Fintech refers to technology that supports and enables banking and financial services. It helps improve and automate how services in the financial and banking sectors are delivered to customers.
With the growth in the digital sector bringing innovations in all spheres of life, banking and financial services have been at the forefront of this transformation.
Mobile Banking: From Innovation to Business as Usual
For example, mobile banking now forms part of the expected package when one opens an account. In banking lingo, this is now BAU — “Business as Usual.” Mobile banking is an excellent digital innovation that only points out how changes, once thought to be great innovations and over the top, have become completely normal.
The Rise of the Digital Bank: Is a Human-Free Bank the Future?
The idea of the digital bank — a bank that will not require human interaction — is now settling and finding acceptance in the banking industry. This may be in the near future as AI develops to levels that can interpret human needs and attend to them. However, this may seem far-fetched in today’s world, as research conducted in Kenya indicates that customers still need to have face-to-face interactions with bank employees. People still prefer human interaction over messaging machines, partly due to communication barriers, as machines can barely understand and correctly interpret all questions — and perhaps never in local languages.
Key Benefits of Digital Banking for Customers and Banks
Nonetheless, a digital bank offers tremendous advantages. Even if setup costs are high, subsequent staff costs, branch network maintenance costs, and other overheads attributed to employees will greatly reduce. Convenience for the customer is also a great plus, which boosts confidence and growth.
Openness, Collaboration, and Investment: The Three Pillars of Digital Banking
Accenture, a firm dealing with digital technology, strategy, and operations, advises that banks need three common themes — openness, collaboration, and investment — in order to stay ahead of the curve in reimagining and reshaping their digital futures.
1. Openness to External Technology Solutions
Large organizations need to have an open approach when it comes to technology, as the old conservative way of doing things fizzles out. They also need to be open to ideas floated by other organizations in the technology industry, as these are the people creating market-moving innovations.
2. Collaboration With Tech Firms and Startups
Banks will need to collaborate with firms in the technology industry, as new innovations are developed through alliances across different sectors. A clear example is the SACCO ATM card, which resulted from banks working with SACCOs to deliver a solution where everyone wins. Another is the SWIFT payment network, without which transferring money across regions and countries would be a difficult and painful process. Collaboration with startups remains a challenge for large banks, but such alliances should be encouraged, as startups typically generate the most innovative ideas due to less bureaucracy and more creative problem-solving.
3. Investing in Digital Capital and Human Talent
In the near future, banks will also need to invest more in digital capital — including technological equipment, human capital competent in digital fields with the right certifications, and innovative ideas. While investment risk must be critically examined, it should not deter digital progress.
Kenyan Banks Embracing the Digital Finance Revolution
Kenyan banks have recognized the need for integrating digital into their operations and are making much-needed strides in embracing environmental changes. This will also serve to include many households previously excluded from formal finance, bringing them in through mobile wallets and other modes of digital banking.
However, with increased digital adoption comes increased risk. Kenyan banks remain vulnerable to cyber attacks, internet fraud, and mobile fraud — a challenge that must be addressed as the sector scales its digital ambitions.
