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10 14 18 22

The top 10 digital banking trends for 2021


Africa’s mobile money and the digital banking future: Re-starting the journey Payment technology from a regulatory and compliance perspective: Experience from Nigeria Digital banking in Africa A venture capital’s perspective




30 34

The Quest for ‘true financial inclusion’ COVID Kairos Creates Opportunity for PWD Digital Accessibility in Kenya



38 40


How open APIs can solve Nigeria’s financial inclusion problem How emergence and rise of open banking



Access Bank: Helping customers access more


The digital effect

52 54 58


Mobile Payments on the Rise As Kenyans Go Cashless


FBC Transformation Delivers Results How banks are turning to social media to attract customers in Africa

64 58

68 70


Finbank Innovation Conference: Where banking meets technology Regional KYC Utilities: The Start of Global Partnerships on a Common Compliance Platform Cryptocurrency Signals A New Dawn In African Finance Can AI prove to be the perfect fraud detector?



Welcome to the winter edition of

DBA 2021! We start the year with an

While Nuru Mugambi provides a

Despite the uncertainty and loss

exciting edition packed full of

highly thought-provoking piece on

experienced across the globe during

insightful opinion pieces. You’ll

the impact of digital banking for

2020 there are some unforeseen

find contributions from leaders

customers with disabilities.

positive outcomes being witnessed

within the digital finance industry

During the last couple of months

across Africa for both customers

reflecting on the rapid changes

digital currency has seen an upward

and financial services themselves.

in 2020 which have inadvertently

trend with Bitcoin reaching all

However, there is still more to do.

sped up the implementation

time highs, making headlines on

What we have seen is a reactive

of digital banking across the

a daily basis and driving up the

consequence to a totally new

globe. Imran Sumra discusses

prices of other cryptocurrencies

and unexpected situation. The

the technology behind many of

at the same time. However the

readjustment period has now begun

these advances whilst also noting

volatility of the crypto market

and what is evident is that we are

the challenges that lie ahead in

means cryptocurrency still remains

on the cusp of a new era.

creating a more consistent and

a concern for many investors.

secure digital banking service.



Chief Executive Officer at First Bank of Nigeria Limited


Commercial Director of the Finbank Innovation Conference & Expo


Trustee of Open Banking Nigeria and CEO at Trium Networks


Chief Executive Officer at FinSense Africa


Chief Executive Officer at Access Bank PLC


Head, Digital Financial Services Enhancing Financial Innovation and Access (EFInA)


Public affairs director at Kenya Bankers Association


DM Payments System Compliance The Central Bank of Nigeria


Managing Partner at Oui Capital


Group Chief Executive of FBC Bank


Managing Director of FBC BANK

Editor: Anthony Bempong Executive Editor: Noel Morrison Deputy Editor: Henry Scott Art Director: Pritesh Patel Layout Designer Abdhesh Kumar Jha Chief Sub: Kwabena Mensah Bonsu Head of Online Development: Lee-Anne Doughlin Online Development: Gerald Hutchfull, Paulette Davidson Subscription Manager: Stephen Rock Marketing Manager: Siobhan Copland Marketing Assistant Jason Hall Circulation manager: Nathan Asare Head of Sales: Michael Scott Production Editor: Rebecca Mcglynn Business Development: James Walters, Lloyd Quansah, Paul Da Associate Producer: Dean Kirby Head of Accounts: Wayne Sykes Publisher: Percival Marshall ISSN 2752-4485 www.digitalbankerafrica.com Images by www.istock.com All information contained in this publication has been obtained from sources the proprietors believe to be correct, however no legal liability can be accepted for any errors. No part of this publication can be reproduced without prior consent from the publisher.




s we all know this is the era of science and technology, our young generation enter into a

new digital world that speeds up the process of the traditional banking industry to branchless banking. Digital banking can be defined

applications online. With this said, banks must continue to stay abreast of digital banking trends that are all necessary to improve their customers’ digital experience. Let’s see the digital banking trends

as moving online all traditional

for the year 2021:

banking activities using technology


and innovation that will allow customers to join a bank and handle their banking activities without physically ever entering a bank. Customers have quickly shifted to online and mobile devices and banks have had to invest in their digital transformation as customer requirements now include paying bills, mobile payments and loan

Many banks started testing bots to automate customer service and make it available 24/7 on customer-preferred channels such as Facebook Messenger or WhatsApp. This will be beneficial both for the bank and for its end customers. Customers do not want to search through FAQs, or wait for the primary customer

service representative. In the past bots in the banking system were a low-cost alternative to humanbased customer service that help customers to locate the nearest branch or ATM, get information on exchange rates and banking products or monitor their latest transactions.

SMALL AND MEDIUM ENTERPRISES: Banks also have to consider the small and medium enterprise (SME) segment. In the past, business customers have been divided into product based customisation according to the needs of customers and due to complexity of each business.

evolution of working processes,

to do in a physical-first distribution

and the challenge of integrating


human work with AI applications is a paramount concern for the industry. The good news, however, However, banks have come to know

is that structured applications

the potential of such a market. They

and pilots are starting to produce

are slowly moving to standardised

interesting results, both in terms

value-added services offerings.

of savings in eliminating repetitive

Banks can increase their revenues

tasks and in sharpening the focus

by increasing their traditional

on customer service.

Many banks have initiatives aimed at targeting demographic-based clusters such as young people, Millennials or older people, but some banks are now targeting customers based on lifestyles, values, aspirations, mindsets and underserved needs.

business customers products and

Banks have to select a niche and

services like business financial

identify and approach niche

management (BFM) solutions,

customers with a dedicated


as well as digital transformation

value proposition. In the last few

Application programming interface

like ecommerce set up or digital

years the most forward-looking

(API) is the most important topic

marketing campaign management.

customers have joined the banks

in the banking industry today, and

that use innovative technologies

many people believe it will become

to shape niche-specific products

even more important with the

and services. These banks

introduction of the Payment service

are developing new customer

directive. API’s change the way

touchpoints and relationship

banks open their boundaries to deal

models in a cost-effective way,

with changes in technology and

something that was always difficult


customers and retaining them. Banks have started offering their

DIGITALISE THE WORKFORCE: Banks should invest in intelligent tools to digitise its workforce. Artificial intelligence (AI) is the key technology behind the



updates are used for many services while customers are offered support via in-app chat.

Fintech companies provide the


technology that enables financial

Bank executives believe that new

institutions to automatically

technologies such as blockchain

process their financial services,

and artificial intelligence (AI) will

using specialised software and

have the greatest impact on the

algorithms that are used on

banking sector.

computers and smartphones. People want to conduct transactions via mobile, and these activities include managing their financial needs for example applying for a loan, or optimising their investment strategies. Fintech companies provide both individuals and businesses the digital tools which give innovative ideas and software solutions.

ADVANCED TECHNOLOGIES MONEY AND PERSONAL FINANCE MANAGEMENT (PFM) TOOLS: Customer-focused banks are changing their way of banking. They are now concentrating on the next phase in the evolution of personal finance. The potential benefits of the strategy include enhancing customer engagement and retention through ongoing “non-sales-only” interactions with the brand, and opening new feebased revenue streams by charging for certain types of high-value alerts, such as overdraft probability notification and management.

EXPANSION OF DIGITAL PAYMENTS: Cash is not king and banks are focusing more on digital payments in 2021. All the banking processes are automated and real-time

HUMANISING DIGITAL EXPERIENCE: Digital Interaction means banks are on the spot to provide interactive experiences, on demand tailored and consistent with each individual’s unique needs. Most customers still depend on human interactions to solve their problems. Financial institutions that learn


how to blend human touch with digital interactions can be successful in building trust and emotional connections with customers.

CONCLUSION: Over the last few years, traditional banking shifted to become more intelligent and experiential. Banks have to find new ways to satisfy their customer needs and emerging technologies support the financial institutions to survive in these critical times. Open platforms are becoming more popular and some banks are offering nonfinancial services to their customers. Banks can transform their product and services to gain new clients and retain them. More than ever, banks realise the importance of flexibility, adaptability, self-sufficiency and teamwork during the pandemic. Banks have to offer customised products and services to their customers while being innovative, that will be the most demanding trend in the future.

Organised by

Your One-Stop IT solutions Provider

in partnership with

Africa’s mobile money and the digital banking future:

Re-starting the journey “You said I didn’t need to wear

as is common with other payment

more acute in West Africa. Nigeria’s

a tie,” muttered Nelson, a tinge


estimated population of 206

of betrayal in his voice. Slightly apologetic in my body language, it is my lucky tie after all; I sat down for one of my increasinglyrare 2020 interviews. Nelson is part of the new generation of entrepreneurs in Africa who eschew traditional formality and are hyper-focused on optimised sales and customer streamlined experiences. I had first interacted with Nelson via his Social Media business page when he was selling mobile phone and laptop accessories. My purchase experience had been fully digital, right from negotiation to order payment and delivery. Although Nelson’s page offered links to an online payment gateway, he preferred to get paid via M-pesa, citing predictable transaction fees and instantaneous settlement. The delivery, dispatched via a trackable ride-sharing motorbike service took 2 hours and all price points were visible to me as the buyer. When I subsequently probed Nelson on his avoidance of online payment gateway providers, he merely pointed out that he can complete an almost frictionless sale using MPESA, without the need for training or re-assuring customers

In Kenya, a key African Fintech hub, the payment ecosystem has in large part been shaped by Safaricom’s M-pesa mobile money system. With 22 million mobile money accounts out of a population

million currently had about 15 million mobile money accounts in 2019 according to recent estimates by Statista. This is an almost doubling of the 2018 estimate, but still only accounts for less than 10%

of 47 million, M-pesa’s network effects are so significant that traditional banks have been left scrambling to play catch up. In 2017, Kenyan banks finally launched a mobilefriendly solution called PesaLink. This longoverdue innovation allowed bank customers to transfer money to both bank accounts and mobile

My purchase experience had been fully digital, right from negotiation to order payment and delivery. Although Nelson’s page offered links to an online payment gateway, he preferred to get paid via M-pesa, citing predictable transaction fees and instantaneous settlement.

money wallets within minutes. However, the M-pesa payment channel has remained the main option. Three years on, Nelson’s question, “What’s PesaLink?” When I first offered this as a payment option, reinforced my conviction of the uphill task facing traditional banks seeking to provide financial services to the average African consumer. This challenge for banks is even

of Nigeria’s 172 million active mobile

numbers. Kenya’s Telco-led

Based in Abuja, Chioma effusively

Both Chioma and Nelson have

approach has not taken root in

narrates how she established and

narrated the business shocks

many attractive digital money

grew her bakery business. She

that hit them with the onset of

growth markets, with one of the

received a co-investment in two

the COVID19 pandemic. With the

reasons being the decision by

tranches in 2018 from her aunt

characteristic optimism of Africa’s

regulators to only license bank-

based in Luton, England. She has

burgeoning entrepreneurial class,

led mobile money solutions.

recently formally hired her only

they both told of their unfolding

The Central Bank of Nigeria

sibling to help with bookkeeping

disbelief as international and

had indicated its intent to allow

and other administrative tasks.

local lock-downs brought their

non-bank financial players

Chioma was a beneficiary of

businesses to a grinding halt

into the mobile money space

Nigeria’s significant annual

by mid-2020. They have both

in 2018. However, this has not

diaspora inflows ($22 billion in

weathered the storm, but not

materialised in a meaningful way,

2017) and was fortunate enough

without significant income

leaving Nigeria’s 60% unbanked-

to establish a successful business

reductions. In some ways, however,

population dependent on cash

with the proceeds. Her aunt’s

the benefits of governmental drives

for handling payments. However,

initial 1,500,000 Naira investment

to eliminate physical cash, as well

numerous Fintech players have

supplemented her savings and,

as a consumer-driven dash to cash

built solutions that leverage their

with her new hire, will enable her

helped reduce transactional friction

own banking relationships and a

focus on product differentiation

for their businesses. In Nelson’s

60,000+ agent network to create a

and expansion beyond the pastries

case, client preferences shifted

mobile-money equivalent to their

(mainly bread) that she currently

almost overnight towards online

end users.


shopping; and a professional online presence supplemented the need to pay for expensive store space. Chioma, on the other hand, had to engage in protracted, but ultimately successful, rent negotiations. Fortunately, she managed to retain her core customer base and managed to eliminate the need for frequent cash agent or banking hall visits. During interviews, both Nelson and Chioma evidenced a low level of interest in any electronic payment channel alternatives. In particular, certain payment options such as contactless debit/credit card seemed to elicit little consumer or merchant enthusiasm. Perhaps most interestingly, both merchants seemed not to mind relatively high mobile money transaction costs, even when lower digital payment options were highlighted. Convenience and consumer

preference drove both of their

established Unemployment

channels, mobile money is bound

thought processes in terms of their

insurance fund, South Africa was

to lead the growth in both financial

preferred payment channels.

also able to disburse existing

inclusion and sophistication of

and enhanced social protection

financial products via digital

payments to over 17 million

channels. The GSMA’s 2018

recipients via a range of bank

listing of 3 sleeping mobile money

account and cash-based channels.

giants includes Ethiopia, Nigeria

Overall, ensuing studies on the

and Egypt, all countries with

benefits, and lessons to be learned

populations exceeding 100 million.

from various payment channels

However, latent demand and

should provide a rich source of

regulatory enablement may drive

information for organisations

faster growth in relatively smaller,

formulating their 2021 digital

but more nimble markets in 2021


and beyond.

the existence of digital payment

Statista estimates that, close to

As for the likes of Nelson and

infrastructure aided social

300 million Africa’s 1.3 Billion

Chioma, the prospects of building

protection distribution. As a case

population held bank accounts in

back their own futures and those of

in point, Kenya’s government

2017. Although this number is likely

their compatriots and neighbouring

was able to create a temporary

to continue growing significantly,

countries remain as bright as they

employment drive and make weekly

the growth rate will pale in

ever were. Organisations with the

payments to approximately 130,000

comparison to that of the growth in

right focus on Africa’s digital future

recipients, as well as provide full

mobile money

reconciliation by close of business.

accounts. With

Separately, the United Kingdom,

countries such

in partnership with GiveDirectly,

as Ethiopia

was able to effect direct cash

now seeking

transfers to 50,000 participants.

to further

With a well-developed national


identification system and an

digital payment

Like many of their counterparts across Africa the economic knock on effects from the COVID19 shutdown also led to a sharp rise in social fundraising requests from friends and relatives. Whether it was for medical expenses or to help the recently-unemployed meet basic living costs, the appeals kept coming. At a governmental and International donor level,

will be around long

The GSMA’s 2018 listing of 3 sleeping mobile money giants includes Ethiopia, Nigeria and Egypt, all countries with populations exceeding 100 million.

enough to support this growth journey and benefit from its outcomes.





The mobile payment industry in Nigeria is expected to record a CAGR of 25.6% to reach US$ 73,871.9 million by 2025, understanding the regulatory demands in an ever growing sector will be key, Mohammed Kabiru shares his expertise and insight with Digital Banker Africa

The regulation of the payments

Fintechs scope of operations and

system and its participants

measures vary among companies. I

generally involves four (4) functions by the regulator: Development of regulations

Shuru M. Kabiru DM Payments System Compliance The Central Bank of Nigeria

Issuance of licences Oversight of the payments system; and Consumer protection Regulations define the rules and standards that govern the various payments system operations, including granting powers to the regulator to licence companies. The licence grants legitimacy to a company to play in the payments system space in a jurisdiction. Routine oversight of the payments system by the regulator ensures that participants play by the rules and consumers are protected against the failures of these licensed companies. There have been a lot of promotions for fintech and disruption as the panacea for financial exclusion and liberation of the consumer from the shackles of conventional banking, but little is highlighted about the enormity of the burden that comes with such disruption, particularly

have seen the implication of this in developing standards and licensing requirements in Nigeria. It is common to find 2 or more payment technology companies holding

from the perspective of regulation

similar licences but providing

and compliance. Without regulation

different payment services. It is

and compliance, the so-called

easy to group them as payment

disruption could do more harm than

system service providers (PSPs),

good to the banking and payments

but it is crucial for policy and


licensing to be clear about common

While global standards and best practices have since been achieved for the banking industry, with the Basel Committee for Banking Supervision, issuing Guidelines and Standards, such has not been for financial technology operations, leaving a lot of room for arbitrage and systemic risks. Let us look at 7 crucial areas of concern to the regulator on fintech operations.

Fintech is still a Buzzword Let us start with the term Fintech. The term is still a buzzword that is yet to have a meaning that is generally accepted and uniformly understood across jurisdictions.

expectations among holders of the same licences, to hold them to an equal standard.

Technological delimitation of fintech makes them defy regulatory boundaries As regulators, our greater interest is to ensure a safe, stable, sustainable, and reliable payment system that does not hurt financial system stability. One way of ensuring this is by setting boundaries for operations under a particular licence. But because the technology systems being used by fintech are often omnibus and scalable. it is easy to find a company licensed to provide gateway service, for example, doing card processing, acquiring, switching, issuing, or


wallets not approved for it. In the

captured under the regulatory

are not required by regulation to

interest of a safe and sustainable

deposit insurance scheme. Hence,

recognise depositor funds in their

payment system, the regulator is

customers risk losing their life-

balance sheet as a component of

concerned that a company, which

savings if a fintech goes bankrupt.

current liabilities, which is required

had been prequalified to offer a

The wider economic implication

of banks.

specified payment service would

of such an adverse event is usually

end up providing other critical

catastrophic. In Nigeria, the Nigeria

services for which the regulator had

Deposit Insurance Corporation

not assessed its capability to do.

(NDIC) has a pass-through deposit

Legal versus Regulatory Framework for the operations of fintech

insurance coverage for deposits

Banking regulations are issued on

What amount of capital is adequate for fintech operations Fintech business is highly risky. An ultimate concern to the regulator is the potential loss of customer’s

being held by mobile money operators (MMOs) only.

Absence of international standards for fintech regulation

the bedrock of banking laws, which grants power and strength to the application of the regulations made by appropriate authorities. Enabling laws, necessary to lay down the legal frameworks for fintech

funds and confidential data due to

Unlike banks that have the Basel

operations have not been enacted in

corporate failures or data breaches.

Accords, which provide a series

many countries. This has left room

Deposit liabilities need to be

of prudential guidance, fintech is

for arguing the legality of fintech

matched with capital adequacy so

not so guided. The Principles for

operations and the powers of the

that the business has sufficient

Financial Market Infrastructures

regulator to approve such or not, in

funds to withstand a financial

(PFMI) does not help, as it is

certain situations.

crisis. Payment companies also

focused on the wholesale aspect of

provide third-party services

the payments system, whereas the

to banks based on service level

fintech operations focus on retail

agreements with liability claims

payments. An important aspect

It’s harder to fight Money Laundering and counter the Financing of Terrorism

for losses that may arise due to

that I have concern about is the treatment of deposit liability in the

The KYC requirements for fintech

system failures. These liabilities are sometimes huge enough to sink a

balance sheet. In Nigeria, MMOs

fintech that does not have adequate capital if such risk crystallises.

The absence of deposit insurance on fintech customers’ funds is a key concern Bank deposits are insured by the deposit insurance authority of the government. This relieves the regulator of concerns around the fate of depositor funds when a bank goes bankrupt. In some jurisdictions, fintechs tend to also roll out products that require them to take deposits from customers in one form or the other, except that these deposits are not

customer’s sign-up are minimal, compared to banks. Wallet deposits


are normally held in a pool account

to the specific payment services

reconciled with the e-float balance

domiciled in a bank. A single pool

they intend to offer. Such

to verify the existence of the

account holds funds belonging

services should be captured from

depositor’s funds at all times.

to thousands of wallet holders,

incorporation into the objects of

which makes it challenging for the

the company.

A framework for deposit insurance

Operation licences should be

required of licensed deposit-

granted based on the company’s

taking fintech. Although MMO

incorporation documents, which

wallets do have coverage in Nigeria

specify its registered business

under the NDIC pass-through

money laundering.

activities. This marks the first

deposit insurance policy, there are

stage of legitimacy to operate as

payment companies other than

My take

a payment company. Payments

MMOs that offer certain services

services should be categorised,

involving deposit-taking, which

and licensed to companies

are not so covered. This is risky and

according to their lines of service.

dangerous for the customers.

bank to screen the funds against money laundering. The bank will not be able to trace deposited funds to an individual and determine its source, leaving an exploit for

The fintech phenomenon is a game-changer and a veritable tool for financial inclusion, poverty alleviation, and economic development. However, global implementation and adoption currently vary and therefore leave a lack of international best practices for guidance and regulation. Financial regulators have had to play catch-up to understand the system and determine what fairplay rules should be developed and applied. Where operation precedes regulation, the regulator tends to have problems dealing with unprecedented issues that do arise. It is high time that global stakeholders in general, and regulators in particular, formed an international working group on this fintech phenomenon and issue a white paper on what could be considered best practices with the view to: protecting customers funds mitigating systemic risks; and appropriating a definition for the term In essence, fintech operations need to be categorised according

This is important for developing regulations according to operations and will help to keep oversight and compliance functions of the regulator within scope per company. It also makes it easier for the regulator to determine and set the appropriate capital that should be required of a payment company based on its category of operation. This is the current licensing regime for Nigeria.

The fintech phenomenon is a game-changer and a veritable tool for financial inclusion, poverty alleviation, and economic development.

needs to be developed and

It is time to put the focus of AML/ CFT on fintech as done to banks across the globe. International remittances are fast-moving through fintech systems, making money laundering easier, faster, and more anonymous. Fintechs can move funds across borders, using technology without an appropriate licence from the regulator. It is common to see a remittance company operate in a jurisdiction without being present as a locally registered company. In such cases, local regulators become handicapped in ensuring that such a company plays by the rules. Appreciating payment technology from a regulatory and compliance perspective has best been

In this regard, the financial statements of a fintech need to factor-in and recognise banking elements such as deposit liabilities and cash reserves in arriving at the true and fair view of their financial position as at the reporting date. A special audit must be conducted on the pool account balances and

demonstrated recently with the events of the Wirecard demise which was largely blamed on accounting and regulatory laxity on the parts of EY and the German Federal Financial Supervisory Authority (BaFin), respectively.




Connectivity in Africa is becoming ubiquitous, with

A tale of low competitive intensity:

mobile and other technologies facilitating efficient

The use of cash is still considerably prevalent

and secure means of doing business. Furthermore, a

in most African economies as people and SMEs

rising smartphone penetration rate; a vibrant, youthful population and regulatory attempts at financial inclusion and a cashless society are creating a watershed moment for banking with many stepping up to develop improved propositions across the value chain. In Nigeria alone, the total number of FinTech companies and solutions (offered by banks and telcos) is over 200. Between Q1 and Q2 of 2020, The African FinTech scene raised over $250 million in funding, attracting 60% of the $480m million raised by African tech startups in 2020. This traction cannot come at a better time, as Africa needs its Digital banks.

grapple with access — to remittance, financing and other value-added banking services. Nigeria makes an immediate and compelling illustration, with a population of 200 million — A whopping 40% of Africa’s largest economy — is financially excluded. Looking past this “low hanging fruit” case in point, There are opportunities across multiple product ranges and user segments, to address known pain points of the banked, unbanked and underbanked. Consumer lending — and, all forms of insurance — are strong focal points for FinTech activity. Activity is also expanding into flexible savings, asset management and investments as users look for more profitable returns on investment, locally and internationally.


REALISING AFRICA’S DIGITAL BANKING POTENTIAL Drawing from global research, along with real-world examples from across Africa’s banking sector, increased FinTech activity has the potential to stimulate economic activity and drive progress towards development goals. This economic impact will fundamentally come from growing revenue pools and inviting foreign direct investment to the continent. The sector can also stimulate the

its 13 locations in Nigeria were

and payments

Olu Oyinsan

closed due to the lockdown. As a

on mobile. Creating new

MBA managing partner

result, the team


Oui Capital

for collaboration

had to pivot into

in sub-Saharan

food deliveries to withstand the

Africa where FinTechs and Banks


can enter into value-added

To Legacy Banks : An uptick in FinTech activity and the COVID-19 pandemic is driving many legacy banks to embrace new tactics to remain competitive. At this time, banks should consider

partnerships with Telcos. Telcos can now provide regulated services like quick credit, money transfers, and banks/FinTechs can extend their reach to a broader market by offering their services on mobile phones.

not just competing in concentrated areas, but should leverage existing smaller, more agile players.


African e-commerce industry.

Notably in new market areas, such

Traditionally, FinTech investments

This, however, is only possible if

digital loans at ‘point of sale’..

digital economy by providing business-to-consumer (B2C) marketplace tools and enabling the

all stakeholders work together, to

assets to collaborate with other

as agent banking, SME lending, and

have gone to FinTechs, but there are opportunities outside these

To serve these emerging revenue

prospects to be considered. Such

pools and compete effectively with

as a logistics company or any other

industry peers, legacy banks will

non-financial firm looking to add-

For FinTech Startups :

need to acquire new talent and

on financial services.

tools; and follow local and global

The vast majority of FinTechs have

examples of banks that adopted

Investors must also be willing to

existed for less than a decade,

the lean startup culture and the use

and only a few are profitable.

emerging technology to evolve and

This could either make them

remain relevant.

unhitch the full potential of Africa’s Digital Banking Economy.

vulnerable or serve to strengthen

look beyond capital injection at a broader landscape, at investments that facilitate infrastructure for FinTechs and the acceleration of

Leveraging trusted partnership:

the digital economy.

Startups with limited access to

FinTechs and banks are the

headwinds, to plan and adjust their

resources should always adjust

most common for a symbiotic

expectations and investments. This

their business models to account

relationship, through which they

ambidexterity will make it easier

for market dynamism. It requires

can provide banking services

to deliver smart capital, when

a focus on solutions, a clear path

without the hassle of meeting many

and where it’s needed to fuel the

towards revenue and certainty on

regulatory requirements.

FinTech space. Ultimately plugging

them depending on the strategy employed.

the goals and objectives that lead to results. For example micromobility platform Awabike was hard-hit during the pandemic. All

Open banking and APIs have made it so much easier to offer banking services like loans, remittances

Finally, investors need a practical outlook on the market

a gap and creating value that is notably greater than the sum of its parts.


FIRST BANK OF NIGERIA: A BANK FOR TODAY AND TOMORROW Established in 1894 and offering a comprehensive range of services through more than 57,000 business outlets to over 17 million customers, First Bank of Nigeria’s impact is woven into the fabric of West African society. FirstBank’s adaptation to a digital economy has seen them lead the way in Nigeria as the first bank to issue over 10 million cards. FirstBank’s financial inclusion and cashless transaction drive has also resulted in some impressive figures with over 228 million users on its USSD banking service through the nationally acclaimed *894# banking service and over 3.4 million users on its Firstmobile platform

always been very deliberate in developing a

FirstBank’s management team is made up of seasonal professionals led by Dr Adesola Adeduntan, the Chief Executive Officer of First Bank of Nigeria Limited. Here Digital Banker Africa speaks with Dr Adesola Adeduntan about the importance of adapting to the changes in the banking industry with ever evolving technologies, along with what we can expect from First Bank of Nigeria in the future.

already reshaping the banking industry,

strategy that is focused on building a bank for today and tomorrow. As such, our investments in digital technologies have been with a strong emphasis on building a future-proof digital bank. As such, the bank’s strategy is anchored on a robust multi-year digital transformation programme. Over the last one year, in response to the impact of the Covid-19 pandemic on how we engage and interact with customers as well as collaborate internally to deliver services, the bank accelerated its responses to the various trends (particularly digitalisation) that were through rapid execution of initiatives that deliver world-class innovative digital capabilities. Specifically, the key strategy execution changes made by the bank include: •

capabilities that enable: end-to-end digital customer acquisition and on-



boarding across different customer segments, virtual customer relationship management and interaction leveraging collaboration tools to improve customer

irstBank’s business model for the

experience, remote work model for

current strategic business cycle remains

employees, lean operating model through

the same as the bank has continued to

robotic process automation (RPA), and

play the role of a dynamic financial services

artificial intelligence (AI), digital and

provider with a strong focus on delivering unique value propositions and excellent customer experience. At FirstBank, we have 24

Accelerating the deployment of

virtual training delivery, amongst others. •

Significant investments to improve


the resilience and capacity of the bank’s technology and cyber security infrastructure. The bank has continued to reap significant benefits from its deliberate investments in digital innovation. Specifically, over the last one year, we: •

Recorded significantly improved uptime and service availability on our digital channels, providing increased value to the bank and improved experience to our customers. This is evidenced in the fact that the bank has the highest volume and value of transactions on the digital platforms in the industry.

Reduced the overall cost of operations and increased the bank’s operational efficiency.

Recorded nearly zero successful cyberattacks on our IT infrastructure.

As a future-focused bank, we will continue to make the required investments that deliver innovative digital capabilities that will make us the most dominant and efficient digital bank in the markets where we operate.

HOW DID THESE CHANGES HELP TO BOOST FIRSTBANK’S BUSINESS PERFORMANCE IN 2019 AND 2020? The accelerated execution of various digital initiatives as well as the additional strategic investments in digital innovation has helped to enhance the bank’s digital capabilities, leading to an appreciable improvement in the performance of the bank across relevant indices. Specifically, the bank has recorded the following performance improvements over the last one year: •

Grew the most expansive digitallydriven Agent Banking Network in Nigeria to over 86,000 agents, the largest in the industry

Increased customer account base 25


(including wallets) to over

Covid-19 pandemic, has had a

the underserved and unbanked

30 million

positive impact on the bank as

population segment comprising

we grew our customer numbers,

of micro-entrepreneurs, salaried

increased our market share of

workers, and farmers; and

customers’ businesses, increased

extend product offerings to

operational efficiency and

new geographies by leveraging


technology-based service delivery

Maintained the dominant digital banking capability rating in Nigeria with over 20% market share of electronic banking transaction volumes;

channels, and decongesting the

over 11 million issued cards;

Access to financial services is

more than 11 million USSD

a major enabler in personal

banking platform users; and

and national economic growth,

I must say that this strategic

over 4 million mobile banking

especially in Africa’s biggest

move has had a very strong social

App users

economy. In a bid to enhance the

impact as well as set an enviable

The above achievements have had a positive impact on the bank’s overall profitability.


access of micro-entrepreneurs and low income households to financial services, financial sector stakeholders led by the Central Bank of Nigeria (CBN) in 2012 introduced the National Financial

Generally, the Covid-19 pandemic

Inclusion Strategy (NFIS) with

presented an opportunity for most

the overall target of reducing the

organisations, including banks, to

percentage of adult Nigerians

drive and accelerate the execution

that do not have access to formal

of disruptive digital initiatives –

financial services from 46% in 2010

forcing organisations to realign

to 20% in 2020. In 2019, the CBN

their strategies to navigate the

Governor announced a target of

challenges of the new ways of

95% financial inclusion rate to be

engaging and serving customers.

achieved in 2024.

For us at FirstBank, I would say


that it has been generally positive. FirstBank’s strategy was developed from a forward-looking perspective with a strong digital focus. As such, the pandemic created opportunities for us to accelerate our responses to the many trends already reshaping the banking industry. Therefore, the pandemic has helped us to accelerate the implementation of digital and innovation initiatives in our strategic plan; ensuring that we quickly and seamlessly adapt to the

In the same vein, FirstBank recognised the need to provide affordable, accessible, and easy to use formal financial services to the bottom of the pyramid market segment and subsequently launched the revamped Firstmonie Agent Banking in 2018.

dynamic operating and competitive

Right from the beginning, we


were very clear and deliberate.

Overall, I would say that the implementation of the various changes, in response to the 26

We wanted an Agent Banking service that would expand reach to the mass market, mostly

branches in the process.


pace in the industry. Through the

further amplified the need for

To further deepen the Financial

Firstmonie agents, we have offered

financial inclusion. Generally,

Inclusion drive, FirstBank also

banking services to our customers,

access to financial services through

developed another product called

other banks’ customers, and

the traditional banking system

the Firstmonie Wallet. It is a bank

even non-account holders. Such

was further reduced. However,

gnostic and telco agnostic product

services include Cash Deposit, Fund

we continued to provide financial

that provides opportunity for

Transfer, Cash Withdrawal, Airtime

services through our Firstmonie

those at the bottom of the pyramid

purchase, Bill Payments, Account

agents throughout the period, with

to access financial services with

opening and BVN enrollment. It is

over 295m transactions (96%YoY

minimum KYC requirements. By

still growing.

growth), worth over 6.6trn Naira

implication, such customers do not

(165% YoY growth) recorded in the

need to have a Bank Verification

course of the year.

Number (BVN) / existing bank

The recent negative impact of the pandemic on the global economy

account, nor a smartphone, to register / transact, and could easily register via multiple channels like USSD, Agent location, APP download and web.

WITH NEW PLAYERS LIKE FINTECH COMPANIES AND START-UPS ENTERING THE MARKET, CONSUMERS WILL HAVE MORE OPTIONS TO CHOOSE FROM. WHAT IS FIRSTBANK’S APPROACH TO FACING NEW DIGITAL COMPETITORS? I believe the emergence of fintech companies and start-ups in the financial services industry is an exciting occurrence. This is because it promotes a culture of innovation across the financial industry, and emphasises the need to put the customers first and satisfy their needs. For us at FirstBank, our customers remain the first in all that we do. In over the 126 years of our journey as a leading financial institution in Nigeria, this has been our approach which is why we keep re-inventing ourselves in a dynamic manner, irrespective of the demand of the times. In specific terms, our approach is to stay ahead by being the bank of first choice for whatever financial services our customers can think of. Innovation is at the core of what we 27


do and that is why in 2017 FirstBank established the Digital Innovations Lab to serve as a hub for creativity and implementation of digital solutions that will greatly improve our customers’ experience on our digital platforms. Again, at FirstBank we believe in what I can call co-opetition. We understand the need for strategic partnerships within the financial services industry to foster the collective growth of the Nigerian Financial System. Like every other thing we do, we are equally deliberate about this. For example, in order to create the right ambience to drive these key strategic partnerships, FirstBank in 2016 commenced an annual convention of the finest and most innovative top-level experts in the digital innovations space called “The FirstBank Fintech Summit”. We have held four editions of this summit and several groundbreaking ideas, digital solutions and partnerships have emerged from there. Knowledge is the wheel of innovation and sharing knowledge can only magnify the benefits. The good thing is that leading Fintechs want to collaborate with FirstBank, both in the local and in the international space. We are currently responsible for about 20% of the industry’s interbank transactions nationwide, and over 25% of the card transactions. In 2020, our mobile banking App, FirstMobile, won the Best Mobile Banking App award in the Global Finance Best Digital Bank Awards and the BusinessDay Banks and Other Financial Institutions Awards respectively. 28

Overall, I would say that the

repose in big banks to keep their

implementation of the various

money safe.

changes, in response to the


Covid-19 pandemic, has had a positive impact on the bank as we grew our customer numbers, increased our market share of customers’ businesses, increased operational efficiency and profitability.

WHAT ADVICE WOULD YOU GIVE TO START-UPS WANTING TO PARTNER WITH BIG BANKS? Strategic partnership in most cases is beneficial to the parties involved. Start-ups need to realise this and pursue it. They are nimbler and don’t have to deal with legacy technology issues. There are benefits to glean from such partnerships; they get to leverage the wide market size of big banks which gives access to a huge customer base to drive their products and innovation and also stand tall on the trust customers

Yes, we are excited to serve our customers with this innovative product. The FirstBank Virtual Payment Card is a non-physical digital representation of the holder’s payment card, linked to either the customer’s operative account or wallet account. It is an innovation that allows our customers to create a Naira or Dollar denominated debit card from the comfort of their home using their FirstBank Mobile App or FirstMonie Wallet. This card can be created in less than a minute and customers can immediately begin to transact with the card without having to visit any physical FirstBank branch.


ways of meeting our customers’

Facemask vybes shown over 10,000

dynamic lifestyle needs. It is widely

times in less than 12 hours. The

acknowledged that the Coronavirus

campaign generated over 41,000

can be better contained by adopting

Impressions and reached virtually

a minimum touch interaction

25,000 people that interacted with

approach, thus FirstBank

the post and took action within 12

Virtual Payment Card ensures

hours. On Twitter with 187 million

customer safety and an improved

users, #FirstBankMaskUp was

convenience in requesting and

trending on Twitter dashboard as

transacting with a card. The time

No 2 giving the brand top visibility,

spent in requesting a Physical Card

share of voice, positive sentiments

is eliminated, the risk of exposure

and youth appeal as a matter of

to the COVID-19 virus is reduced


as well as providing a new and exciting user experience for our customers.

FirstBank Virtual Payment Card offers a convenient alternative to the use of cash and cheques by giving direct access to funds in customer operative or wallet accounts. It allows customers to perform seamless card not present (CNP) transactions on the Web. More so, through its contactless features, it will allow customers to carry out transactions on contactless acquiring devices such as POS and ATM via NFC-enabled mobile devices. This innovation is also one of our responses to the COVID-19 pandemic and a reassurance of our “You First” commitment to our esteemed customers by providing convenient and seamless

THE MASK UP, STAY SAFE DIGITAL CAMPAIGN PROVED TO BE VERY EFFECTIVE; IS SOCIAL MEDIA SEEN AS A KEY AREA WHERE FIRSTBANK CAN INTERACT WITH CURRENT AND FUTURE CUSTOMERS? That’s a very interesting question. The #MaskUpStaySafe was the first ever digital campaign using Instagram filter virtual facemask designed with FirstBank bespoke Ankara fabric. It was a 12-hour takeover campaign to drive advocacy in a fun way on the use of masks to stay safe from the COVID-19 pandemic. It was indeed a success having staff of FirstBank, family and friends join by uploading the IG virtual mask and uploading on their social media pages, as well as used as display pictures on WhatsApp and Telegram.

Social media is certainly a key platform where FirstBank interacts with current and future customers. This is one of the reasons we have a social media presence, which enables us to build relations. Besides, the effective management of these channels is an essential element of the brand’s success. Social media can positively influence sales and to a large extent brand loyalty and connection. With the development, improvement of functionalities and growing popularity, social media has become a valuable tool to build a community for the FirstBank brand. We use social media for customer service – to communicate our products, service and initiatives as well as manage customers to continually put them first in our business. The mutual benefits of easy brand accessibility via Twitter, Facebook, YouTube, and others allow easy customer contact and engaging social interaction,

Externally, we deployed the

providing brand building and wide

campaign on Instagram, Facebook,

scale contact through multiple

Twitter and LinkedIn. Facebook,

channels. Indeed, the use of social

reputed as one of the top social

networking sites enables FirstBank

media platforms in the world,

to reach a much wider group of

accorded FirstBank a new milestone

customers and prospects compared

global recognition of FirstBank

to traditional methods. 29



‘TRUE FINANCIAL INCLUSION’ Over the years, financial inclusion efforts in emerging economies have predominantly been about expanding the access and usage of formal financial services, to improve the quality of life of people in low-income segments. Sub-Saharan Africa has been a trailblazer in the use of technology to bring financial services to people who still have no financial accounts although also facing some challenges that may be hindering development in the region. According to the Global Findex database(1), 515 million adults worldwide opened an account (at a financial institution or through a mobile money provider) between 2014 and 2017. This means that 69% of adults now have an account, up from 62% in 2014. Account penetration is at 94% and 63% of adults in developed and emerging economies respectively. GSMA’s 2019 State of the Industry Report on Mobile Money(2) highlights that in Sub-Saharan Africa, there was an increase in 50 million new mobile money accounts in 2019, and that this region remains at the epicenter of the mobile money global movement, with digital transactions representing the majority - 57% of mobile money interactions and more value is circulating in the mobile money system than ever before. The report also forecasts that account adoption across Sub-Saharan Africa will remain strong and the region will surpass the

Although increased usage of accounts is important, account dormancy is not a problem to people in the low- income segments because living on very low-income levels forces them to opt-out from services that are perceived to be expensive and not suited to their needs

half-billion mark by the end of 2020. 1 2


The Global Findex Database 2017. Measuring Financial Inclusion and the Fintech Revolution State of the Industry Report on Mobile Money 2019


Adults without a financial intitution account reporting

Jacqueline Jumah

barrier as a reason for not having one(%), 2017 Religious reasonas

Head, Digital Financial Services EFInA (Enhancing Financial Innovation & Access)

Family Memener already has an account

So far this is impressive, but is it enough?

Lack of trust

Do not need an accout

From these figures, the progress in access

Luck of necessary documentaton

to finance seems remarkable, thanks

Financial institutions too far away

to digital financial services. However, active usage of financial services remains

Accounts too expensive

very low, and today’s leading financial

Not enough money

inclusion challenge. From the Global


Findex database, about one in five account owners has an account that is currently inactive, without any form of transactions within the past year, while about two-thirds of the global mobile money accounts are dormant. The implication here is that the commercial viability of digital financial services is questionable and many financial service providers may struggle to achieve scale, where profitability is attainable. This also means a struggle to improve the quality of life of people in low-income segments, considering the financial inclusion objectives. Although increased usage of accounts is important, account dormancy is not a problem to people in the low-income segments because living on very low income levels forces them to opt-out from services that are perceived to be expensive and not suited to their needs. A significant number of people in Sub-Saharan Africa (about 340 million adults) still have no accounts at financial institutions. 3 in 4 of these unbanked adults say they have too little money for account ownership according to the Global Findex study(3), and almost 30% cite lack of funds as the sole reason for not having an account. So, how can financial inclusion improve their quality of life? Does greater usage mean greater impact?

Cited as sole reason





Cited with other reasons


The impact of financial inclusion

commercially viable financial

is debatable, there have been

inclusion. So, to be successful

several studies that have

and impactful, the industry

shown how financial inclusion

needs to shift away from the

improves lives, however, these

product-focused approach

studies tended to focus on the

to consider other essential

impact of single use cases, e.g.

variables like building financial

microcredit, resulting in the

knowledge and aligning with

industry being product-focused.

behavior, robust infrastructure

Improved lives cannot directly

and ecosystems, etc. that enable

be achieved from only owning

the customers’ journeys to build

and using accounts, but through

resilience and financial health.

the ability to be resilient and financially healthy.

Building the resilience of people

Rethinking financial inclusion:

allow them to prepare and deal

From the linear narrative of

with shocks when they occur and

access, usage and impact, to

recover. Financial health refers

resilience and financial health

to opportunities for individuals

We all now have the understanding that the usage of financial services does not always equate to positive impact(4) , and that increasingly, customer needs are to be at the core of all efforts for driving

refers to how financial services

to improve their livelihoods through access and usage of relevant financial services. The resilience and financial health outcomes constitute the empowerment necessary for the impact of financial services.



CIAL INCLUSION, World Bank, 2019 How Useful Is “Usage” in Measuring Financial Inclusion’s Impact? CGAP, 2019




This empowerment is fueled by

• Leveraging digital financial

• Government-led approaches to

financial resources (assets and

services to support the MSMEs

expanding the reach of WASH

liabilities), human capability (skills

for instance through exploring


and ability) and physical capability

innovative and alternative

(physical mobility and health.(5)

financing options

Finding the best approaches to improving the lives of people therefore involves the development of these three catalysts as in the

HUMAN CAPABILITY (SKILLS AND ABILITY) • The use of financial services/

below examples derived from

investments to improve access

the CGAP theory of change for

to skills development.

impact and evidence:

FINANCIAL RESOURCES (ASSETS AND LIABILITIES) • Fostering the growth of entrepreneurial ecosystems and

• Use of government subsidies to facilitate more innovation and risk-taking in financing education and skills development

through favourable policies that


encourage growth across all

• Facilitating financial access

income stability for example

industry sectors and improved

to health and WASH i.e. water,

access to credit leveraging digital

sanitation, and hygiene, etc.

Exploring ‘true financial inclusion’ There are immense opportunities to explore linkages between digital financial services and other sectors, spreading digitisation, and enabling usage through financial tools such as payments, beyond the financial services industry. This calls for collaborations across sectors and stakeholders to leverage technology for cost-friendly business models, exploring and expanding the use cases for the unbanked and underbanked. By so doing, a lot can be achieved in terms of achieving ‘true financial inclusion’ for improved lives

financial services



CGAP Theory of Change for Impact and Evidence

give yourself the power to be more




f the Coronavirus (COVID-19) pandemic has taught us anything, it is that we don’t know a lot about many things. Over the past 10 months, we have stretched our capabilities

and imaginations to adjust to this historic moment, which has put all governments to task while reshaping every sector, and every home. The COVID narrative has largely centered around the economy but the core issue is social wellbeing. This is the first time in over a century that a social crisis has sparked such widespread disruption. Typically, when we in the financial services sector speak of sustainability from a development perspective, we often focus more on the economic and environmental dimensions of sustainable finance; rarely do we factor in social aspects as output risks. But we have learned from COVID that we need to pay more attention to human beings -how they live, interact and create opportunities for others. They say every cloud has a silver lining; and the “COVID cloud” we are weathering has several, which is why I coined the phrase “COVID Kairos.” Kairos is a Greek word for opportune moment. As such, a window has opened up for the financial sector, leveraging on fintech, to better design human-centered solutions that ideally promote inclusivity while bridging the gaps that create social risks within an economy. The social risks unmasked by COVID that policymakers and the private sector need to address is transitioning a critical mass out of the informal economy — especially women and small business owners who typically operate informally— and the other, is financial inclusion of persons living with disabilities (PWDs).

Nuru Mugambi Kenya Bankers Association Sustainable finance expert and public affairs director


When stay safe, stay home

(CWDs). And if you are not a PWD,

and mobility impairment were also

protocols were announced and

or live with or know someone with a

surveyed and common financial

essential services were defined,

disability, chances are you may not

goals such as home ownership,

banks, insurers and other financial

relate with their lived experiences.

starting a business, and education

institutions came into focus

For example, we were all wearing

were their primary concerns.

due to the critical twin peak

surgical and fabric face masks

role of intermediation and risk

before plastic face shields came into

management they play in the

the market; and those who rely on

economy. As financial institutions

lipreading had the effect of their

worked closely with governments to

impairment exacerbated overnight.

cushion the impact, they found new

Promoting Digitally Inclusive Finance

ways to operate through digitalfirst business models that facilitate efficiency and continuity. Unfortunately, there has been paucity in financial sector discourse on COVID as it pertains to customers with disabilities

People living with a disability have just the same aspirations and require the same, if not more, from financial service providers. In a pilot project by the Kenya

When it came to general expectations from financial service providers, what came out clearly from user experience testing was CWDs expect independent, fast and frictionless digital transactions. Privacy of their data is particularly an area of interest within the branch and agent environment, as well as, customer call centers in the case for clients with speech and hearing impairments.

Bankers Association (KBA) together

From previous analysis, it takes

with inAble and Financial Sector

two to three years to get to the

Deepening (FSD) Kenya, seven

“next normal” after a pandemic.

banks volunteered to have their

Therefore, as much as vaccines

mobile banking systems (mobile

are making their way into health

application and USSD) and websites

systems, we still have to navigate

tested for accessibility according to

a complex and highly-dynamic

international best practices. More

environment. Financial institutions

than 130 clients with visual, hearing

have played a critical role, in partnership with the government, to support as many businesses and households as commercially possible. For the next two years, the actions these financial institutions invest in to bridge the digital inclusion gap will make a difference for 15 percent of the world’s population, which is living with either a temporary or permanent disability. In Africa, where financial inclusion has been demonstrated to directly contribute to economic growth, this translates to more than 180 million CWDs (or approximately the population of Nigeria) who can more actively participate in the formal economy and thus mitigate social risks.



technology-based organisational

Bank employees also indicated

culture will spur greater innovation

that they wanted to learn sign

as firms race to be the gold standard

language and be more sensitive

of fully automated, intuitive and

and inclusive, which indicates that


frictionless payments.

banks should engage and train


The second key learning is that


financial institutions should


partner with technology firms to leverage on artificial intelligence, and robotics to serve this segment.


To do so, it’s important to ensure


customer relationship management


systems are able to identify those with both permanent or temporary disabilities. Finally and most importantly, we learned that people

their staff and suppliers for better PWD user experiences. While it may not be practical to teach an entire workforce how to conduct their duties using sign, use of wearable technology, such as sign language gloves which are an invention of the 1980s but have yet to be mainstream, can be utilised to eliminate communication and access barriers for all clients.

make all the difference. In Kenya,

The good news from Kenya is that

security guards are the first point

banks recognise they have been

of contact for CWDs in the physical

blinkered in the area of digital

environment. However, they only

accessibility for PWDS and have

There are several learnings from

assist if they are able to decipher

agreed to develop roadmaps to be

the KBA project. One key lesson

that the customer needs help, which

fully disability inclusive. It’s a step

is that financial service providers

means those with not-so-obvious

in the right direction and we hope

should design products knowing

impairments often struggle. The

more follow suit.

that there certainly (not possibly)

bright spark in this scenario is that

will be clients with hearing, visual,

the PWDs interviewed recognised

speech, mobility or learning

alacrity in security and branch staff

impairments using those products.

once they recognised the clients’

Having an inclusive, assistive



The writer is a sustainable finance expert and public affairs director at Kenya Bankers Association



SOLVE NIGERIA’S FINANCIAL INCLUSION PROBLEM Every time we use an app like Facebook, send an instant message, or check the weather on our phones, we’re using an API.  Open APIs have great potential to advance financial inclusion across Africa. Adedeji Olowe from Open Banking Nigeria provides us with a fascinating insight.


Could Open APIs be the solution to Africa’s financial inclusion problems?

With an estimated 422M of its population living below the

Adedeji Olowe Trustee Open Banking Nigeria

global poverty line, proponents of financial inclusion in Africa need to engineer processes that do not

not have a bank account, and 2.5B

traction even though 1.2B adults

rely on the technology that has

people do not use formal financial

gained access to formal accounts

made banking the middle-class

services. Account ownership is

between 2011 and 2017.

easy. Since mobile, internet and

usually more ubiquitous in high-

social media banking are out of

income countries, therefore these

the question because this stratum

numbers are disproportionately

of Africans are unable to afford

based in developing countries.

smartphones, are often illiterate and expectedly poor, financial services providers are forced to innovate differently to ensure the specific commitments made at the Maya Declaration come to fruition.

suffered low use and dormancy as financial illiteracy remains prevalent in the developing world.

A 2018 survey by Enhancing

Nearly half of India’s 80% banked

Financial Innovation and Access

population are yet to perform a

(EFInA), revealed that nearly 40M

withdrawal or transaction and

Nigerians adults (39.7% of the

many of its payments banks are not

99.6M people surveyed) had bank

allowed to lend.

accounts, and 63.2% of Nigerian

Open APIs could be the catalyst that

adults were financially included.

makes this possible.

The World Bank in its Findex survey (2017) estimates this number for


Many of these accounts have also

The state of financial

the broader continent, putting

inclusion in Africa

financial inclusion in Sub-Saharan


Banks and fintechs have only scratched the surface

There is a consensus that financial inclusion processes are impossible without banks. It is for this reason

For financial inclusion to reach

Africa at 43%.

a group of people, most of

The Consultative Group to Assist

in rural areas. In many developing

its population, especially the

the Poor (CGAP) affirms that much

countries where mobile money isn’t

economically vulnerable, should

of the progress made in the last

prevalent, banks are expected to

have access to an affordable

decade has been broad but shallow.

build capacity to propel the growth

transaction account which serves

As most of the innovation around

of financial inclusion. This includes

as a gateway to broader financial

the Bottom of the Pyramid (BoP)

establishing offices, upskilling

services such as credit, insurance,

market has focused on payments

staff, and introducing financial

payments, and savings. But

and transactions, the core

products tailored to these rural

according to the World Bank, 75%

functionalities of savings, credit


of poor people in the world do

and insurance have barely gained


that banks facilitate these processes



Open APIs allow fintechs be

future for enhanced credit scoring

the last mile for financial

for the poor. The key ingredients


for this will be customers’ account

In Africa, fintechs have adopted the use of agents and super

Fintechs can also use open APIs

are untrusting of “outsiders”,

to help the financially excluded

these agents are usually owners

build and retain wealth. Since rural

of mom-and-pop shops who have

communities operate on a trust

deep ties in the community and are

system, building contributory thrift

authorised by financial institutions

savings products (locally termed

to carry out transactions on their

ajo and esusu) which allow them to


save with friends, family and co-

to get these transaction accounts running. Typically, the fintechs will create and manage the agent

banks are not incentivised enough to bank those that are financially less fortunate. While it seems like there is an enormous market opportunity in serving people at the (BoP), the challenge remains how to combine low cost and good quality with sustainability and profitability. Because of this, banks have turned their focus to public sector/government-run organisations, large corporates, and middle-to-high income individuals, often prioritising margins over volume. Over the years, agency banking and BoP-focused fintechs like Kenya’s mPesa, Nigeria’s Paga, MTN and


agents. Since these communities

Fintechs and banks often partner

By itself, this model cannot scale as

transaction and loan repayment

and super agent networks and operations, acting as the last mile for customer delivery. Since banks are unenthusiastic about the grunt work, they act as the point of account domiciliation and hold customer balances as allowed by regulatory provisions. To achieve this, fintechs and banks have to

workers could help them achieve financial goals, potentially lifting them out of poverty.

It is faster and less painful for banks to aid the creation of a deeper financial inclusion network by adhering to a common standard than it is for them to work on changing their default monolithic standpoint.

seek each other out, complete months of grueling integrations

Across Africa, financial service

before launching at agent locations.

providers are starting to take up the

This process is then repeated for

initiative of adopting open APIs.

each bank or fintech partner.

Equity Bank in Kenya, for instance,

Adopting a common standard for open APIs eliminates this headache, translating to a faster time to market. When applied to a data analytics perspective, providers

has invested up to $10M in Finserve, one of its subsidiaries, to offer a suite of open transactional, Know Your Customer (KYC), and account APIs.

are able to get a more accurate

It is only a matter of time before

picture of a customer’s financials.

other African banks follow suit.

This allows them to provide better

To make this happen, the Central

loan offers that help the eligible

Banks would need to take on a

take care of their families and grow

three-pronged role of innovator,

their businesses. A clear pathway

enforcer and regulator. By doing

Banks need all the help they

to save and invest may then be

this, they will drive a common

can get.

created following further analysis

standard with traditional banks and

of the customer’s deposit and

simultaneously provide the guard

spending patterns. Uniformity in

rails to ensure that customers are

API standards also connote a better

adequately protected.

Orange South Africa’s co-venture Mowali, have risen to the challenge, chipping away at the financial inclusion gaps left by banks, and scaling significantly.




OPEN BANKING Although no African country has implemented a clear regime or legislative framework for Open Banking, there are promising developments in a number of countries. Imran Sumra takes a closer look at the Open Banking journey and what it might mean for the future. Open banking emerged from the EU with the PSD2 regulation. The original intent was to spur innovation and competition in

Imran Sumra CEO FinSense Africa

the financial services sector. PSD2 forces banks to routinely and securely share their customers

of trade, but also helped boost

financial data for the purposes of

cashless business transactions.

account aggregation and payment

With its convenience, continuous

initiation via APIs.

innovation and reach of the agent

as one of the major trends shaping the future of banking. Although

network, it has made it a de facto means of trade currency with the SMEs and the unbanked market.

adoption rates have been sluggish

So, what can you do with open

over the last two years, 2020 has

banking? The opportunities are

exponentially fast-tracked digital

aplenty. Here’s touching on a few:

transformation and the push for open banking has come of age.


However, many countries have

Mobile smart phone and internet

their own maturity cycles. As much

access in Africa, enabled a new

as others are ahead of the curve in

breed of the younger population

adoption, there are some countries

to adopt technology. In Kenya,

which are not aware of the potential

75% of the population is under 35

open banking brings to the wider

years of age. Access to the internet

financial spectrum.

on an affordable smartphone

In Africa, the open banking regulation has not landed yet, however, should it appear, it will help bank the unbanked population. Telcos with their Mobile Money (Mpesa) offering have been the front runners in the race to open banking, open APIs and financial inclusion. With the introduction of Mobile Money, over 10 years ago, payment by mobile has not 40

institutions to revisit how their customers access their systems and has culminated in the buildup of various mobile-based app

only become a convenient means

Open banking has long been hailed

turn has led various industries and

introduced a new wave of technology enthusiasts who started solving problems for themselves or their communities; this created a new breed of technology-savvy individuals who were creating access rails to financial services for the unbanked in Africa. With the COVID19 pandemic came the avoidance of cash and the adoption of these digital services. This in



API For businesses to thrive in the new age connected world, exchange of data in real-time was a key component for the success of various digital businesses. The challenge that emerged was how to access the financial information data being hoarded by various narrow-minded financial institutions. However, some digitally enlightened banks saw an opportunity to expose such data and enable secure payment channels via the API rails. This immediately made them the

Real-time was a key component for the success of various digital businesses. The challengethat emerged was how to access - the financial information data being hoarded by various narrow-minded financial institutions. favourite of the fintech players who wanted to connect their apps to the banks and businesses who wished to get real-time updates on their transactions and account data to make real-time decisions. This

DATA Today, banks hold an insurmountable amount of data, but it all sits somewhere catching dust either in files or disks in silos. The potential of that data has been realised by fintechs and big techs who wish to have the transactions passing through their app such that they could analyse the spending patterns of the customer and guide them on their next purchase or monetise their data to a willing buyer, who would then target relevant ads to the customer. Not surprisingly Google has partnered with a US bank to provide checking accounts to its clients in order to

opened up a new revenue model

understand their spending habits.

and acquisition of customers


through fintechs which the banks could not have gotten through the

A major blocker for organisations

usual walk-in account opening

across Africa is the lack of


institutions able to nurture

The success of this new API banking method by one of the largest banks in Kenya (Equity Bank), was immediately noticed by wider East African and West

specialised talent in our educational institutions. This will create a huge shortage for key capabilities especially in fintech security.

between different entities and



International organisations


have seen great success and the

Many bricks and mortar banks

has profited customers in the

have had challenges and have

EU. The next step of that is now

been pushed to adopt digital

pushing for open banking in Africa

transformation. They have had

(Uganda for a start), to help reach

a huge and outdated stack of

the unbanked faster, improve their

technology that is not agile, thus

lifestyle and help spur economic

adapting fast to the changing

growth. This would be a win win

needs of the customer is a

for all sides involved.

African banks who started easing their thinking away from hoarding customers to sharing their customers, enabling collaboration

capability of how PSD2 regulation

painful journey. 41




Investment – Money flowing into African Fintechs has

When Covid hit China’s ground zero, banks were closed

been rather slow and selective in the African market.

for weeks and no one realised. This was a wake-up call

There is a huge opportunity for growth to support local

for many banks that had not adapted to the new ways

developers and solutions for the local governments

of the customer. Today you need to be relevant and

and private sectors to jump into this new technology

necessary as a company in your customers’ journey or

enabled world.

else you will be outdated.

Regulation – many countries in Africa have not yet

As a Microsoft boss said once, ‘banking is necessary,

understood the potential of startups, whereas most

but banks are not’. That was proved by the pandemic.

governments outside of Africa are creating and

It’s time financial institutions think of becoming

enabling environments and funding to help spur the

technology companies, be mobile first in all their

growth into becoming billion dollar ideas. Enabling

thinking and data first in all their actions.

regulation focused on the technology needed to adapt faster to help Africa be in the forefront of technology would be advantageous. Cyber Security – With digital transformation comes


cyber security threats. You cannot escape them, you

With Africa opening its borders to its fellow

just need to plan for mitigating them. The constant

Africans and the world at large, this will be

adoption of new skills and tools is extremely important

a trillion-dollar opportunity for trade. This

now more than ever before. This is a huge area of

in turn will spur adoption of technology and

concern for many organisations in Africa, in both the

skill migration, helping countries which were

technology front as well as in regulation to help fight

previously devoid of such technology now

and prosecute cyber crime. Many industries lack the

being able to easily adapt and get support.

budget and vision to understand and invest in the

This will further open opportunities to a

future survival of their businesses.

huge market that currently remains widely

Internet – The cost of internet connectivity is still

untapped. Africa is home to the youngest

relatively high in Africa. If the price of internet connections can be made further affordable with a wider reach inside Africa, more economic growth will follow. We are now in an internet economy, the greater the connectivity and reach the more growth a country will have. This has been proven by various research, with the penetration of the internet. Open Source – Adoption of open source technology is still lacking across Africa. This is primarily due to a lack of awareness and knowledge of such revolutionary technology available in the market. The big techs have for a long while pushed the expensive, rigid software blinding the corporates from taking advantage of the open source solutions. If everyday people understood how to use such technology and be able to support it, there could be new tools and solutions coming out for the market affordably. A lot of big techs run on open source software.


population in the world and by 2050, Africa will have doubled its population to more than 2 billion people, most of whom will be young and hungry for technology. With an enabling environment, affordable infrastructure, investment in education, research and technology, this continent is a superpower awaiting takeoff!

FINSENSE AFRICA: Works with its customers to bring solutions that help bring about successful, technologydriven business transformation. We are the interface between the old IT and the new IT, simplifying the complexity of your infrastructure, bringing agile capabilities into your organisation.


Banking Transformation in a Smart Digital Africa Connect with over 500 financial executive leaders and learn about the latest technology in banking and financial industry in Africa 24th & 25th FEBRUARY 2021 – KIGALI,RWANDA 500 Delegates 30 Speakers 30 Exhibitors


Access Bank:

Helping customers

access more

From its headquarters in Nigeria’s largest city of Lagos, Access Bank has grown exceptionally, following on from the merger with Diamond Bank in 2019 it has become the largest retail bank in Africa.  As  one of the first banks in Africa to dedicate lines of credit to finance women-owned businesses, Access Bank has always prided itself on financial innovation.  With the growth of digital banking it has been imperative that the traditional banks have been able to make the transition, as younger generations put their trust into tech, Herbert Wigwe explains how Access Bank have been able to deliver what’s expected while helping customers access even more. Globally, banking has moved from the traditional method of physical branches to performing banking transactions from the comfort of our living rooms. Payment methods are becoming more advanced as innovative payment methods such as contactless and biometric payments are on the rise. This transformation has increased financial inclusion, making it easier for customers to access banking services even during uncertain times like we are witnessing with the recent COVID-19 pandemic. The pandemic threw the global socioeconomic environment into turmoil. Social distancing and significant restrictions to movement have also hampered social and economic activities. It is now certain that the world, post COVID-19, will be significantly different. As such, one of the enduring responses to the pandemic is going digital. Access Bank has grown exceptionally, following on from the merger with 44


Diamond Bank in 2019, it has

industry. Over the years, Access

established innovation and digital

become the largest retail bank

Bank has embraced these changes

transformation at the core of its

in Africa, and cloud computing

and made the most out of them.

five-year strategy from 2018-2022.

enabled by super-fast mobile

The bank has been a leader in the We have seized and utilised

network and internet technologies.

external innovation through our These technologies reduce the investment threshold for banks and help to create new services. These services have lighter terminals, a

accelerator hub known as Africa

Herbert Wigwe

Fintech Foundry. The Foundry is a

CEO Access Bank PLC

Pan-African accelerator that finds and invests in start-ups with a

smarter network and the capacity

global outlook but with a focus on

for various intelligent sensors,

digitisation of banking and building

from 3D structured light cameras

technology-based strategies with

and NFC readers to fingerprint

a clear-cut vision for the future of

Our customers have chosen Access

scanners and GPS.


Bank on the basis of smooth and


user-friendly digital experiences. The COVID-19 pandemic brought

The bank’s merger with Diamond

The one thing that is constantly

a drastic and dynamic change to

Bank PLC in 2019 birthed the

on our minds is our customers and

banking, introducing a rapid uptake

largest retail bank in Africa with

how we can ensure we give them

in digital banking according to the

over 40 million

World Economic Forum, as a result

customers. The

of the pandemic, user sign up on

majority of these

digital platforms increased by 70%,

customers were

usage of mobile pay applications

acquired through

went up by over 80%, and usage of

our digital

contactless payments went up by

platforms. We have

over 30%.

also delivered an omni-channel

Being a digital banker entails accepting and adapting

experience across all platforms to

to the changes

enhance customer

coming into

experience. Access

the banking

an unmatched

Access Bank has grown exceptionally, following on from the merger with Diamond Bank in 2019, it has become the largest retail bank in Africa

end-to-end digital experience. We are aware that a compromise in the quality of service will result in significant business loss. In line with our strategy to provide an all-inclusive

Bank has migrated

platform that

customers to

delivers value to

self-service channels on its digital

the smartphone users in Africa, we

platforms such as USSD (*901#),

launched a revamped super mobile

Chatbot (Tamada), Access More

banking application called Access

mobile application and Quick Bucks

More in March 2020. Access More is

amongst others.

focused on delivering experiences beyond traditional mobile banking

Access Bank has continued to

and this requires understanding

lead financial innovation in the

and integrating customers’ needs

banking industry from the rate of

and lifestyle to banking.

digitisation of banking products and channels, to the promotion

This next generation mobile app

of financial inclusion and

delivers an unparalleled mobile

technology. The bank has firmly

banking experience to our 45


40 million plus customers, with

value. This novel solution digitally

Also, there is PrimusPlus, a web-

deep integration to lifestyle

automates in-branch transactions

based enterprise suite of payment

features, advanced analytics and

and allows customers to carry out

and collection solutions that offers

future proof technologies. As

transactions within banking halls as

organisations a secure, simple

the name implies, the platform

a self-service function.

and cost-effective alternative to

provides ‘more’ than regular mobile banking services.

cash and cheque payments across As a digitally-led bank, we created

multiple banks. The platform grants

Africa’s Payment Gateway – Access

corporate users access to view

The features include but are not

Africa which is a funds transfer

and initiate transactions on their

limited to:

product designed to simplify global

account online real-time. Users

payments by Person-to-Person

also have access to customs duty

(P2P), Business-to-Business

payments, FX bidding, local and

(B2B), Person-to-Business (P2B),

foreign payments (both single and

Government-to-Person (G2P)

bulk), account statements, cheque

and any other payment activities/

services and payroll amongst

flows. Alongside instant transfer


• Nearby payments (QR, FacePay and contactless). • Instant loans (no documentation, no collateral) • Access Africa - transfer to our African subsidiaries • Account services including instant account opening, bill payments, funds transfer, investments, cheque management, etc

Facepay is the first of its kind payment solution in Africa built by Access Bank With the aim of providing a contactless payment avenue, FacePay was created. It is the first of its kind face recognition payment solution in Africa. It leverages artificial intelligence and machine learning, to enable users consummate transactions across our branches. Facepay is the first of it’s kind payment solution in Africa built by Access Bank. As at the end of November, we have achieved over 5,000,000,000 naira in transaction


to countries where we have subsidiaries, we have leveraged

Lastly, our Artificial Intelligence

our extensive partner network to

Personal Banker ‘Tamada’ offers an

reach about 15 countries including

extended set of features, ranging

UK, France, Germany, China, Benin

from standard banking services

etc. This makes Africa look like a

(opening accounts, paying bills,

country by rapidly enabling instant

performing intra and inter-bank

Pan-African payments. Also inter-

transfers etc) to weather forecasts,

continent transfers can be made

sports updates, traffic updates,

using Access Africa.

investment advice, cash out services, news updates, live chat

PayDay Loan is a digital loan

with customer care etc.

product of the Bank that avails loans to employees that are

We constantly seek to build on our

Access Bank and non-Access

achievements of previous years, by

Bank customers for a maximum

providing world-class innovative

of 30 days or salary payment day

solutions to meet our customers’

(whichever comes first). Loan

dynamic needs. We consolidate

eligibility is based on a percentage

our winnings by expanding the

of the applicant’s average monthly

scale of our products and platforms

salary. The payday loan product

and heavily leveraging various

can be accessed through various

technologies such as Data Analytics,

digital channels such as USSD,

Cloud Computing, Artificial

mobile banking, internet banking,

Intelligence and Robotics Process

ATM and QuickBucks loan app. We

Automation, to deliver unparalleled

have also partnered with salary

value to our customers and

processors to extend the solution to


over 2 million employees.


digital effect

In this age of innovation digital technologies are providing the solutions to our problems. Digital banking is bridging the gap between financial institutions and their customers. The banking sector has revolutionised its interactions with customers by allowing them to use social media for basic banking transactions or activities on the go. People can easily open new accounts, ask general queries, and request mini statements which result in boosting the efficiency of the firms. Digital apps are capable of keeping track of transferred money and complaints from customers, while people have access to their money 24/7 eliminating the need to wait in long queues at bank branches for small tasks.

EFFECT OF DIGITAL BANKING ON BANKING STAFF Although digital banking is proving to be greatly helpful for consumers, it has had an effect on employees at banks. Millions of workers are predicted to lose their jobs in the next decade as artificial intelligence takes over. According to a report by Citigroup, there is a prediction that banks will cut millions of jobs in the coming years as financial technology companies look for profitable growth. Due to the increase in usage of digital technologies around 37%

of jobs will change dramatically

opening up new opportunities

businesses and jobs, the unique

or become redundant. Around

for businesses. People have only

capabilities of humans will never

30% of the currently employed

focused on the problem that fintech

be lost and firms will need them to

staff at banks will lose their jobs.

disruption might lead to, including

adjust their talent strategies. These

According to the research of the

job cuts of banking staff. The

innovations will help the staff to

open university, almost 12 million

fact is that fintech is not going to

upgrade their skills and knowledge

workers will lose their jobs as a

remove the traditional financial

so that they can serve in a better

result of digital automation in the

firms completely from the industry.


fintech industry.

The influence of this fintech could incumbents. Workers who are


ready to learn new skills can take

Lack of digitally skilled staff affects

their place in the industry with

the innovation process. It creates

Fintech is a term that covers a

their passion. Workers can thrive

a huge gap between demand

wide range of companies that are

in a disrupted world by adapting

and supply within the labour

providing financial services by

to new roles. Being proactive in

market. 88% of institutions are

using software and technology.

managing the change could help

claiming that this gap is affecting

It includes online banks, asset

banking staff to grow, as opposed to

the innovation and production

management firms, mobile

being passive participants. Before

processes. There are predictions

payment firms, online lenders, and

taking the advantage fintech offers,

that the gap between digitally

online remittance firms.

workers need to understand how it

skilled staff and innovation will

is going to affect them.

gradually increase with the increase


Over the past decade, fintech has

bring a positive change for the

in technology adoption. Although

removed the lines between the finance industry and technology. Investment in fintech is increasing around the globe. According to research, the finance industry received an investment of 17.4 billion dollars in 2016. In 2017 it reached 31 billion dollars with the increase in several venture capital transactions and private equity deals. Fintech platforms are used by 64% of customers. 60% of consumers make transactions with banks who provide single platforms

digitisations have already disrupted

The World Economic Forum developed the framework for ‘Future of financial services”. It includes information about how disruptive digital innovations are reshaping the structure and consumption of financial services.

via social media or mobile banking

are continuously underestimating the importance of building digital skills. Staff must learn new digital skills to adapt to the change in the entire industry.

IN DEMAND SKILLS TO ELIMINATE THE THREAT OF JOB LOSSES Here are some in-demand skills which one should learn to become a professional to thrive in the Fintech industry. These skills

apps. Surprisingly, 96% of global consumers are already well aware of

With technological advancements,

fintech companies

traditional ways will be removed


the whole industry, organisations

but it will also open up new markets and opportunities to develop new potential gains. Banking staff can provide the consultancy services or answer queries from customers

Digital technologies have the

in less time by using social media.

potential to maintain and improve

Although new technology will

human skills rather than making

continue to emerge and give rise

jobs obsolete and as a result,

to different paths of managing

include blockchain and distributed ledger experts, programming skills, machine learning, and artificial intelligence, cybersecurity expertise, and soft skills. These are the skills for the professionals but banking staff should be able to adapt the following trends or techniques to survive in the industry.


and upskilling of talent to meet

way, customers are able to feel their

Being able to engage with

the needs of the era. When digital

importance to the bank.

disruptors are offering better

customers in the most effective way is the key to success. With the increase in the adoption of mobile banking, consumers are seeking support on online platforms. According to Accenture, 66% of customers do their transactions on digital apps and 71% are

will lose their place. If someone


needs to remain competitive then

In a technology-driven world,

having an open mindset is the key.

technical talent is crucial for the

quality products and services, nonagile banks as well as employees


success of the bank. There is a need to value human skills so that banks

Banks need to mitigate the risk of

can grow in the long run with the

fraudsters opening new accounts

help of their staff. Retraining and

with stolen data using digital

upskilling are key for banks to work

platforms. With the increase in

efficiently in a digital environment.

the utilisation of new technology,

According to research, 78% of

cyber risk has also been increasing.

banks believed that providing

Therefore, employees must be

training to the existing staff will


capable of understanding and

help to overcome the obstacle.

managing such kinds of risks in the

Many firms said that hiring the

Employees must have basic

digitisation process.

new digitally skilled staff was more

seeking automated support. They said that future-ready banks are incorporating the know your customer approach into their apps for continued engagement with customers.

knowledge about digital banking and its applications. In the modern world banking services are provided through digital marketing so an employee must know the basics of digital marketing.

• HUMAN-CENTERED DESIGN When banks design their products and services they should incorporate their customers into


it and those products will hold

Banking staff must have an

employees, it is necessary that they

adaptable mindset for the innovations in the industry. It will encourage the innovation

more value to the customer. For the can communicate with customers about their general queries. In this

effective and less costly. To cope with digital automation, banks started retraining their employees. This step increased the average training budget by 13 % over last year. In the future, all jobs will likely require some basic digital skills. Banks can help in building up the skills of their employees and become resilient and adaptable in the future.




ver the years, the use of cash as a means of payment has been on a slow, steady decline in Kenya but it has managed to hold up, until recently. It is gradually becoming more common in Kenya to see shops with signs saying “No cash.” Previously, such shop

policies could only be found in European countries, and even there, it was very uncommon. Digital-only payment policies have emerged in Kenya since the outbreak of the pandemic and are gradually becoming very popular. Kenya has been at the forefront of digital transactions in Africa. Even during the Moi era in the past years, Visa and MasterCard were accepted for payment in many shops, supermarkets, upscale restaurants, and just about every hotel. During this same period, Ethiopia had just a single bank outlet in the entire country where cash withdrawals could be made with a credit card. When M-Pesa was introduced in 2007, Kenya became a global forerunner in mobile payments. This led to an overhaul of the dynamics of the country’s economy by eliminating the reliance on

physical cash and promoting

Kenya has left most other African

showing that usage rose from 3.6

financial inclusion. As a result

countries behind in the use of

billion dollars in June 2019 to 4.18

of the use of mobile money, the

digital payments. For instance,

billion dollars in July 2019, which is

percentage of the population with

Nigeria still strongly prefers the

the biggest month to month increase

access to financial services has

use of banknotes, so much so that

to date.

increased from 14% to over 80%

cash is the first choice even in some

between 2006 and today.

international hotels. It is almost impossible to pay bills with an international card in any restaurant in Lagos. To make things worse, the

The M-Pesa technology has also spread out into more than six countries in Africa, Asia, and Eastern Europe. Business schools all over the world use M-Pesa as a case study and mobile money has become the primary method of payment for smallscale transactions in Kenya. Many developed countries are yet to catch up with Kenya’s level in mobile money application. As of 2019, the total volume of mobile transactions was equal to nearly half of Kenya’s GDP.

dispensing limit of most ATMs is NGN 10,000 (USD 25) or NGN 20,000 (USD 50) per withdrawal. With the high prices of goods and services in Lagos, you will tend to spend a lot of time at the ATMs and move around with huge amounts of cash. Even though mobile money has been in existence in Nigeria since 2009, its impact has been insignificant until the last few months. With the implementation of updated policies towards the end of 2019, mobile money is now finally seeing some growth in Africa’s biggest economy. However, the use of physical cash still remains widespread unlike Kenya. As a matter of fact, coins and banknotes are an oddity in modern society, with hand to hand payment seen by some as unhygienic. Cash payments pose a serious health risk amidst the Covid-19 pandemic. Making payments with the use of physical tokens that will change hands often should be avoided by all means at this time. Since the beginning of the pandemic, the Kenyan government has encouraged citizens to make use of digital transactions instead of cash. Mobile operators have been spurred on by the government’s support and have increased transaction limits for money payments, while temporarily removing most transaction fees. The Central Bank of Kenya released data

Banks also followed suit by removing their transaction fees on bankto-mobile account payments. Though these fees will definitely be introduced again after the pandemic, people who have abandoned the use of cash due to the pandemic are unlikely to take it up again. In Kenya, cash as a payment method is now so rare that cashiers express displeasure when a customer tries to make payments with cash. It appears that we are now in a time where handling cash may not be part of the new normal. In 2019, a new, contemporary, and visually pleasing set of the Kenyan Shilling was introduced by the Central Bank of Kenya. This set is likely to be the last of the Kenyan banknotes and coins, and by all indications could be in circulation for just a short time. Cash leaves room for crime and is a potential security risk because it is easy to steal. Not only that, it is expensive at bank and merchant levels due to the cost of keeping cash secure in transit. It would be of great benefit to everyone if Kenya does go into digital payments fully, and it appears that the coronavirus pandemic may be the trigger for a complete transition. As the world gradually recovers from the effects of the pandemic, certain new habits will be hard to let go of. There are speculations about the fate of video conferences and home offices, but cash seems to be ending up as one major casualty of the Covid-19 crisis in Kenya.


FBC Transformation



t was the year 2018 and the FBC Group had just ended their annual strategy conference FBC. The team was excited about the journey ahead, having resolved

to begin a transformation process that would take the Group to a new position in the global marketplace. Having initially commenced operations in 1997 as First Banking Corporation Limited, the entity has evolved from being one of the first locally owned commercial banks in Zimbabwe to becoming FBC Bank- one of the leading financial institutions in the country to-date. The bank is part of FBC Holdings, which also incorporates FBC Building Society, FBC Insurance, FBC Reinsurance, FBC Securities and Microplan which is a microfinance entity. The world as we know it is changing at such a rapid pace and large established corporate entities are faced with the reality of stiff competition emanating from new and smaller start-ups, which possess a vastly different, energy-infused, agile mind set. In addition to this dynamism in the operating environment, the COVID 19 pandemic erupted towards the end of 2019, galvanising companies into either quickly adapting to the “New Normal” or risking extinction. Many companies fell into the latter category 54


and were forced to contract

value adding relationships,

collaboratively develops products

their operations abruptly and

simplified processes and relevant

in an iterative fashion, with speed,

indefinitely. Fortunately for


ahead of competition.

transforming the organisation had

III Our Promise

FBC has launched a digital

already commenced in the previous

You Matter Most

insurance and account opening app

year, thus giving it the platform to

Employees, customers and other

the FBC group, the process of

have the desired impact. FBC Group has long understood that to survive in the new world order of digitalisation and innovation, it was imperative that they take the necessary steps to “future-fit” the organisation. Strategic initiatives were put in place to begin the transformation process. In line with the new digital thrust of the Group, FBC created a new Vision/ Mission/ Promise and a set of Business Principles. This venture was a key driver in beginning the communication exercise in positioning the brand of the” FBC of the Future”. The new Vision and Mission statements are as follows:

I. Vision Statement Nurture sustainable solutions that enable the financial wellbeing of the communities we serve

II. Mission Statement Deliver a unique customer experience through

stakeholders were involved in the co-creation of the transformation and accompanying artefacts, an approach which has instilled a sense of ownership and palpable involvement. For a digital business to become well established and to truly embrace “digital”, the new Vision/Mission statement is underpinned by a set of business principles which are the guardrails for effective decision making within the “FBC of the Future”. The principles ensure that the digital DNA pervades the entire business’ decision-making process and way of working, such as being ‘insights-driven’, ‘customerobsessed’, ‘lowering the cost to serve’, ‘driving simplicity’ and consistently disrupting the status quo. More importantly we cocreated these principles and are now making a consistent effort to ingrain it into our way of working. FBC embarked on a radical shift in

that allows customers to digitally insure and license vehicles as well as open different types of bank accounts instantly using one application. This single app allows access to different products and services, from banking to insurance, from one touch point, consistent with the “Product of One” business principle. The application enables end-toend full KYC account opening in less than 5 minutes after autonomously doing an APIbased background check process, including identity, in real time. At the same time, the bank has launched a digital assistant named Noku, which supports and interacts with clients using the Whatsapp platform. So in essence, FBC has enabled digital account opening through 3 different platforms:

Service Data(USSD) for KYC-

its project management approach by adopting the agile methodology in line with modern global trends. Projects are now implemented through collaborative, crossfunctional project teams whilst ensuring consistent alignment to the new FBC principles. FBC applies design outside-in thinking in the design of its products and services, involving customers to ensure ‘product of one’ and ‘customer obsession’ principles are fulfilled amongst others. With

Unstructured Supplementary lite wallet and account

Whatsapp banking for KYClite wallet and account

IOS and Google Playstore – for full KYC account

By enabling customers to open accounts on the different platforms, FBC Bank has enabled all segments, including the base of the pyramid, to access financial services easily, thereby accelerating financial inclusion.

an internal fintech capability, FBC 55


FBC has brought within its leadership and management structures, digitally competent

FBC’s indirect monetisation frontier as competitive pressure on traditional business escalates.

team members to drive the

To ensure end to end support for all clients that on-board virtually

digitisation agenda. It has

FBC has established “FBC Virtual” which is among other things, also

established a fintech company,

responsible for the following:

Operational and risk management

digitalisation and innovation drive

Anti-Money Laundering(AML)

within the FBC Group. This fintech


Xarani, to spearhead the

team houses capabilities which cover technology and development; innovation; change management; and scrum teams. Innovation and entrepreneurship are now integral parts of the transformation journey that will enable FBC Bank to compete in a world characterised by vulnerability, uncertainty, complexity and ambiguity. The bank is now geared to embrace and implement new ideas with agility, speed and scale. FBC has adopted an ecosystem approach to improve value creation through internal and external synergies.’ Co-opetition aptly describes its nuance to competition which also includes cooperation where value can be created with competitors. A data and insights function has been established and it is entrenching a data and analytics culture in decisionmaking ahead of hierarchy and other non-scientific factors. Critically, data lies on Managing Director of FBC BANK


Business development - Cross

benchmark of 0.15% whilst their

African economy where 70% of

and Upselling to the digital

click to conversion ratio for 2020

the population is rural and low-


has been 2.14% versus the world

income, there is much work which

Relationship Management

average of 1%. FBC participated in

is required to uplift the lives of the

the worldwide lockdown-inspired


Product & Client Support for clients utilising our digital platforms. Distribution of physical products to clients who opt for delivery (e.g cards delivery & PIN issuance through POS)

#JerusalemaChallenge which incorporated elements of its repositioning and digitalisation. Some of the digital marketing initiatives that have been used include the

Zimbabwe. Zimbabwe has extensive

increasing interaction with the

mobile network coverage and the

brand on social media through

feature phone penetration is high,

paid social media strategies to shift

covering previously marginalised

customer awareness and

sections of society in remote rural

in a competitive digital landscape.

successfully on-boarded, they

b) Google Display Advertising –

receive on-going service support

The bank has leveraged the Google

from the Customer Experience and

ads platform to reach contextually

24-hour Contact Centre.

relevant customers using key words

Department by establishing a fully-fledged Digital Marketing

to increase top of mind awareness of FBC’s digital products and resultantly, increasing our share of voice compared to competitors.

wing within the Group’s Marketing

c) Google Search - The bank

division. The marketing investment

implemented a Google paid search

is now strongly metrics-based

strategy to outrank competitors

in line with their ‘insights

for keywords searches relevant to

driven’ business principle. They

digital banking search terms and

strongly believe in engagement

appears on top of search results

and building an interactive community of customers and other stakeholders. FBC’s engagement metrics have grown exponentially across all digital channels, with its digital advert engagement ratio being 0.66% against the global

Zimbabwean with a basic feature

a) A Brand Lift strategy aimed at

adoption of their banking products

push to enhance the Marketing

USSD platform which allows every phone to open a bank account

increasing conversions and

The bank has made a concerted

KYC account bank account on the


perception of the brand, thus

Once a customer has been

FBC has enabled a wallet and low-

for queries relevant to their digital banking products. FBC’s financial inclusion strategy is encapsulated in the new vision statement which aspires to ‘nurture sustainable solutions that enable the financial wellbeing of the communities we serve’. Operating in a developing

remotely from anywhere within

communities. Their USSD account opening platform allows previously excluded communities to open a formal bank account and transact easily and instantly without having to travel to urban centres. FBC has a deliberate solutionist and data-driven strategy that is geared towards financially including the base-of-the pyramid beyond payments in support of the United Nations’ sustainable development goals (SDGs). A collaborative ecosystem approach underlies FBC’s approach in working with banks, fintechs, vendors and other regulators in creating value. John Mushayavanhu, the FBC Group CE summed it up perfectly. “Winning the Digital Banker Africa 2021 Awards is a fitting testimony to the transformation journey that FBC has embarked on. Having won numerous other awards in the past year, FBC Bank and other business units are poised to become true trailblazers in the digitalisation and innovation space.”


SOCIAL MEDIA TO ATTRACT CUSTOMERS IN AFRICA n the current century, there has been economic changes, technological developments, increased market competition, and changes in the buying behavior of consumers. Social media has proved to be very effective in catering to all these challenges faced by financial institutions. Studies have found that the usage of social media in South Africa is growing with a rapid increase of 6.8 million to 9.4 million Facebook users between 2013 and 2014. Internet penetration in Africa stands out at a population of 1.3b which is 36% of the total population. People using social media through mobile phones are 216 million which covers 17 % of the population. About 40% of Africans prefer social media for their banking transactions. The use of social media has increased prominently among the young generation. Social media has changed the structure of information along with its availability.

The importance of social media

sectors of the economy including


banking. The role of social media

Social media is offering many

has also been increased due to Covid 19 which affected all

has also increased more due to this pandemic leading customers to find online solutions for their financial needs. Financial institutions understand the power of digital banking to attract younger customers. Banks are communicating with their customers through social media channels hence building credibility while providing several products and services. Africa has become the second-fastest-growing market for electronic payments in the world. More than 50% of the adult population in Africa has access to mobile phones. Banks are recognising that by using mobile banking they can reach millions of potential customers, especially in the rural areas. Digital banking helps in bridging the gap between financial institutions and their prospective customers. Tailoring customer’s needs and providing efficient solutions can be done efficiently by digital banking within Africa. An analysis by Mckinsey suggested that between 2019 and 2021, African banking revenue could fall by 23 to 33 percent. While the return on equity of the bank could fall driven by the increasing risk cost and decreasing margins. It is expected that 30% of the African consumers

functional benefits to financial institutions. With advancement in technology, firms are trying to adjust and adapt new techniques so that they can attain a competitive advantage over their competitors. In order to improve their performance firms are improving their strategies to capture the major share in the market. Involvement in social media usage is one of the strategies that could be used by the banking sector in Africa to attract young customers for their rapid growth. Social media is providing the following functional benefits to the banking industry allowing them to increase their number of customers.

CONSUMER ENGAGEMENT Banks are using social media to connect with their customers in the easiest way. In this way, they can communicate and reach a greater number of customers in less time and cost. Building a relationship with customers through social media, enables the banks to respond to customer’s queries in less time. With this method, banks are able to manage a large number of consumers while maintaining accuracy of information at the same time.

post-crisis. This ratio means that


increasing social media usage for

Banks are also forming different

financial services can help the

types of bonds with their customers

banks to reach a larger and

by using social media. These

younger audience.

include financial bonds and

will use online banking more than

relational bonds. A well-structured

older age groups

campaign by banks on social media

is subjected to

contributes towards the growth

the investigation

of banker customer relationships.

about lifetime

Financial bonds could be made

saving plans.

by showing the customers how

While youngsters

they can get benefit from a long

may need good

term deposit. Likewise, gaining an

deals related to

understanding of the customer’s

their educational

requirements and providing

and entertainment

adequate solutions can help to make


relational bonds stronger. African

Customers looking

banks are using this relationship

for a vehicle or

banking to attract more customers.

home loan need


information about

Banks are using social media to

identifying and tailoring the needs

reflect their firm as a thoughtful

reduced monthly installments. Well designed strategies are helping in of the targeted audience

show off their performance in the banking sector. Showing the revenue reports and history of the bank’s performance helps in

aspects which are differentiating


them from their competitors can

Banks are getting customer

financing. Many online platforms

help in the generation of a loyal

acquisition by showing the positive

like Facebook, Twitter, Instagram,

consumer base. Building trust

attributes of their financial

etc can be used by the banks to

among young customers by using

products and services. Customers

attract young customers. Using

social media is helping the banking

are persuaded to open new accounts

these tools is creating excellent new

sector of Africa.

with the banks by advertising

opportunities for the banking sector


through different channels of

to communicate more effectively

social media.

with their clientele. By using social


media, banks can offer direct

and caring entity that can help consumers to achieve their goals. Highlighting their functional

Well, structured social media campaigns about banking products and policies are helping to better position the banks. A better strategy can help in enhancing the customer’s confidence in the bank’s

The banking sector is using social media in the most effective way

building trust among the young customers. Banks can provide different loans for educational purposes as well as micro-

value to the customers looking for a financial solution online. Social media allows the banks to target their posts and ads more specifically. This will result in better engagement with young customers

ability to provide financial support.

for the interaction and retention of


their customers. When a customer is using different products from a

Digital banking is the key to

Social media is being used as

bank it tends to prevent them from

financial inclusion within Africa.

wanting to switch to another bank.

Broadening the usage and

Consumers are divided into


penetration of the products and

different groups depending upon

Banks are using social media to


a marketing tool by the banks in Africa to create customer satisfaction.

their financial needs. Content for

by saving their time in searching.

services by the banks in Africa through social media in real time becomes possible with digital



MEETS TECHNOLOGY 2020 saw an abrupt

FinBank Innovation Conference &

Sure. Fintech startups are

interruption of the hospitality

Expo is taking place in February

redefining banking, there are still

in Kigali, we are hosting financial

unbanked and non-accessible

institution executives from

banking markets in Africa where

industry due to Covid 19. This created new ways for

fintech companies are offering

people to get together for conferences and events,

Gustave Sugira

with virtual meetings

Commercial Director FinBank Innovation Conference & Expo

becoming the new normal. Stepping into 2021 with the

the best solutions and modes of access to such markets. Technical examples include providing biometrics solutions in the regions where customers don’t have access to the internet. Fintech

emergence of vaccines and

Africa and those from financial

companies are helping banks

new methods of controlling

technology companies. Attendees

escape traditional banking and

the Coronavirus, there is

can expect to meet new clients

move towards digital banking

as well as discover new trends

where clients have access to

and technologies in the financial

their own accounts on their own

industry. Financial intermediaries

smartphones, tablets and PC’s

can adopt new solutions to

and transact without queuing at

and events. Digital Banker

help them improve their digital

branches etc.

Africa caught up with Gustave

operations and transformations

an expectation that we will once again be able to attend our favourite conferences

Sugira to discuss the up and coming Finbank Innovation Conference & Expo taking place in Rwanda.

while fintech companies in

What can regulators, supervisors and

attendance have opportunities to

legislators do to facilitate the adoption

launch their new solutions to the

of fintech in Africa?

African market. Fintech startups are now redefining

FinBank Innovation Conference & Expo

banking. What opportunities are created

2021 takes place in February, give us

by fintech in terms of developing a truly

some detail on what can be expected by

digital financial service market across

those that attend?



Regulators, supervisors and legislators should work together to identify top quality solutions in fintech to adopt, as there are technologies which don’t work well or don’t work at all. By testing and evaluating those new solutions,


we understand their impacts to financial institutions and what those solutions really solve. Providing a license or certificate of good quality also should be key, it will help financial institutions to select nice solutions for their customers or employees who will use the technologies

Africa’s banks will benefit from financial technologies even more than other continents because African economy is improving on all sides and regulators are passionate to build a cashless economy.

adopted at the end. How can Africa’s banks benefit from financial technologies compared to other markets such as America or Asia?

We’ve seen many events

technologies. What can companies

go virtual due to this

expect from the event?

pandemic, how did you adapt to this situation?

new technologies on the African

magic on the ground,

Market to work with us. We will

however due to the

provide launching time where

pandemic they were not

financial executives will attend

possible to make. So

and assist with the event. We

far with collaboration

believe this will be of value to both

with governments,

fintech companies and financial

venues and other

institutions as there will be time

partners, we are coming

for networking, arranged meetings

back live. There are

and discussions on partnerships.

still participants interested in

A simple demo and presentation

participating but not yet ready to

should be available to help

travel, that’s why we prepared the

participants quickly understand the

FinBank Innovation Conference


& Expo 2021 in a hybrid format. It

financial technologies even more

means it will be

than other continents because

live with virtual

African economy is improving


on all sides and regulators are


passionate to build a cashless economy. While citizens keep

FinBank Innovation

their money in the banks they will

Conference & Expo

also need to make transactions,

reaches out to tech

payments and access their accounts

companies to come

seamlessly. As now Africa’s banks

and launch their

operate traditionally by having


branches, there are also branchless solutions which are being adopted in other markets on the other side of the continent which is not yet adopted here in Africa. This will reduce cost on branches for banks and other financial institutions as well. There are still lots to do here and there is still a long way to go to digitise the financial industry in Africa. Africa’s banks need financial technologies now more than ever before.

companies willing to launch their

Physical events make

Africa’s banks will benefit from

their customers come into the

Yes, we are calling up all fintech

FinBank Innovation Conference & Expo 2021 takes place at Kigali Convention Centre, Kigali, Rwanda on February 24th to 25th 2021. Tickets will be available from www. finbankinnovation.com


Regional KYC Utilities: The Start of Global Partnerships on

a Common Compliance Platform The protocols surrounding KYC (Know Your Customer) involves multiple repetitive documentation, rigorous managerial undertakings and heavy costs to abide by industry regulations. The bureaucratic process for

singular reserve for KYC data and

the launch of CordaKYC through a

offered their services to interested

consolidation of five of its banks

financial institutions as well.

on a unified platform. During the

Clarient Entity Hub was meant to offer her services to a variety of customer segment over a vast

period, 21 corporate organisations opted to work with CordaKYC and operations have been positive.

business landscape. This left a

For the Baltic States, the rising

disjointed KYC terrain with several

suspicion of the complicity of its

exploitable gaps.

financial institutions in money laundering, expressly violation

harmonising customer data

National KYC Initiatives

for KYC is fragmented and

Today countries are beginning to

lacking uniformity for financial

geared towards developing national

tow the same line to homogenise

and regional KYC registries.


customer data and optimise

Lithuania started to move in this

collation processes for efficient

direction in November 2018. Latvia

There have been continuous

KYC operations in financial

and Estonia will have to collaborate

institutions, but the very first of

with Lithuania to dispel current

such efforts was done by India in

scepticism about the Baltics by

2016. They planned to condense

developing KYC protocols that

documentation and verification

observe world-class standards.

deliberations amidst industry players in the financial sector. The constraints of creating and maintaining databases to keep track of customers have been a top the agenda. KYC protocols are expensive and especially tasking for financial organisations, so there have been attempts to leverage cooperation to reduce the monetary and time costs involved. One of such alliances was forged in 2014. It was entered into by five organisations: Depository Trust and Clearing Corporation, Markit/ Genpact KYC Services, Swift KYC Registry and Accelus Org ID, a service run by Thomas Reuters. The alliance birthed Clarient Entity Hub. It was focused on running a

regulations in place, have been the major driver of conversations

processes for all regulated financial industry players in the country.

It is expected that many more

This they did by inaugurating a KYC

countries will learn from those

registry to centralise all of these

who have adopted a centralised


KYC registry and improve on their implementation processes, as very

Benefits of the central registry

recently we have seen Australia and

include eradication of multiple

Hong Kong approaching the final

data collection for customers

stages for adoption.

and a reduction in data collection costs due to shared responsibility. Notably, India did not achieve total homogeneity of KYC collaborations as a few organisations remained isolated from the system. As recently as 2018, France saw

The Advent of Regional KYC Partnerships The benefits of operating KYC registries have seen interests of various governments rise in the last couple of years in Africa. The

evolution of these collaborations took a different trajectory when corporate and financial institutions began to examine the prospects of partnering to share customer data and other forms of vital

With the launch of “Mansa”, African organisations had finally surmounted the major hindrance to attracting funding from some of world’s largest financial institutions.

information. In Africa, sharing a KYC registry on a singular platform has not advanced without its challenges.

meeting the

institutions to give credence

demands for

to customer verification and


reputable assessment of risk on the



from global financial institutions in the face of limitations to accessing cheap finance

for trade. This was how Mansa, Africa’s first KYC platform was born in July 2018.

Known for its difficult business

This first platform came into

terrain and high risk of doing

existence largely as a result of

business, the odds were more or

the efforts of the Africa Export

less stacked against her. Interested

Import Bank, Afreximbank,

organisations grappled with

collaborating with other willing

With the launch of “Mansa”, African organisations had finally surmounted the major hindrance to attracting funding from some of the world’s largest financial institutions. Elsewhere, countries in Northern Europe and around the North Atlantic saw six of their banks get approval by the European Commission to run Nordic KYC Utility, a novel KYC registry. After gaining approval which was just in July 2019, plans were fixed to


launch fully in 2020. Willing banks

would improve

can now take advantage of the

efficiency and

platform to unify customer due-

save cost for

diligence protocols and maintain


uniform KYC standards in the

banks, it must


protect customer

Are We Ready For Global KYC Platforms? We have seen national KYC collaborations; we have seen regional partnerships but the jury is out on whether a Global KYC platform is in the offing. The contradistinctions that dote the governing landscape for KYC compliance pose serious challenges for any Global KYC initiatives though. Yes, a few KYC protocols share similarities across the globe, but where disparities exist in risk categorisation, documentation, customer data collection and other procedures, there needs to be harmonisation for any major uniformity to be attained in KYC collection globally. Stakeholders believe collaborations between financial institutions across continents will bode well for the development of global KYC utilities. One of the often ignored bottlenecks to global KYC adoption is the breakdown of the juxtaposition between the cost/benefit of powering a functional KYC platform and the advantages for participating banks respectively. Setting up the right infrastructure across the different financial institutions to enhance efficiency in managing the massive data proportions involved is another serious challenge that requires pragmatic solutions for the financial institutions involved. Whilst ensuring that the platform

data as the platform will be a target for hackers and other criminals. These risks for

the often ignored bottlenecks to global KYC adoption is the breakdown of the juxtaposition between the cost/benefit of powering a functional KYC platform and the advantages for participating banks respectively.

each country’s citizen’s data mean that they will play hardball, especially in allowing such data go beyond their borders except if they are assured of the highest standards in safeguarding

blockchain. Blockchain technology is secure, built from the outside in, to create no avenue for cybercriminals to work around any backdoors into the system. This has made

its currency, Bitcoin to be fairly adopted as a legal virtual tender for goods and services around the world. With its verified processes and transparent documentation

their data.

system for every transaction,

One cannot deny, however, that if

contemplating taking advantage of

we are to see a global collaboration,

blockchain technology for secure

we must learn our lessons from

and transparent documenting and

challenges encountered in

sharing of customer data amongst

running regional KYC platforms

would-be collaborators.

and maintain the standards that have made regional collaboration so successful in recent times. Although the data management for any global partnerships will be on an unprecedented scale, interested participants will also be excited by the margins of cost savings, realising that with the right technology, we will realise

financial institutions are

The use of blockchain’s secure database will provide the financial industry with the same standards of durability that Bitcoin has enjoyed, and improve operational efficiency for participators. This is why some stakeholders believe that blockchain may play a pivotal role in the setting up of global KYC

interesting results.

platforms in the future.

Technology comes with its own

As industry players continue to

evolved solutions and unexpected disruptions for the world’s problems. This is exemplified by the proliferation of blockchain technology in the world of financial transactions today. There are discussions about using blockchain to facilitate a global KYC platform, and CordaKYC, France’s first KYC platform has adopted the use of

leverage partnerships to cut cost and meet constantly evolving financial regulations, and secure customers from data and fund theft, it might only be a matter of time before business circumstances line up for a global KYC platform to be created.



AFRICAN FINANCE Africa is going through an economic reformation that

About cryptocurrency

is independent of the banking industry or government.

Cryptocurrency is simply virtual money that

Mobile money has been accepted across the continent

individuals can make transactions with in the same

already and virtual currency provides more opportunities

way they do with real money. Complex cryptography

for young, tech-savvy Africans. Consequently, Africa is

is used to create the currency and record transactions.

witnessing an increase in the volume of cryptocurrency

It’s much more than money on the internet.


Cryptocurrency takes the value of money and makes it

From less than $10,000, the monthly transfer of cryptocurrencies to and from Africa increased by 55% last year, reaching its climax in June at $316 million. These figures are sourced from the US Blockchain research firm Chainalysis and are projected to rise. Cryptocurrency is used mainly for commerce in Africa especially in Nigeria, Kenya, and South Africa.

more transparent and centralised through technology so that everyone has a say in the prospects of finance. Cryptocurrencies leave out middlemen like banks to make transactions cheaper and are independent of any central body or government. Africa is the new territory for development and global economic growth and crypto is being widely accepted like mobile money services such as M-Pesa. In 2008, Bitcoin, the first and most popular cryptocurrency, was created by an unidentified person(s) under the pseudonym Satoshi Nakamoto. Over 6000 other cryptocurrencies have been created since that time, like widely held options such as Litecoin and Ethereum.


A perfect environment for virtual currencies to thrive The unemployment situation in many African countries leaves the population of young people in search of new money-making

remittance company BitPesa

complex crypto is actually simple if

performs international money

you spend time studying it well.

transfers using Bitcoin. This eliminates both bank fees and the

What lies ahead?

cost of changing money to different

Nigeria, Africa’s biggest economy,


is at the forefront of countries working on new regulations


A gamble?

Consequently, digital money has

Africa’s delving into Bitcoin does

based future. This is happening

come with some dangers. By

through the recent legalisation of

nature, cryptocurrency prices are

cryptocurrency and new regulatory

volatile. Since virtual currencies are

guidelines for virtual currencies and

unchecked and have no legal status

crypto-based firms or startups.

gotten the attention of young people due to a lack of jobs. Cryptocurrency provides people with the opportunity to start their own businesses and gain patronage from outside their home country. Cryptocurrency works just like mobile money so Africans should be able to understand and benefit from it better than people in the West who were never exposed to systems other than their banking systems.

Avoiding currency volatility Cryptocurrency is seen as an alternative to the unreliable government-controlled currencies. It is set to develop economies eventually because the competition with government currencies will make the economies more resilient.

in many African countries, there is a high risk of loss of funds, especially for short-term investors.

in preparation for a crypto-

The major financial regulators in South Africa published a policy paper in April advocating for the

Anyone thinking about trading

regulation of cryptocurrency. Kenya

cryptocurrency should be

is also testing the waters with a

discerning and seek information

digital tax from January 2021.

first. People with no information fall into schemes that disguise as crypto.

Though it is too soon to measure the future rate of acceptance of cryptocurrency in Africa, it is worth

People with little exposure to new

the attention of young Africans

technologies tend to fall victim

because that is where finance

to the rising number of crypto

is headed. Cryptocurrency has

scams or misguided investments.

previously been dismissed as a flash

Educated people will understand

in the pan, however, more than ten

cryptocurrency and blockchain

years later, it has continued

technology more easily than older

to grow.

or unexposed people. The seemingly

The cryptocurrency boom has been boosted in a way by inconsistent local currencies and hyperinflation like when the Zimbabwean dollar rose sharply in 2015.

A boon for remittances Africa’s growing diaspora is also taking advantage of cryptocurrency as a cheap way to send remittances abroad. The cost of bank transfers across borders is extremely high but with cryptocurrency, it can be free. For instance, the Kenyan 69


THE PERFECT FRAUD DETECTOR? The banking industry has come a long way from the time of the manual filling system and ledger cards to the current computer age. Our standard of living has changed over the past 3 decades with the invention of computers. Adopting information and communication technology (ICT) has enhanced our way of life and human interaction. As a result of the implication of technology in business, the world has become a global village. Electronic commerce has proved to be very helpful for people around the globe, but it does give rise to different legal and socio-economic issues. The development of the internet converted the traditional banking system into digital banking. The adoption of digital banking is growing at a greater speed. With the help of digital banking, millions of transactions are processed every year resulting in an inflow of digital currency and electronic data. Due to the access to sensitive information that helps consumers to withdraw their money, the payments infrastructure has become a target for hackers.

Digital banking fraud In the 1970s, computerisation was introduced in the African banking industry for the first time by Society General Bank Limited. With time, banks not only adopted computerisation but also converted their basic banking transactions like cash withdrawal and deposits into sophisticated products. Due to increased customer demand, innovation and modernisation in the banking system, time has been needed to ensure convenience as well as improved service delivery. Digital banking proved to be a convenient way to manage finances and carry out different types of transactions. The dependence on technology in the present time increased the ease of access to digital banking but it also has given rise to the increased number of cases of fraud and other exploitations in the African banking industry.

Types of fraud

Online fraud:

The following are different types

information, fraudsters make

Employees at the bank can attach

of fraud that have been on the

online purchases by showing

a mobile number to the account

increase in the African banking

someone else’s identity.

holders who do not use mobile

With the help of stolen card

industry Whenever any hacker obtains

Different kinds of hackers get

personal information about a

unauthorised access to the digital

legitimate account holder and takes

platforms of banking systems for

control of the account, it is called

money laundering and as a result,

an account takeover fraud.

many customers lose their moneymaking the bank liable for the losses.

incorrect mobile number:

banking and as a result, the account Account takeover fraud:


Mobile banking application against

is compromised by the associate’s number. Creating fake and non-existent users on a mobile platform: Banks appoint web developers to develop a mobile application for

Money laundering: Money can be easily debited or credited from a mobile wallet. Transacting the amount from one individual account to another individual’s account could be a source of laundering unaccounted

them. The designer can create two unauthorised users with rights to verify the transactions and transfer of funds.

Major channels


for electronic

Unauthorised text messages/



Most fraud cases recorded in banks

This type of fraud arises when

are related to computers. Due to

a customer is asked about their

increased electronic fund transfers

account information by fraudulent

and computer manipulation in

messages and emails. Details

the banking industry, there has

of customers are then used by

been an increase in the number of

fraudsters for misappropriating

cases of fraud. These are the major


channels through which frauds are

Lost/stolen card If an account holder loses their

committed in most of the African banks.

card and hasn’t informed the bank

Smart Card:

about the stolen card, then any

Cards issued by the banks are

unauthorised person can make a

provided to the customers to

transaction with the help of that

provide aid in their financial

stolen card.

transactions. These smart cards

Debit card skimming: This is a type of fraud that is done by installing a machine or camera at the ATMs to pick up PINs and account information of the account holder.

become a major channel for fraud whenever any unauthorised person makes transactions in case of theft or loss.

Electronic Fund Transfer (EFT) EFT is an electronic payment mechanism classified into basic elements of the clearing network, remote point of sales, etc. EFT allows accounts to be credited

Fintech companies helping banks in

Exploration-Exploitation It is an approach in reinforcement learning in which the algorithm keeps exploring new methods through which fraud could be done.

the detection of

After the detection of fraud, the

within 24 hours electronically. Automated Teller Machine (ATM)


validation. Based on the expert’s

These are the electronic machines

Banks are joining hands with

which cases are true and which are

installed countrywide to facilitate

fintech companies to find

false positives. This continuous

banking customers providing them

solutions for the timely detection

learning method helps in making

the ease of accessing money 24/7.

of fraud. Here are some key points

fraud detection systems robust

These ATMs have also become

in this regard.

and updated for future fraudulent

algorithm sends it to experts for response algorithms categorise


a major channel of fraud when targeted by hackers using methods

Fraud Detection is a continuous

to breach into the bank’s electronic

learning process

Artificial intelligence


With the advancements in

Artificial intelligence is being used

technology, fraudsters also

by banks for the detection of digital

find new ways to fool the fraud

banking fraud. It could prove to

detection systems created by the

be a perfect fraud detector for

banks. Banks have joined hands

institutions, by helping the experts

with Fintech companies to solve

to counter different kinds of fraud.

this problem. Fintech companies

Thus keeping their platform

need to create better algorithms

safe for users making financial

that can help in the identification


of new methods of fraud in the

The traditional rule-based

Fraud cases in the past few years According to South African banking risk information center statistics, there has been a 75% increase in bank app fraud cases within African banking. It was reported that there were 4790 cases reported in 2017 costing R57.5m. while 7445 fraud cases costing R104.8 were recorded in 2018. There was a total loss of R250.5m because of fraud cases in digital banking in 2017. SABRIC reported that there R262.8m was lost due to the digital frauds in 2018. They reported that there has been a huge increase of 18% in fraud cases every year. The operational effects and magnitude of losses, result in a decline in an investor or depositor’s confidence in the operational activities of the banking industry

digital banking industry. These Fintech companies use machine learning and reinforcement learning to make collaboration and take feedback from humans constantly.

approach is being converted to MLbased fraud detection, as banks and Fintech companies collaborate to resolve the issues being faced.

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Digital Banker Africa Winter 2021  

Digital Banker Africa is the premier, magazine and website that is trusted by influencers for its comprehensive coverage and analysis of in-...

Digital Banker Africa Winter 2021  

Digital Banker Africa is the premier, magazine and website that is trusted by influencers for its comprehensive coverage and analysis of in-...