Bankers from Sub Saharan Africa and China who attended the Huawei Sub-Saharan Africa Financial Services Industry Online Summit 2020 agree that digitisation of the sector will give it resilience against the current Covid-19 pandemic and enable sustained growth in the post Covid era.
The pan-African conference themed “Accelerating Digital Transformation, Enable Business Growth Again” was attended by 1200 delegates from across banks, telco operators, fintech and ICT services companies.
Opening the event, the Vice President of Huawei Southern Africa Region, Liao Yong said advances in ICT present unique opportunities for the banking sector, especially when almost 70% of the region’s population don’t have a bank account.
“All of these ICT advances will be critical enablers to a thriving banking sector in Sub Saharan Africa. As we can see, the merging of these two curves of ICT and banking services is powerful. But how much we can unleash the power, depends on how much and how soon banking sector goes digital.” Liao said.
There has been a rapid uptake of mobile technologies in the region with strong economic growth in the past 2 decades. According to statistics by GSMA, 4G, mobile broadband technology, adoption will overtake 2G in 2023 and the total of unique subscribers in Sub Saharan Africa will reach 600 million by 2025, representing half the region’s population.
Speaking at the online event, Brett King, author of Bank 4.0, a New York-based mobile banking startup, said the behavioural changes that come with coronavirus further underpins the needs for digital transformation in banking sector.
“The declining use of physical branches is likely for many customers to remain a permanent feature of their lives. The reality is this is likely to accelerate a multi-decade trend we’ve already seen towards digitisation. So when we look at the architecture of banking moving forward and the real elements that have been accelerated during the coronavirus period, you can see that that shift to digital is creating much more aligned, some digital experience. This basically brings us to a new model of banking…we moved to this low friction banking embedded in the world around us,” said King.
In China, bucking the decline in Q1 GDP, the financial sector recorded a 6% year-on-year growth. Analysts attribute this growing to the sector’s years of unremitting efforts in digital transformation.
The former Chief Information Officer of China Merchants Bank and current Chief Digital Transformation Officer of Global Financial Services in Huawei’s Enterprise Business Group, Chen Kunte, said digitisation will give the banking sector the resilience it needs in the public health crisis. Banking everywhere can’t come true without leveraging cloud, AI and Big Data.
“We need to restructure banks’ ICT platforms from legacy architecture to cloud-based, open architecture by building AI-Powered and Data-Driven platforms to expand the way financial institutions engage and interact with their customers, and accommodate more innovative business models and service scenarios,” Chen said.
Banks from the region shared some case studies on digitisation in banking services in the region.
Lucille De Kock, Head of Data Analysis and Product Management at FNB, South Africa, introduced FNB’s fundamental shifts across all dimensions to transform the bank into a helpful, trusted and people centric money manager leveraging digital and data platforms.
According to Alex the Head of DFS, KCB, Siboe Wekunda, 97% of all transactions are done digitally which lead to substantial growth during the pandemic. Luckily enough, we had invested well in our platform, so we’re able to handle the traffic that comes through this ecosystem. And Joshua Oigara, CEO and MD, KCB Group PLC, said KCB will continue accelerate that investment beyond just lending platform, which has been very successful.
Huawei works with over 1,000 financial institutions globally, including 6 of the world’s top 10 banks in the digital transformation voyage.
Liao concluded, “Our operations of over 20 years in Sub Saharan Africa enables us think global and act local by providing our clients in the region with tailored made solutions to make digitisation process painless and smooth, as if it is a tech company that happens to work in the financial sector rather than as a bank that tries to adapt disruptive technologies.”
COMMENT: Nigerian stocks and fears over Naira devaluation
BY: Lukman Otunuga [Senior Research Analyst at FXTM]
In the face of economic uncertainty, dollar scarcity and depressed Oil prices, the Central Bank of Nigeria (CBN) has devalued the Naira for the second time this year.
At an auction of importers last Friday, the CBN asked that bids for foreign exchange to be made at 380 Naira per dollar, compared with 360 previously. While this move may harmonize Nigeria’s multiple exchange rates and even improve transparency, it may come at the cost of higher inflation.
Given how consumer prices have already jumped to 12.40% in May amid border closures and supply chain disruptions, a weaker Naira that fuels inflationary pressures could hit living standards of Nigerians.
This negative sentiment was reflected on the Nigerian Stock Exchange on Monday, as the All Share Index closed in the red despite equity markets across the globe rallying. Buying sentiment towards local stocks may remain heavily influenced by coronavirus developments and domestic economic data. With the economic calendar for Nigeria void of Tier 1 economic releases this week, the focus may turn towards Oil prices which account for over 90% export earnings and roughly 70% of government revenues.
Nothing much has changed in the Oil arena since the EIA reported a 7.2 mbpd drop in oil stockpile last week. The commodity pretty much remains driven by coronavirus related developments and factors influencing fuel demand. Appetite towards the Oil received a minor boost thanks to the positive US jobs report; however, gains were later capped by risks around a new round of lockdowns due to rising coronavirus cases.
Standard Bank partners with leading global expert to launch paper on Africa’s platform economy
BY: Chisom Ada
Many African organisations are well placed to drive the next wave of innovation in the global platform economy, according to the findings of a report by world-renowned platform economy expert Sangeet Paul Choudary and Standard Bank’s Corporate and Investment Banking (CIB) Digital unit.
The paper, titled ‘Can Africa take the platform economy forward?’, analyses the challenges facing the continent’s platform economy, the path it is likely to follow, and the untapped opportunities for long-established organisations.
Despite several unique challenges across the continent, the platform economy is gaining traction in Africa as consumers and businesses grow more accustomed to online services.
Embodied by the likes of Amazon and Uber, the platform economy refers to value-creating interactions facilitated by digital intermediaries.
Africa’s sophisticated mobile-money market is one of the best-known examples of platform innovation on the continent, which is fast developing alternative infrastructures in response to the dearth of continent-wide traditional digital infrastructure.
As its platform economy takes root, Africa may well draw on the experiences of both India and China, whereby governments work to develop standards and create basic digital capabilities such as identity management, while private companies build out the necessary financial and logistics infrastructure.
At the same time, opportunities exist for traditional African organisations to drive new innovations and develop new operating models in the platform economy.
With their extensive networks and ecosystems of clients and partner organisations, companies that are already deeply entrenched in the African market are well placed to facilitate the growth of the business-to-business sharing economy, in which companies drive efficiencies by sharing services, processes and digital assets.
“Banking groups are among those that could seize this opportunity,” says the Head: CIB Digital Channels, Standard Bank, Kent Marais. “For example, a financial services organisation can provide a digital platform that facilitates value-creating interactions between ecosystem participants – clients and other partner organisations”.
In this scenario, a corporate banking client that has developed a robust risk-management function could consider taking on the role of a capability provider that on-sells this service to other businesses in the ecosystem.
Platform owners themselves can also on-sell some of their own digital capabilities which they have built up over the years and invested heavily in. For instance, a telecommunications company with a mobile-money platform could provide credit-scoring services to ecommerce platforms keen on offering instalment-based payment options to boost sales.
By participating in the platform economy, organisations have an opportunity to better service clients while also generating new revenue streams.
“Globally, the current health and economic crisis sparked by the Covid-19 pandemic has brought platform operating models to the fore, and the digital infrastructure providers behind them – cloud providers such as Microsoft, Amazon and Google – are playing a crucial role,” says Sangeet Paul Choudary.
“But the crisis has also resulted in a stalling of big-tech regulations,” he adds. “Against this backdrop, there needs to be a focus on ensuring that we leverage platforms to develop solutions to humanitarian problems, and to ensure that organisations are more efficient and able to withstand this shock and the period that will follow.”
As the Covid-19 pandemic weighs heavily on the African and global economy, it is clear that platform companies are faring better than most. African organisations should consider how they can participate in this segment of the market – whether that means building and owning platforms themselves or participating in them, or both – to ensure that they are agile and able to adapt their offerings while also accessing new revenue streams.
The paper, launched digitally, was authored by Choudary and Standard Bank CIB Digital’s Jonathan Lamb and Kent Marais. It is available here.
Traditional money is on its way to becoming smart money after COVID-19, says WBAF Chair
The Chairman, World Business Angels Investment Forum (WBAF), Baybars Altuntas, recently hosted a virtual World Press Conference where key findings of a global survey that included business owners from more than 81 countries and across multiple industries were announced.
He said that the WBAF has taken active roles in the ongoing global pandemic, key among which was the submission of a comprehensive policy recommendations report to the G20 leadership in order to alert policymakers about the urgent needs of startups.
Altuntas, a former Senior Advisor to the London Stock Exchange Group, said “we are convinced that we will be able to present a better road map of post-pandemic times for startups, scaleups, entrepreneurs, small & medium enterprises and investors if a greater emphasis is placed on knowledge, which is central to the transition debate to a ‘new normal’. We believe that simply keeping physical distance, washing hands and staying at home is not enough to solve the challenging problems that entrepreneurs and the young generation will face after COVID-19 ceases to be a problem. We need better policies that are developed in the light of knowledge that can only come from the entrepreneurship and investment ecosystem.”
“Smart entrepreneurs will be the winners in post-pandemic economies! As the COVID-19 crisis continues but geographies around the world begin to reopen, consumer behaviours have started to change. Entrepreneurs who are quicker to read the changing customer behaviours will take more active and profitable roles in the post-pandemic business environments. Business transformation is a must, but… new combinations of talent and technology will deliver decisive advances in customer experience, operational efficiency and competitive edge in post-pandemic times.”
‘Business transformation will be a must for all businesses, from the smallest to the biggest. Digital transformation should drive positive outcomes: whether it is streamlining processes, harnessing data or shaping entirely new ways of doing business. This is about uniting every part of the enterprise in a common purpose but we must draw attention to an important fact; that, business transformation is not a cheap process. If startups are suffering financially and unable to meet even their basic expenses in the short term, how can we expect them to allocate budgets for business transformation now? In today’s unparalleled circumstances, organisations are discussing ways to slow digital transformation and preserve capital. However, history has proven that companies that took strategic future-focused investment approaches were ready when the global economy rebounded.’
Altuntas stated that ‘traditional money is on its way to becoming smart money after COVID-19 as many traditional business owners from construction, tourism, etc companies were seeking opportunities to become Angel Investors, known for making smarter investments.
“This shows that traditional money is trying to discover opportunities in the startup economy and early-stage equity markets after COVID-19. Traditional entrepreneurs are looking for ways to turn themselves to millennium entrepreneurs too while career paths are changing for the young generation now not looking for jobs but business ideas.’
“We are entering a new career environment where digitalisation and workforce should cooperate instead of competing. The replacement of human pilots with drones might be a good example of this. Some pilots have lost their jobs, but other jobs have been created in maintenance, remote control, data analysis and cybersecurity. But what about smart watering systems replacing millions of uneducated people? COVID-19 accelerated the process of developing good policies for equal rights in education. It has become common practice to deliver education online to all corners of the earth – if there are computers and internet connection available for students.’
“It is about refitting our labour markets and our social-protection and welfare systems and making sure everyone has the ability to realise the human right to social security in the post-COVID-19 digital era. No society and no organised democracy can afford to ignore the vulnerable workers who have few social protections yet whose contributions to the workforce are critical in crises.”
‘We are inviting all countries to consider the situation of 2 billion unbanked people in the world. Given the chance to study again at university, my field of choice would be computer and software engineering, a field that would facilitate establishing my own business as early as possible, instead of providing me job opportunities. COVID-19 may close the era of shared economy, which featured co-working spaces, shared cars, shared bikes, hotels, and the like with the post-pandemic Award for Excellence likely going to smarter cities, online education, healthcare and financial technologies’.
‘An affiliated partner of the G20 Global Partnership for Financial Inclusion (GPFI), the World Business Angels Investment Forum (WBAF) is an international organisation contributing immensely towards easing access to finance for businesses from startup to scaleup, with the ultimate goal of generating more jobs and more social justice worldwide.
It is committed to collaborating globally to empower world economic development by creating innovative financial instruments for innovators, startups, and Small & Medium Enterprises.
The Forum interacts with global leaders in all areas of society, first and foremost in business and political spheres, to help assess needs and establish goals, bearing in mind that the public interest is of importance. It engages a wide range of institutions, both public and private, local and international, commercial and academic to help shape the global agenda.’
WBAF’s operating structure presently comprises a Board, 30 High Commissioners, 119 Senators, 57 International Partners and 47 Faculty Members from 96 countries.
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