Digital citizens are central to neo-bank model

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Crucial skills that will help create the bank of the future are those focused on creating digital, client-centric core banking offerings.

This was the word from Bongiwe Kunene, MD of the Banking Association South Africa, giving a keynote presentation last week, at the “Future of Banking” webinar hosted by CNBC Africa in partnership with Euro Exim Bank and Liquid Intelligent Technologies.

Unpacking the key trends driving change in the banking sector across the African continent, Kunene noted that in the digital era, it’s important for banks to have a way of managing digital citizens. She added they should quickly adapt and incorporate new skills to create shared value for customers, stakeholders and businesses.

“The bank of the future will evolve to become client-centric and offer the same experiences they have come to expect from any marketplace. Skills of the future for the banking industry are going to be focused on core banking services – which is what banks do best to enable allocative efficiency in terms of various services, including advisory services, credit services and working with clients to take them to journeys and markets where they haven’t been before.

“Today, banks have had to learn to be very agile and they need the same skills as those the innovative companies are looking for, to deal with issues that relate to data, such as data science and data management,” explained Kunene.

Underpinned by a platform-based model, the marketplace banking model is defined as an “ecosystem” of aggregated products and services presented to customers as a wide range of offerings from third-party service providers that have partnered with banks.

Kunene noted that in today’s digital world, transactions will have to be done at exponentially fast speeds. This means there must be real-time settlements and instant payments, as well as innovations that will make sure digital citizens receive the services they want, instantly and where they want them.

“Skills of the future for the banking industry are going to be focused on shared value creation for clients, enterprises and stakeholders, to ensure they are able to derive new value for themselves out of their relationship with the bank. In that regard, the banks are looking for the cost scale of critical thinking – how do you use your data to formulate analytics to create and share positive value for everyone? Banks also need to meet the expectations of what the world of work would mean, for both customers and their own employees.”

She highlighted the four key trends that will shape the future of banking, as observed by the Banking Association South Africa: mobile banking, digital-only banking, open banking and fintech, and cyber risk and financial crime.

Mobile banking

With the drive of mobile use in Africa against a backdrop of limited technological access, online banking channels are emerging as the preferred form of engagement. Banks are now pushing a mobile-first strategy, either in the form of mobile-only bank brands or enhanced mobile apps with features such as virtual assistants.

Digital-only banking

The acceleration of the digital-first economy means the new normal in banking is engagement through a digital interface – or neo-banks. There’s a shift from branch-heavy interactions and product-centric organisations to more seamless digital consumer experiences. Traditional banks are exploring technological solutions to keep up with the neo-bank model.

Open banking and fintech collaborations

Banks are being forced to re-think the customer’s journey in a digital world. This has seen fintech providers emerge as potential rivals to the growing adoption of open banking. Open banking requires banks to make their own application programming interface more accessible so that third-parties can create new products and services on top of the data. This has seen banks collaborating with fintech firms to achieve this goal.

Cyber risk and financial crime

The digitisation of banking comes with the risks associated with cyber crime. Regulators are now tightening compliance to address the rise of more complex and sophisticated financial crimes. Banks have to embrace advanced technologies like analytics and artificial intelligence to address this threat.

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