FinTech companies can be seen as either a threat or an opportunity, and African banks are taking the later view.
In a growing industry, there are various opportunities for new entrants and innovations to emerge, but what does this mean for the traditional players? More specifically, what does this mean in Africa? A key discovery in our latest survey Banking in Africa matters - African Banking Survey 2016 relates to this topic and addresses the impact of technology on Africa's banking sector.
Taking a look at history, we already know that breakthroughs in technology can drastically change our lives. In the financial sector, similar developments are transforming the business and social landscape. Opportunities in the African banking sector are ample, and we have found that incumbent banks operating within the continent are already implementing new solutions in their service offerings and internal processes.
Technology companies are making inroads into the financial services sector with robo-advisors, DIY investing, payment services and digital wallets, and much more. While this provides plenty of opportunities for growth in tech companies, traditional banks are facing a very real threat. At the same time, large incumbent banks are starting to realise the enormous and strategic value of the client data they capture through the normal course of their business - launching initiatives to capitalise on this through big data capabilities. While this is true worldwide, this is also true in Africa and our survey shows that African banks are also proactively acting on those trends.
Embracing new business models before new entrants disrupt the market is also key. Our survey shows that African banks, particularly in South Africa, have already started to put customer centricity at the core of their strategy. As such, they are implementing organisational changes including integrating customer data obtained from different channels to promote cross-selling opportunities, and on-boarding clients through digital channels to enlarge their customer base.
For many banks worldwide, FinTech represents a disturbing interruption. But in Africa, many banks are leveraging new technologies to bolster their presence at home. Their primary approach to maintaining profitability in African markets seems to be an increased focus on capturing client value through enhanced customer analytics and an improved customer service.
There is no doubt that banks are in the midst of a major transformation - and African banks, in particular, are embracing the change to build a more certain future.
Find out more about "Banking in Africa matters - African Banking Survey 2016" here.