The recent past, present and foreseeable future of banking
By Mario Poolman
Nedbank Head of Customer Strategy.
Debit and credit cards, cellphones and electronic funds transfer (EFT) have replaced the cheque as a mode of payment while browsers are increasingly making inroads on the traditional client preferences for bank branches.
The accelerated pace of digital change has already seen Namibians skip the automatic teller machine (ATM) queue in favour of in store teller at a supermarket and welcomed a fair share of Fintech innovation with the like of PayToday, a notable player.
Evolution of Banking in Africa
According to a Forbes online article (2018), with over half of the world’s mobile money services and given the continent’s mobile only nature, Africa has been the ideal breeding ground for this next generation of banking offerings.
The proportion of Kenya’s population with access to formal financial services rose to 83% from 75% in 2016, driven largely by mobile technology. And we know locally that mobile telephone penetration in Namibia passed the 110% mark back in 2012 already.
Our neighbours closer to home, particularly Botswana, Tanzania and Zimbabwe, have been the most active in mobile money development in the region, with Tanzania having adopted Kenya’s wildly successful mobile phone-based money transfer, financing and micro-financing service. In some respect, some may argue, this has evolved into the most sophisticated fintech market on the continent.
Such fintech evolution has also helped with core banking infrastructure in several markets. Products have been developed to switch payments between mobile network providers and bank, effectively becoming a regional switching service that had not previously been available. This also poses an interesting question: can or will technology replace humans in the provision of financial services considering the global strides in embracing the fourth industrial revolution?
The future of banking is here
The rise of the mobile phone has unquestionably been a catalyst for change and assisted banks in finally dragging itself out of the 20th century and not a moment too soon. The World Bank supports these views stating, ‘Sub-Saharan Africa leads one of the most exciting development innovation of our time- the rise of mobile money. Since 2014, the region’s big financial inclusion gains have been driven by mobile money,’
The Namibian banking sector in itself has seen an avalanche of technological changes in recent times. Modern banking has improved business and the flow of money and all it takes is a smartphone with an Internet connection to have these banking services at your fingertips. Often, not even access to the Internet is needed. With easier access, clients long for a customer-centric business approach everywhere: simplicity, intuitive usability for customers and catering for individual needs, especially as times are tough and access to affordable services is essential
Mario Poolman, whose daily focus at Nedbank Namibia is to devise best practice to enhance the customer experience within the bank says, ‘Easy to use technology and greater access to mobile phones eliminated the need to carry large sums of cash at any given time for both indibiduals and businesses, and have cut on long hours spent in long queues in banks. This change has allowed banks such as Nedbank to adapt and introduce apps and packages that allow for easy transfers between people and businesses and use bank accounts in new and innovative ways.’
And it’s probably the safest way to bank yet. If you lose your phone no one can access your bank account because of the various layers of security built into the system. However, most banks digital platforms are an extension of their physical and legacy banking platforms, an evolution rather than a reinvention of what the banking experience could be in a digital age.
Banks know that digital-savvy customers expect a holistic banking experience on their apps -similar to what they get from other digital services.
Everyone wants to feel valued and understood, and Namibians are exposed to international platforms and services that shape the expectations of local experience. So people are increasingly becoming less understanding of the lag in banking experience behind their other day-to-day experiences, especially given the increased digital nature of banking.
Traditionally, banks have multiple layers of human and technological checks and balances to ensure security and accuracy. In recent years banks have invested in automated processes to eliminate possible errors and to speed up processes. Online and cellphone banking has become de rigueur. Embracing this change Nedbank was the first Namibian bank to offer online applications and the first and only Namibian bank to provide unlimited transactions on a single bundled price – passing cost efficiencies from emerging technologies through the customers while enabling them to quickly and seamlessly make payments across banking platforms.
Digidal appllications are reshaping banking for the better and local PayToday serves as an excellent example. It is a smart, safe and social Namibian payment application. Its uniqueness lies in the fact that it works across all banking platforms – so regardless of where you bank, you’re able to make payments to individuals and businesses alike. It allows for payments with your phone and card for a hassle-free banking experience while avoiding excessive fess. Nedbank recognised the potential in PayToday and in powering their payments became the first Namibian bank to partner with a local fintech. Today PayToday is the market leader in the emerging Namibian payment innovation space.
Rising to the challenge of Fintech innovation, Nedbank redeveloped its mobile banking platform and recently launced the MoneyApp. “Its considered by app store users as one of the best banking apps in the market,” says Benje Fourie, Head of Distribution at Nedbank Namibia. “The MoneyApp allows one to manage accounts, activate cards for international travel, freeze and unfreeze bank cards, make payments and change credit or debit card setting from their mobile device. This enhanced card functionality for a mobile app was also first for Namibia. And you do not even have to use your data to access the app. If you are new in town, the MoneyApp’s ATM and branch locator is an easy to use facility that will save you time,” Fourie adds.
“In the same vein, mobile banking apps and Cashout options at point of sale devices (to withdraw money at a supermarket cashier) do not only present convenient ways to check your account balances or withdraw cash, but form an integral part of the banking experience. It is this sort of innovation that becomes a key consideration when choosing your banking partner,” says Fourie.
The way cash is handled everywhere has changed in recent years
Although it is still emerging, withdrawing cash at point of sale in supermarkets using Nedbank’s Cashout technology is becoming increasingly common in Namibia. Two of the biggest local retail chains, Pick n Pay and Woermann Brock are on board with the changing tide and there are more in the pipeline. “We had the option to put down additional ATM’s, but we saw more potential in rethinking cash withdrawals, which is when we turned to point-of-sale network,” says Fourie. “As a result of Cashout, our cash withdrawal footprint has increased with more than 200% in one year. We now have more than 120 retail outlets onboard with Cashout across the country, and when you consider that each till is capable of dispensing cash to our clients, it brings Nedbank’s points of cash withdrawal up to over 700,” says Fourie.
Doing transactional accounts differently
But, innovation doesn’t just come with fancy apps and digital solutions. Customer centricity is more than access to super-fast electronic products and processes. Often it is how we treat people that count. “The fact that we think and do things differently is the ultimate differentiator, which is also why we’ve simplified our banking offering,” says Poolman.
There are more than 50 transactional accounts among the large commercial banks in Namibia, which pretty much do the same thing, but with confusing rules and requirements. Clients end up making choices that do not meet their needs.
Nedbank stripped out this complexity by refocusing its efforts in consumer banking on two accounts only: a bundled and a pay-as-you-use account. Both have the same rules and requirements and provide the same services, with the only difference in how their pricing is structured. If you want to manage your fees on a per-transaction basis, the pay-as-you-use account is for you, with no monthly maintenance fees – if you don’t transact, there’s no charge. If you swipe for everything, and transact a lot, then you’d be better off with a bundled account that charges a fixed monthly fee for an unlimited amount of transactions.
The banking sector remains a competitive space
Even though the impact of financial technology in Namibia has so far not extended much beyond basic transactional services, it cannot be ignored that with the rise of technology, consumer demand for increased mobile and even frictionless experience will create new and unique opportunities for banks and new fintech players alike. This breeds competition that ultimately benefits the customer, making banking more secure, faster and convenient.
It’s about time.