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 the customers.
With the growth in the digital sector bringing innovations in all spheres of life, banking and financial services have been on the forefront. 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’ – BAU. 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 normal.
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 state that customers still need to have ‘face to face’ interactions with bank employees. People still prefer having a human interaction over a messaging machine.
This may be due to communication barriers as machines will barely understand and correctly interpret all questions and perhaps, never in local languages.
Nonetheless, a digital bank will be one with tremendous advantages. Even if the costs for setting up will be 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 boost confidence and growth.
Accenture, a firm dealing with digital, technology, strategy and operations, advices 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.
Openness involves engaging external technological 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.
Banks will need to collaborate with firms in the technology industry. This is because new innovations are developed when there are alliances with different sectors. An example is the SACCO ATM card which was as a result of banks working with SACCOs to give a solution where everyone wins.
Another clear example of need for collaboration is the SWIFT payment network, without which transfer of money across regions and countries would be a very difficult and painful process.
Collaboration with start-ups is still a huge challenge for large banks. However, such alliances should be encouraged as start-ups usually come up with the most innovative ideas due to less bureaucracy and more creative ways of thinking and solving problems.
In the near future, Banks will also need to invest more in digital capital. They will need to invest in different technologies; the technological equipment, human capital competent in digital fields and with the right certifications, as well as in innovative ideas.
Risk in investment is also a factor to be critically examined, however it should not deter digital investment.
Kenyan Banks have recognized the need for integrating digital into their operations and are making much needed strides in embracing the changes in environment.
This will also serve into including many households who were previously not banked into formal finance through mobile wallets and other modes of digital banking.