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The Voice for Banking and Finance

Is your bank giving its customers what they want and need? What is driving Africa’s need for transformation of core banking systems?

The challenges and risks of mobile money for Nigerian Banks

Centralised skill portals addressing the lack of skilled banking expertise in Africa

Technology Banking & Finance Africa

One Voice

What works best today? What gives you the edge? How are your competitors exploiting new technology? And how can you find out all that’s going on in the world of banking and finance technology in Africa?

Introducing Technology Banker, Africa new bi-monthly magazine, the only banking and finance publication answers these questions and more.

Finally there is a technology resource for banks and finance in Africa.

From The Editor Welcome to Technology Banker – informing, influencing and inspiring business.


even of the world’s ten fastest growing economies from 2011 to 2015 are predicted by The Economist magazine to be from Sub-Saharan Africa, and technology-driven banking and finance is the fastest-growing sector.

Page 4, 5 & 6 Is your bank giving its customers what they want and need?

Page 7 What is driving Africa’s need for transformation of core banking systems?

Clearly there’s a need for a publication that spans the fields of finance and technology globally, but especially in regard to Africa. And that’s where Technology Banker comes in. Our new bi-monthly magazine, complete with in-depth editorial analysis in critical technology areas, provides insights and analyses which allow you to realise operational efficiencies, innovation, continued growth and success. This is what makes us unique – and you, we believe, even more successful.

Page 8 & 9 My Bank on Mobile Page 10 The challenges and risks of mobile money for Nigerian Banks Page 11 Centralised skill portals addressing the lack of skilled banking expertise in

Africa is in the forefront of taking banking and financial infrastructure to a new level through highly innovative technologies such as NFC (Near Field Communication), mobile banking, cloud computing, core systems and more.


As a reader, you’ll receive all the latest news, knowledge of what works best today and what will give you a competitive edge tomorrow. You’ll discover who is exploiting new technologies, along with the views of leading industry players. At the same time, Technology Banker can act as a showcase for your business via traditional advertising plus integrated digital media and videos. This ensures the most important players in the banking and finance sectors in Africa are aware of and consistently and repeatedly exposed to your activities so that when the time is right you are the one they contact to do business with. Thank you for reading Technology Banker and we hope you enjoy it. John Bennett – Editor

For Private Circulation Only Contact Details: Managing Editor – Remi Akinjomo

Editor – John Bennett

Design & Creative - Monika Derfinakova

Sales & Marketing – Jenny Howard

Technology Banker is a registered trademark of Technology Banker Group. All rights relating to the content of the publication are reserved to the rightful owners.

Ground Floor, Breakspear Park, Breakspear Way Hempstead, Hertfordshire HP2 4TZ, United Kingdom Tel: +44 (0) 1442 345 379 Fax: +44 (0) 1442 345001


Publisher: Stefan Grossetti


Technology Banker Offices: Seefeldestrasse 69 Zurich Seefeld Zurich 8008 Switzerland Tel: +41 (0) 43 488 35 35 Fax: +41 (0) 432488 35 00 | 3

By Lindsay Grubb

Cover Story - Payments

Is your bank giving its customers what they want and need? Technology Banker takes a look at how the banks are responding to customer needs by improving on their payment, card and ATM offerings to their customers.

Payment Solutions The ability to conveniently, easily and safely make payments is high on the list of needs for most banking customers. This is particularly true in Africa where many customers live in outlying rural areas and would otherwise need to travel great distances every month to settle their accounts. In Nigeria payment options are being driven by the CBN’s desire for a cashless society. Zenith Bank offers its customers a suite of electronic alternatives - including online bill payments, ATM payment and mobile payments. More banks are starting to follow suit in order to comply with the CBN.

“Mobile Banking has been our fastest grower to date, even without us really making any marketing noise about it.”

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Guaranty Trust Bank (GT Bank) is also doing its part to further a cashless society and make payments simpler for its customers across the continent. The bank has a full e-banking suite available to its customers. Their internet banking is one of the most comprehensive available allowing not only basic transactions but also payments for utility bills, transferring of funds between their accounts as well as to other

beneficiaries, book flights, pay US Visa fees, and transfer foreign currencies from their domiciliary account to anyone in the world. Unlike the rest of Africa, in South Africa mobile banking and payments take second place to internet banking. Even so, Charl Nel - Head: Strategic Communications, Marketing & Corporate Affairs for South Africa’s Capitec Bank noted that, “Mobile Banking has been our fastest grower to date, even without us really making any marketing noise about it. Currently our Mobile Banking only allows clients to buy airtime and electricity, and pay other Capitec Bank clients using their registered cellphone numbers (no account numbers necessary).” Their mobile banking service is available to new and existing customers. Nel added that, “We will soon have the option to also pay other banks’ clients using their bank account particulars. Our Mobile banking option is at no additional cost to the client and is included in the total R4-50 monthly service fee.”

PesaPoint Bellevue ATM

Card Solutions

ATM Solutions

While credit and debit cards are widely used in South Africa, there is a different trend across the rest of the continent.

In Kenya more than 30 banks have partnered with PesaPoint’s Interconnect services to increase their ATM footprint across the country. Their customers now have access to a network of more than 500 ATMs across the country, which operate 24/7.

Many African countries are still cash based. Three years after credit cards were introduced in Uganda, uptake is still low. Reasons for this include the” buy now - pay now” attitude of Ugandans and the fact that credit cards are aimed at the affluent market which putting them out of reach of most Ugandans. Poor point of sale networks also add to the low usage in the country and credit cards are offered by only five banks in the country. Debit cards are the more popular financial card in Uganda and banks like Barclays, Stanbic, Standard Chartered and Crane Bank have all partnered with Visa for both debit and credit cards.

”We will soon have the option to also pay other bank’s clients using their bank accounts particulars.”

In Kenya, Ecobank was the first bank to roll out the chip and pin technology for all its Visa Debit card products. This was done in efforts to curb fraud related to skimming or stolen account data which is increasing ATM fraud across the country. There are currently more than 4.5 million debit cards in use in the country and its fast gaining traction as a preferred payment method. Nigeria’s Zenith Bank offers its clients a choice of VISA or Master Card as well as credit, debit and international prepaid (Dollar, Euro Pound) and Visa Naira Prepaid Card denominated in Naira for local transactions.

This is a huge convenience for customers of banks like Fina Bank who did not offer ATM banking to their clients prior to partnering with PesaPoint. NIC Bank noted their Move clients’ needs for an extended ATM reach and has achieved this through the partnership. In addition to customers of the member banks, the Interconnect ATMs can be utilised by cardholders of American Express, JCB Cards, Master Card, Union Pay and Visa. Mobile money account holders or individuals wanting to pay one of PesaPoint’s billing partners can also use the Interconnect ATMs. Transactions which can be processed include standard cash withdrawals, mobile money cash withdrawals, bill payments to member billers, airtime top-ups, salary payments, balance enquiries, mini statements, and Visa and Master Card acceptances. An additional benefit for customers is a reduction in ATM banking fees – a major step forward on a continent where one of the primary drivers for individuals not having bank accounts is the perceived and actual high costs associated with banking and in particular ATM transactions. | 5

The banks are listening to customer concerns about ATM security. In February Ecobank became the first bank in Kenya to roll out the chip and pin technology for all its Visa Debit card products. In doing so, they now offer the customers a higher level of security when performing transactions at ATMs and Points of Sale. In 2011, First Bank in Nigeria introduced biometric ATMs, one of the most secure forms of customer identification for payment systems. In South Africa a few banks allow withdrawals from retail stores thereby extending their withdrawal footprint. Capitec Bank is one of those banks and customers can withdraw from four retail store networks across the country. In terms of Capitec’s ATMs customer pay a fixed rate of R4-00 per transaction regardless of the amount drawn (fixed R7-00 at a saswitch-linked ATM) – a major bonus to their customers, who in a recent survey rated reduction in banking fees as one of their primary needs. The majority of other banks in South Africa charge ATM fees on a sliding scale based on the amount withdrawn.

Looking forward Competition between banks is increasing and new, customercentric products are being constantly rolled out in an effort to cross-sell to existing customers or to acquire new customers. In South Africa, this means changing the way people see banking, offering a more retail experience and becoming more

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accessible through online social media applications. First National Bank (FNB) is ticking all the right boxes for their customers. They have extended banking hours in a non-traditional manner by adopting a positive social media strategy through the ever popular @RBJacobs. They have recently also taken digital banking to the next level with their dotFNB store which gives customers a glimpse of the digital future of banking. Across the rest of the continent customer-centric banking innovation is focused on ensuring increased accessibility through ATM networks, creating more payment options and through secure debit and credit cards facilitating daily transactions. While most of the larger banks in Africa are now offering some form of e-banking, the ability to do more than check balances and mini-statements needs to become a priority. Making payments easier and increasing their electronic offerings will certainly go a long way to ensuring customer retention and acquisition as customers look for convenience and accessibility when choosing their bank.

“Customer-centric banking innovation is focused on ensuring increased accessibility through ATM networks, creating more payment options.”

By Lindsay Grubb

Industry Watch

What is driving Africa’s need for transformation of core banking systems? The key drivers for core systems transformation differ across the regions of Africa. In a recent interview, John Santhosh, founder and evangelist of GIEOM shared his observations with Technology Banker.

Eastern Africa In Eastern African markets like Kenya, Tanzania and Uganda, there has been a strong trend towards mobile marketing, remittances, ATM and internet banking. As a result the key driver in these countries is channel banking and the banks’ need to connect to these platforms. This was initiated by the launch of M-Pesa and the increasing demands from their customers.

John Santhosh, Founder and Evangelist of GIEOM

Western Africa If you look particularly at the Nigerian scenario over the past few years and similar occurrences in other Western African countries, it’s understandable that mergers and acquisitions are strong drivers for systems transformation in this region.

Southern Africa The Southern African belt – the SADC countries excluding South Africa – are driven by normal regulatory pressures which come from the central banks. Trade finance and treasury are also important in Southern Africa. Many of the banks who were not thinking about trade finance and systems for trade finance activities are now putting them in place. Correspondent banking is important in order to do trade with Asia and Europe – in particular China and India. This has lead to them doing business

with Citibank and other large banks and these larger banks have forced them to change their technology to ensure they have the right transparency in their systems.

Northern Africa Political instability has affected the core transformation process in northern Africa. Three years ago in Egypt, the three largest banks all transformed to the new core banking system. Tunisia, Morocco and Algeria - were almost at the point of transformation - then the political instability came in, so they have not been able to complete the process of moving to the latest technology.

Moving past core system transformation While there is a variety of transformation and modernisation solutions available to African Bankers, Santhosh believes that once they have achieved the base level automation process they need to move towards studying the operational aspects and analyze areas for simplification, standardisation and consolidation, which will lead to improvement and innovation. This is when a solution like GIEOM comes into play - helping the banks to set up a ‘Business Excellence’ unit which focuses on continuous improvement and innovation. | 7

By Pragyan Acharya

Features - Mobile Money

My Bank on Mobile Mobile money seems to be one of the newer ways for banks to operate in a highly competitive market as this gives them an opportunity to reduce the cost to serve its existing customers.

Killian Clifford, Owner and CEO of Mobile Money Consulting

At a time, when the world is following the dominant paradigm of doing business mostly through desktop internet access, Africa would be the only continent where a mobile handset is the main platform for IT development. Africa seems to be a role model when it comes to the implementation of mobile money. Traditionally, banks expected customers to come to them but now modern banks need to go to customers. Well, with the growing competition, this seems to be one of the newer ways for banks to operate in a highly competitive market.

Bringing the unbanked to the banking world

“Mobile money promotes financial inclusion particularly for the rural dwellers, mobilizes cash for the banking sector, accelerates pace of transferring value, enhances convenience and safety”

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The advantage of mobile money has been discussed worldwide. This new trend in technology is still in its infancy with countless providers and big issues with interoperability (as it is still unclear whether mobile money should be regulated by banks or by mobile operators). But Africa and Africans are indicating that, its benefits could outweigh the risks. In this new emerging market, mobile web is expected to surpass desktop web before anywhere else in the world. The idea of mobile money was pioneered by M-PESA when there were no regulations in place but as it became a favourable medium to transact safely, with most of the Africans not having a traditional bank account, mobile money emerged as a new trend in technology that could bring the

unbanked and the underbanked to the banking world. “Mobile money promotes financial inclusion particularly for the rural dwellers, mobilizes cash for the banking sector, accelerates pace of transferring value, enhances convenience and safety,” says Olufemi Adeagbo, CEO at Comnavig ICT consultants in the course of his presentation delivered at the ‘Mobile money West Africa Summit’ held in March 2012.

Technology infrastructure Mobile money seems to have a promising future but in order to familiarize itself among users, it got to groom itself. Some of the technologies used for mobile banking are SMS Text, mobile browser and custom application. SMS Text is also one of the technologies for mobile payments. Along with SMS Text, NFC (Near field communication) companion devices, embedded NFCs and voice are some other mobile payment technologies. A decade ago, SMS Text was one of the most dominant technologies for mobile money but now bankers are eyeing at NFCs, as the next big wave in mobile money technology. For the time being, there is sufficient technology to back the operation of mobile money but as it grows and matures, it is likely to face more risk. As it has always

been the case with bank notes, mobile money will also need new rules to address the risks. If there is a new way to pay, there would be a new way to steal.

to clear information about their customers which reduces their service options especially in terms of extending credit facilities.

level of maturity without disrupting the current model which is largely convenient in most parts of the Africa.

Mobile phones in developing countries usually have less advanced handsets. The WAP and application based solution are not universally applicable in all markets. But for banks that are able to deploy user friendly and low technology solutions, mobile banking in the developing world offers massive opportunities and rewards.

Spotlight Nigeria

Banks or Telecom Providers? Who is the real Parent?

The Central Bank of Nigeria had issued licences to 11 companies to offer mobile money services. The 11 are Fortis money, UBA/Afripay, GTBank mobile money, Pagatech, eTranzact, monitise, Eartholeum, Paycom, FET, Ecobank and mKudi. “Within five years, Nigeria will have 145 million phone subscriptions, there will be new payments infrastructure and this will have an impact on the financial inclusion and economic development,” says Killian Clifford, Owner and CEO of Mobile Money Consulting in the ‘Mobile Money West Africa Summit’.

The state of technology used for mobile money is perplexed. According to Swiss-based KPMG Mobile money is still a new concept International Cooperative’s Global in this new era of technology and Report on ‘Monetising mobile it is difficult to say whether it is money’ released in July 2011, “On an offspring of banks or telecom one hand, it has been the incessant Conclusion providers. It has definitely got pace of technological innovation the aspects of both the banks as that has rapidly delivered all of the Mobile money is picking up well tools necessary to develop a mobile well as telecom providers. But the with 53 services in 27 African idea originated from Safaricom’s payment solution. But on the countries. According to a GSMA M-PESA in 2007 and since then other, competing technologies and mobile money tracker report by the business model has been localized standards demonstrate Ovum, mobile money the difficulties that lie services of Kenya, ahead in bringing a Tanzania and Cote truly global network to “Within five years, Nigeria will have 145 d’Ivoire feature in market.” top 10 mobile money million phone subscriptions, there will be new services in emerging Currently, there are a payments infrastructure and this will have an money markets by lot of device related subscribers. issues. Users would impact on the financial inclusion and economic As the trend continues want that mobile development” to grow, both banks payment systems must and telecom providers be accessible and will join together to constituted by Super agents, functional across a wide range make this service available to every mega agents and agents. Agents on consumer devices, meaning citizen of Africa. But one thing is of various telecom providers are that banks will need to deploy satisfactory that, this model has trained to penetrate the market. device friendly platforms. Bankers not been aped from the developed So primarily, the dominant gene in find huge discrepancy between world, rather it has emerged on this offspring is that of the telecom launching mobile services in a its own to serve the needs of the providers. developed and in a developing developing world. nation. Presently, mobile money is in an opportunistic phase with According to UK Department for competitive services being International Development, “more offered by all players in the than 2.7 billion people in the telecom market. But as the scale developing world have no access grows, interoperability between to financial services. By 2012, products or services could become there will be 1.7 billion people an issue. If interoperability is with access to mobile phones but ensured, mobile money would be no bank accounts.” With a large convenient for the consumers. proportion of developing world, Both telecom providers and banks currently unbanked, financial have to ensure that they reach this institutions do not have access | 9

By Lindsay Grubb

Country Focus - Interview

The challenges and risks of mobile money for Nigerian Banks As mobile money services continue to roll-out across the African continent, there are challenges and risks for banks which can influence the success of these new service channels. Technology Banker spoke with Clifford Brody, Founder and Chief Executive Officer of the Global Bankers Institute, to gain insight into the risks and challenges, particularly within the Nigerian context.

Securing mobile money platforms is challenging. What should the banks in Nigeria focus on to protect their platforms and customers?

Clifford Brody, Founder and Chief Executive Officer of the Global Bankers Institute

What do you see as the biggest risks for banks offering mobile money services in Nigeria?

Because of the interconnected nature of mobile payments architectures, the key is good and on-going communication among the various software and hardware providers involved in the deployment and having consultants with real experience supporting the effort.

I think the three obvious risks are the quality and stability of the infrastructure, new regulatory hurdles, and security – especially in the perception of the customer. But I think the biggest risk to the banks deploying mobile money services is the viability of the business model itself. Banks are essentially conservative – and that is as it should be – and new markets and new technologies require a certain amount of risk-taking and thinking outside the box, not what banks are known for. If you think back to the ATM industry, it was banks who were the first to market with ATMs – Citibank (Then First National City), Barclay’s Bank and then Chemical Bank with hardware from companies like Diebold, NCR, IBM and Fujitsu, but it took the interbank network providers like NYCE, CIRRUS, Maestro, Interac and others, to provide the interoperability that gave the technology the critical mass and momentum it needed to become the ubiquitous convenience it is today. I think the same will be true with mobile payments. Unlike the M-Pesa business model, how does CBN involvement impact the roll-out of mobile money applications and services in Nigeria?

Whenever you have government involvement, inevitably there will be delays, but I think having Central Bank involvement and buy-in is critical if the deployment is to be a success.

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What would your recommendations to the Nigerian banks be, in terms of up-skilling their workforce and their customers to ensure optimum adoption and uptake of the offering?

As with all new technologies, education is critical to adoption. Technical training will obviously be needed, but at least as important is customer service training for the inevitable deluge of support calls following roll-out. What the customers need is a solid, easy to use platform with help and just-in-time tutorials integrated right into the system.

How does the Global Banker’s Institute assist their banking clients in Africa?

Global Bankers Institute (http://www. focuses on Human Capital Performance Improvement. We deliver measurable value to our clients by aligning training with Key Performance Indicators. I am proud to say that I have worked with banks such as Access Bank, Bank PHB, Diamond Bank, Ecobank, FCMB, Guaranty Bank, UBA, Unity Bank and Zenith Bank providing them with eLearning and classroom training, hosted Learning Management System solutions and HR and training consulting services. I truly appreciate the commitment to quality education shown by all the banks I have worked with in Africa.

By Lindsay Grubb


Centralised skill portals - addressing the lack of skilled banking expertise in Africa

In PwC’s 15th Annual Global CEO Survey, they noted that more than 40% of BCM CEO’s see skills shortages as a serious threat to growth. Their concerns are that it’s getting harder to recruit and retained skilled personnel in the industry. Highly skilled middle managers who are critical to the growth process are in very short supply. Technology Banker looks at how centralised skills portals are addressing the lack of skilled banking expertise in Africa.

The need for centralisation of skills While you can train skilled personnel on new technology – if there is a lack of skills to start with, your challenge becomes bigger. As there is a limited pool of experts in the financial sector globally, not just in Africa, the situation is compounded by the fact that hiring skilled personnel has become very expensive. Due to the lack of skilled personnel in critical roles e.g. trade finance and other branch processes, a number of banks on the continent are now centralising their skill portals, (replicating Citibank’s eServe International/Citigroup Global Services Ltd model.) By centralising their existing in-house expertise multi-national and regional banks operating, are now able to address more complex banking processes more quickly and efficiently than before.

Centres of excellence to address skills shortages In banks with centralised centres of excellence, the customer-facing bank employees are required to submit the more specialist complex applications (e.g. opening a trade finance account - not the straightforward opening of personal accounts) into their network’s centralised skill portal where expert personnel are on hand to process the requests. As a result these applications and processes are handled with a far greater accuracy, particularly where modernised core systems are in place with appropriate quality controls. Speaking with John Santhosh of GIEOM, he feels that by centralising the available skills, applications such as the opening of trade finance accounts are processed faster than if handled by less knowledgeable staff at the local branches. He says that many African banks are starting to centralise their skills portal because it’s easier to control one central point, and that these portals will address many countries. Another benefit of skill centralisation is that the banks free up the capacity of skilled branch personnel and this is resulting in increased productivity which translates into cost savings at all levels within the bank. | 11


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Technology Banker is excited about the technological advances being made across the African continent. “ Within the banking and finance aren...