Digital revolution represents a threat to the incumbent banks. PHOTO | FILE
By BRIAN NGUGI
Banks in the region have been advised to embrace
digital technologies to counter the disruption from financial
innovations. Failure to do so, warns a new research by SAP Africa, may
expose them to a tough future marked by thin profits.
According to the research, upstart financial technology
firms are introducing new customer-centric innovations at a pace
unmatched by the formal traditional banking sector.
It notes while the digital revolution represents a
threat to the incumbent banks, they should be wary of focusing on
maintaining traditional advantages and rather think of utilising
technology to create new opportunities across the entire value chain.
Digital transformation, says the study, can drive
adoption of banking services by enabling banks to develop and deploy
tailored, customer-focused products and solutions.
“The ability to embrace disruptive fintech products
and services will allow banks to ride the wave of uncertainty and
emerge strong and future fit,” said Darrel Orsmond industry head
financial services at SAP Africa.
Despite the rapid pace of disruption and the
evolution of the banking sector, the research assures lenders that most
customer needs will be fundamentally the same five or even 10 years from
now. For example, saving for retirement, buying a house and paying for
education.
“What is likely to change, however, is the role of
the banking sector in providing such services,” says the report. “Smart,
forward-thinking banks will embrace digital transformation by adopting
cloud technologies to reduce costs, analysing data to create more
personalised services, and using customer-focused channels.”
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