INDUSTRY WATCH
Partnerships key for digital banking in Africa
In emerging markets significant amount of payments and remittances are done outside conventional banking channels . what value proposition they bring to the customer , and they can offer it on a joint basis without actually having the customer alter his daily routine ,” continues Zakhour .
Can digital banking work with the African way of life ? In emerging markets including North Africa and Middle East , a significant amount of payments and remittances are done outside conventional banking channels . These large inflows and outflows of remittances naturally become an important target component of digital banking . However , in these markets , the simplified front ends for customers and the scale of reach to drive down costs , are driven by telecom companies , post office , remittance providers , and other niche technology providers , not incumbent banks .
Banks have traditionally competed fiercely with each other for deposits and customers . In the past , banks across North Africa and Middle East were kept afloat by government deposits which contributed to their growth , but this has changed in the present day scenario . This has put increased pressure on banks to compete for deposits and rightfully earn those deposits . While there has been much discussion about Omni-Channel experience for new-age banking customers , digital banking is different .
Explains Charles Habak , Principal at Booz Allen Hamilton MENA , “ Digital banking brings in a much lower cost play . It provides an opportunity for far simpler and far more automated processes and services and allows you to interact with customers in new ways , all the while lowering the cost base . This means customers who were less appealing to you as a bank in the past , are now suddenly very much interesting , particularly when you start to capture larger portions of those segments .”
So what are the characteristics of digital banking ?
• Digital banking involves identifying new business models and services for existing or new customers , and providing solutions that are integrated with customers ’ lifestyles in new markets
• Services and processes are simplified , shortened , and easy to understand , and leverage a digital customer experience
• Lower costs are leveraged and these are passed on competitively to customers through lower fees , higher interest rates , and reduced time through simplified processes
• Customer experience in digital banking leverages digital elements like location , images , and videos
Since the emphasis of digital banking is to integrate into the customer ’ s existing way of life , finding partners who are already engaging with the target customer segment or target markets is important . “ You really have to think about the customer and their everyday routine , and how you can offer solutions that will not greatly disrupt their way of life ,” explains Lutfi Zakhour , Senior Vice President at Booz Allen Hamilton MENA .
“ You need to take a look at the different partners that already interact and interface with customers today . Each one involved in the partnership knows
“ From what we are seeing emerging from around the world and increasingly impacting the region – there is no choice but to partner with these Fintech companies . The key is to balance that partnership by leveraging each other ’ s strengths ,” remarks Habak .
Incumbent banks therefore need to offer valued services to their existing and potential customers through transaction partners who already exist in customers ’ lives , provided these FinTech partners are effectively integrated with the banks . Banks therefore own the financial relationship and financial aspect of any such service interaction with these customers , while FinTech partners engage with customers at the front end through better scale and experience and provide faster and cheaper services . What banks need to look at closely is where to partner with Fintech companies to provide the best value for their customers , while maintaining and owning the relationship with their customers .
Since the bank is meeting the needs of its customers or providing a service for its potential customers , which partner is engaging with the customer becomes secondary , according to Habak . “ It is not who is providing what , it is knowing that the bank at the end
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