.

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He earlier identified the strategic areas for digital infrastructure investment to guide the country’s digital transformation.

Computer Professionals CPN

President of CPN, Prof. Charles Uwadia

According to him, seeing how valuable digital infrastructure are to the financial services industry, for instance, it is appropriate to investment in efficient gateways help to connect merchant terminals to the merchant acquiring banks for ease of processing of card transactions. They reduce transaction failures to the barest minimum paving the way for vibrant businesses and satisfied customers.

“Networks connect individual devices and enterprise systems to the cloud to transmit data. The right investments in network infrastructure create expanded network capabilities as well as improved network compatibility with connected devices.

“Cloud-based resources and services are critical to the survival of modern enterprises. To remain relevant in the economy of the future, we will require the capacity to provide cloud-based services that are cost-effective, fast, efficient and secure.

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“Interoperability and seamless integration are critical requirements for digital infrastructure to deliver desired benefits in the digital financial services and payment industry.  Apart from industry collaboration, appropriate regulatory frameworks will be required to guide various segments of players within the digital infrastructure space to enhance integration.

induction ceremony for 318 new members of CPN.

Technological disruption and financial services

The Keynote Speaker said that the financial services sector is undergoing significant structural and paradigm shift that is altering and redefining the financial landscape. This same movement is sweeping through all aspects of the global economy.

“Advances in many of the technologies already highlighted along with ever-changing customer expectations are birthing innovative disruptions in the financial services landscape and ecosystem. This is evident in the range of digital financial services available to customers in the industry.

“Banks and Financial Technology firms (Fintechs) are leading the charge in leveraging digital services made possible by digital infrastructure solutions to deepen customer experience and break new frontiers. They are creating demand and tapping into hitherto non-existent markets.

“Bank-led Digital Financial Services is transforming banking from a physical place (brick and mortar) to the digital space. We now see as commonplace the ability to be in the comfort of our homes, or at work on an oil rig at sea or even thousands of miles away from where our banks are located and still be able to initiate and consummate banking transactions”.

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He further said that Fintechs have emerged as the new challengers to the dominance of traditional financial institutions.

“They are taking advantage of ubiquitous connectivity, virtual reality, artificial intelligence, robotics, big data analytics and cloud computing which have combined to enable the “Internet of Things” to further extend the frontiers of financial service delivery in lending, payments, advisory, investment and wealth management.

“They are using innovative solutions like artificial intelligence powered chatbots and embedding banking applications in wearable technologies to provide financial services, especially to the millennials”.

Meanwhile, The Pulse of Fintech 2017 report of KPMG, shows that Fintechs are now looking to move beyond niche markets to offer adjacent services and, in some cases, full stack solutions. For example, Europe has seen a number of Fintechs apply for banking licenses in order to expand their product offerings.

“Nigeria’s first fully digital financial services platform – Lidya, launched in November 2016, with a focus on lending to small and medium businesses. The digital financial services platform promises to complete account opening in fifteen (15) minutes and grant loan in seventy-two (72) hours.

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“Since then, there has been an astronomical rise in the number of Fintechs and the size of Fintech funding in Nigeria, a replication of Fintech trends on the global stage. According to KPMG, global Fintech investment doubled in value to $111.8 billion in 2,196 deals in 2018 from $50.8 billion in 2,165 deals in 2017.

Vice President/Vice Chairman in-Council

“Blockchain technology is playing an immense role in the Fintech revolution as it allows digital information to be recorded and distributed across computer networks. While Cryptocurrency has become the foremost expression of blockchain technology, there are many other applications of the underlining technology. The Central Bank of Nigeria (CBN), just like many other central banks across the world, has not endorsed Cryptocurrency because of the potential risk to financial system stability. But as Information Technology practitioners, we must remain open to explore all the benefits of blockchain technology for now and for the future.

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Service Challenges within the payment system

Mr. Amangbo, said that the payment system is an indispensable component of digital financial services as the ability to exchange value enables individuals and businesses to participate in the economy. “Without an efficient payment system, no one will be able to effectively tap available opportunities, no matter how abundant they are.

“Despite the milestones achieved in respect of service options, convenience and speed of transactions processing, many problems persist as a result of integration challenges in the payment system.

“The impact of infrastructure inadequacies or integration challenges manifest typically in the payment system and the financial services industry in the form of service disruption. System downtime and the incidence of failed transactions have remained a major concern for customers, financial institutions and regulators since the advent of electronic banking in Nigeria.

“According to a PoS analysis by the Nigerian Interbank Settlement System (NIBSS), the number of failed transactions arising from terminal and network issues stood at roughly 11 million in 2018. Though about 295 million transactions were successfully processed, the number of unsuccessful PoS transactions that resulted in debits to customers’ accounts created some measure of unease between customers and their banks. Issuer and switch challenges also led to failed ATM and web transactions just as they negatively impacted interbank transfers.

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“Since financial institutions and other players in the payment system depend on the complex web of connections to facilitate payments and transactions, challenges also exist when there is a failure and claims are to be initiated. Often, query resolution processes depend on reports that may take a couple of days for gateways and other third-party processors to generate.

“Customers may have to wait for a period longer than the duration stipulated by regulators for resolution of logged claims. Repeated incidence of downtime and failed transactions is a significant contributor to a dip in service levels for financial institutions.

Other faces at the IT Assembly ( Some photos provided by Cogito):

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Cross Section of Guests, Council members and speakers at the CPN IT Assembly

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