Technology Banker July / August 2014 by Technology Banker

The Voice of Technology and Finance in Africa

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July/ August 2014 £3.99

MAKING BANKS MORE EFFICIENT Boosting customer confidence through convergence Technology convergence and what its impact means for African banks.

Nigeria’s rapid pace of

change A decade of success: how Nigeria transformed its payments systems.

Legislative Framework required for Africa’s M-economy Unfulfilled potential – how to create a successful M-economy in Africa.

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WELCOME CONTENTS Over the last couple of weeks, Africa has seen the launch of a number of new innovative solutions in terms of mobile payments, regulations, interconnectivity, payment cards, etc. Mobile money is having a huge impact on Africa, bringing banking services to tens of millions of new customers, and is proving such a big success in Nigeria, the total value of Mobile Payment Transactions in the country has already hit the $1.7 billion mark. In addition, the Islamic banking sector is growing rapidly in Africa, gaining momentum in many parts of the continent, including amongst non-Muslims. It has evolved in countries like Kenya, Nigeria and South Africa from being an emerging ethical niche market into being part of the mainstream financial services landscape.

Technology convergence and

what its impact means

for African banks.

A decade of success: how

Nigeria transformed its payments

systems. So I will close this letter with the thought that we have not yet seen the boom that Africa is still awaiting. If this is to occur, then there needs to be far greater transparency, coordination, cooperation and, above all, a strong commitment to finding the right solutions that will provide financial stability and prosperity for the whole of the continent.

How Kaspersky Lab is making

Africa’s mobile technology more

secure.

As always, we would love to hear from you, our readers, so please write to us and send your views by email. Warm Regards,

Staying alert to security risks.

Breaking down the technological

barriers to financial inclusion.

Remi Akinjomo Managing Editor

Contact Details: Publisher - Stefan Grossetti Editor - Ian Powell Deputy Editor - John Bennett Sales & Marketing - Jenny Howard Managing Editor - Remi Akinjomo Head of Operations - Monika Derfinakova Head Office: 10th Floor, 88 Wood Street, London EC2V 7RS Tel: +44 (0) 208 528 1536 info@technologybanker.com www.technologybanker.com

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The contents of this publication are subject to copyright protection and reproduction in whole or part, whether mechanical or electronic is expressly forbidden without prior written consent of the editor. Views expressed in the publication do not necessarily reflect those of the editor or publisher. We welcome contributions, however, publication is at the discretion of the editor. We also take no responsibility for the return of materials. Whilst every care is taken to ensure accuracy, we cannot be held liable for any inaccuracies. All rights reserved.

Unfulfilled potential – how to

create a successful M-economy in

Africa.

©Technology Banker 2014 ISSN 2051-9443

JULY / AUGUST 2014

NEWS IN BRIEF

West African Capital Markets Set For Integration

apital markets across West Africa are moving towards integrated to boost regional trading and liquidity flow among member states. The West African capital market will comprise of the Nigerian Stock Exchange, Ghana Stock Exchange and Cote d’Ivoire Bourse Regionale des Valeurs Mobilieres. This new development will enable Nigerian companies and investors to raise funds for trading in stocks and bonds listed in capital markets through a licensed issuing house or broker-dealer. “Integration of our capital markets will bring about formidable benefits, and help increase the breadth and depth of markets across our region,” said Arunma Oteh, Director-General of Nigeria’s Securities and Exchange Commission at a BusinessDay conference.

Mobile Firm and Banks Sign Up to New Platform

obile network providers and banks in Zimbabwe have signed up to a new platform called wiPlatform. This allows mobile transacting at the Point of Sale in real time and customers to make deposits into their bank accounts at any POS. wiPlatform, developed by Kuronda Venture Partners in partnership with wiGroup International, allows for real time transactions, saving retailers from the current tedious reconciliation at close of business. The technology has already been successfully operationalised in South Africa. Negotiations with more local banks and mobile network providers for the adoption of the platform at POS are at an advanced stage, according to KVC Chief Executive Officer Tirivashe Mundondo. “We have reached an agreement with one mobile network provider and one bank for the wiPlatform targeted at the local retail sector, especially supermarkets,” he said.

FNBB Launches First Cash Deposit ATM

irst National Bank Botswana (FNBB) has launched the first ATMs that accepts cash deposits in the southern African nation. The highly innovative ATM Advance scans cash deposits and allows for the cash to be credited to the holder’s account immediately. FNBB is a unit of South African FNB and, along with Barclays Bank Botswana, dominates the local banking industry. Its Marketing and Communications Director, Bomolemo Selaledi, said: “This deployment of the ATM Advance was a defining moment in the local banking industry, a service which we at FNBB are proud to offer our customers.”

Hitachi Launches Cloud Storage Facility In Kenya

itachi Data Systems Corporation (HDS) has announced new technology that will revolutionise cloud infrastructure and accelerate customer success with businessdefined IT. Dubbed ‘Continuous Cloud Infrastructure’, it promises to bridge the gap between a company’s business and technology objectives that demand a more responsive IT foundation. Wayne Dick, HDS Business Development Manager for Sub-Saharan Africa, said: “Our customers across industries have told us they are aligning the IT and business functions more closely than ever. IT teams are looking to new infrastructure strategies to deploy more continuous, adaptable and scalable infrastructure.”

The new storage operating system provides a common software architecture that will double the useful life of hardware architectures, span the breadth of the infrastructure portfolio, as well as enhance the benefits of server visualisation.

JULY / AUGUST 2014

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NEWS IN BRIEF

Cash Recycling First For Sudan

ank of Khartoum has chosen GRGBanking to supply the first cash recycling ATM in Sudan. The purchase order includes GRG products Lobby Cash Recycling ATM H68NL and Foreign Currency Exchange ATM H38NL-XDM. The H68N series are cutting-edge cash recyclers that shift heavy counter transactions to self-service and reduce cash replenishment frequency. With high capacity, Serial Number Tracking technology, biometric authentication and coin dispensing features, they are capable of supporting big volume transactions and delivering both an advanced and reliable service to customers. The H38N series are full function ATMs that offer 24/7 fast and easy service combination for big transaction locations. Bank of Khartoum was awarded ‘Best Retail Bank’ by Banker Africa magazine this year and its Head of Retail, SME Microfinance, Kashif Naeem, said: “We launched Retail Banking from scratch, in the shortest span of time, and are known to be the market leader in Sudan.”

New Retrenchment Insurance Cover Provides Support in Kenya

arclays Bank of Kenya (BBK) has launched a new and innovative insurance product for customers who have their salaries processed by the bank to cushion them from a disrupted lifestyle in case of sudden job loss. The Salary Retrenchment Cover will support retrenched account holders, whose salaries are processed via the bank for a period of three months, with monthly monetary payment equal to their net salary, and is the result of a partnership between BBK, Pan Africa Life and MicroEnsure. The launch is part of the BBK’s three year corporate strategy, which is anchored on the rollout of innovative technology-based solutions.

Maximum Traffic on MNP Platform

here has been huge traffic of over 87,000 recorded on the Nigerian Communications Commission’s (NCC) Mobile Number Portability, since its launch in Lagos last April. This traffic, which represents a steady adoption of the service, includes the number of telephone lines that have ported from one network to another since the launch. The figure of 87, 887 comprises of incoming and outgoing porting of all of the Global System for Mobile Communication (GSM) operators, including MTN, Airtel, Globacom and Etisalat.

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South African Firm Certified As Specialised Training Centre

-KON South Africa (Q-KON SA) has acquired qualification and certification from AudioCodes to serve as a Specialised Training Centre and offer AudioCodes Certified Training. The telecommunications engineering firm will provide two AudioCodes Certified Training Programmes. These are AudioCodes Certified Associate (ACA) and AudioCodes Certified Professional (ACP). Managing Director Tjaart de Wet said the training is targeted at technical professionals, including system engineers, network architects, consultants and integrators. The firm is already a recognised provider of training on global technologies it specialises in.

Global Mobile Termination Rates Fall

he average global mobile termination rate (MTR) fell to US$0.043 in 2013, compared to a global average of US$0.084 in 2009, according to a recent analysis of 118 countries by Telecommunications Management Group (TMG). It found that MTRs have declined by 75 percent since 2005, and continue to fall at a pace in line with TMG’s previous forecasts. It believes MTRs will continue to drop as a result of ongoing regulatory interventions, which seek to align interconnection rates with costs.

JULY / AUGUST 2014

NEWS IN BRIEF

Public Cloud Empowers Local Businesses

usiness Connexion, a stalwart of Africa’s ICT landscape, has launched its latest public cloud offering, which offers small, medium and large businesses with the sort of functionality that is usually reserved for huge enterprises. It offers fully white-labelled solutions that its clients can on-sell to clients of their own. This makes it an enablement channel, not just for the company, but also for end users, and empowers entrepreneurs to provide services that would previously require enormous manpower and infrastructure. The offering can be branded with a client’s own corporate identity or just as easily be sold as a Business Connexion product. Charles Lalieu, Managing Executive for public cloud, said: “Business Connexion is now Africa’s first true cloud brokerage. It’s our vision to make things in Africa, for Africans, to meet African needs. With public cloud, we’re continuing to empower communities and make the impossible possible through technology.”

CRDB Bank Upgrades SIM banking

anzania’s CRDB Bank has further improved its SIM Banking to accommodate new features that will enable customers to perform more transactions at any location in the world. “We are always seeking to create easy and less cost accessibility to the banking services to its customers,” said CRDB Bank Managing Director, Dr Charles Kimei, at a press conference. It was also revealed that the bank has simplified its SIM Banking registration, where customers register for themselves without visiting the bank branches.

Electronic Trading System Launches in Nigeria

he Nigeria Commodity Exchange (NCX) will launch a pilot electronic warehouse receipt system (e-WRS) on July 10. The Managing Director and CEO of NCX, Mr. Yusuf Abdurrahmin, said the new platform will enable farmers to place their commodities at an NCXaccredited warehouse in different parts of the country. They will be issued with an electronic receipt, stating details such as the commodity type, quality and quantity, owner and other information. The depositor will be able to use the receipt as collateral to obtain bank loans or for trading on the exchange, or keep such commodities in the warehouse until their prices stabilise or appreciate.

Nigerian Bank Launches Transaction Alerts on Twitter

U Access Bank Focuses on Cost Reduction

ccess Bank Plc’s unaudited results for the three-month period ended 31 March 2014, showed the Nigerian financial institution’s continued focus on improving on its top line while managing its cost base. The first quarter results also revealed progress towards the bank’s strategy of delivering profits through a sustainable build-up of its loan book. These results showed that their gross earnings for the quarter climbed to N57 billion, representing a nine percent increase, compared to the corresponding period in 2013.

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nited Bank for Africa (UBA) has become the first bank in Nigeria bank to offer transaction notifications on Twitter for its customers. UBA said the solution is based on a secure custom application it had built and will enable its customers to receive bank transaction alerts directly on Twitter. The innovation is an added value service which enables its customers to be informed of transactions wherever they are.

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FEATURE

BOOSTING CUSTOMER CONFIDENCE THROUGH CONVERGENCE Technology convergence provides African banks with exciting opportunities to integrate innovative services, enhance customer experiences and increase client engagement. Tim Russell reports

The last couple of decades have witnessed a major shift in the African banking sector, with innovative banks seizing opportunities provided by the latest technology to find new ways to provide financial services.

make the bank more competitive and improve its services for clients by delivering an intuitive, easy to use interface, which is accessible anywhere with a single logon.

Future strategies revolve around ‘technology convergence’, which is fundamentally changing the banking industry by adding a range of user interfaces, including the internet, mobile money and e-wallets.

Initiatives like this aim to develop a seamless, omni-channel approach to the consumer experience by integrating both a bank’s retail and e-tail (online) presence, enabling people to use many different banking channels simultaneously. The challenge is to engage customers and provide them with the kind of banking and business interactions that will suit their personal preferences and life situation.

As a result, many customers are able to enjoy speedy, around-the-clock access to their finances and make payments through their computer, tablet or mobile phone. These are exciting developments for the African banking industry, but what impact will technology convergence have on clients and will it succeed in enhancing customer experiences? Banks like Nedbank, one of the largest in South Africa, certainly hope so. It has successfully launched a channel convergence initiative to

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SEAMLESS APPROACH

For example, a client may prefer to visit their branch for certain transactions, as it offers them a secure physical location, where they can carry out complex financial business with real people. On other occasions, they will prefer to use online banking because it is more flexible and offers a range of services that are not be

available at their local branch. The latest internet technology makes it possible to create new customised banking services that are tailor-made to the needs, preferences and quality expectations of individual customers. But this level of integration requires greater interaction and engagement with clients and so customer feedback has become essential. As part of its convergence initiative, Nedbank incorporated the Customer Feedback System (CFS) into its service management strategy, receiving over 300,000 responses every month from its customers. The results were combined with other business measures to give an overall customer service score, which was cascaded through the business to drive improvements in service levels. Banks can also gain valuable information by tracking customers across all channels – whether it be online transactions, branch interactions, call centre

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FEATURE inquiries, marketing mailouts or promotional tweets.

OBSTACLES TO PROGRESS

Convergence therefore offers the African banking sector a great opportunity to deepen customer engagement and increase the loyalty of clients, but only if their needs and expectations are successfully met. Banks need to overcome a number of obstacles before this level of customer service can be achieved, including tackling platform limitations, outdated business processes and a tendency for some banks to grow within their own organisational silos, which means they often fail to share important data between different teams and departments within the organisation. This means, big improvements made to one channel, for example the successful launch of an enhanced branch experience, does not necessarily lead to similar improvements to other channels, such as the internet banking service, because the relevant information is not always shared. This approach can be detrimental and shortsighted and often leads to disappointed customers, especially as convergence has raised expectation by making people more knowledgeable about the breadth of banking services that are available to them. It is therefore important that banks examine how their online presence and physical presence could work more effectively together and ask some searching questions, such as: • Do we provide a compelling experience to our customers? • Do we give them the information they require and the freedom to choose the right channels that best suit their preferences? • How can we bring the best aspects of our different channels together in a unique way? Asking these kinds of questions can

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help a bank to develop a clearer understanding of what its customers want and where it needs to improve and develop its services. This is particularly important as improving customer experience is fast becoming the central part of the whole channel convergence discussion. With today’s highly competitive market conditions, many banks are looking to find an edge over their closest competitors by creating customised services, improving online security and developing innovative ideas; all of which is good news for the consumer as it creates a much-needed emphasis on client satisfaction.

EXCITING INNOVATIONS

Mobile banking, such as The Commercial Bank of Africa’s highly successful service in Kenya, is especially important because of the continent’s large unbanked population, but there are other exciting banking innovations currently taking place on the continent. South Africa’s First National Bank (FNB), for example, is providing its clients with banking as well as telecommunication packages, all from one space. After obtaining a telecoms licence, FNB is able to offer clients a smart device with a SIM card and data package. Stafford Massie, the founder and Chief Executive Officer of the payment technology innovations company, Thumbzup, believes this has tremendous potential for customers. Speaking in an interview with CNBC Africa, he said: “I think it’s interesting to see banking transform itself into the telecommunications world where you can literally get everything you want from a bank that you can get at a telecommunications company.” He believes the phone will soon be dubbed the new credit card that can make voice calls, and adds that customers can get everything from FNB they can get at a telecommunications company. “You can get an iPhone, an iPad, a sim card

and a data package. So here’s a bank that has a telecoms licence, they’re provisioning data packages with their banking services.” He believes these kinds of technological changes have made sub-Saharan Africa’s financial services and technology players as advanced as first world countries. “If you take a look at financial services and look at technology players in general, you’ll find sub-Saharan Africa is [as] advanced as you will find anywhere else in the world. If you take a look at what banks are doing in Australia and what banks are doing in South Africa, it’s incredible how far ahead we are.”

POTENTIAL PITFALLS

Looking to the future, there can be no doubt that convergence provides exciting opportunities for future growth. It is a powerful force that will help African banks to reach broader sections of the population for the first time, but the road to this level of integration is not without its fair share of pitfalls and challenges. Above all, banks must be careful not to provide a faceless, dehumunised service that fails to engage and connect with customers. In racing to outdo each other and be “firstto-market”, banks can sometimes overlook the usability issues and technical complexities that underlie many online services and put customers off. There is always the need for the human touch and so the banks’ main aim should be to successfully create a carefully targeted, personalised service that people can identify with and have confidence in. This means providing people with the right channels at the right time by listening to feedback and being constantly aware of customers’ changing needs and expectations.

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OPINON

NIGERIA’S RAPID PACE OF CHANGE Liam McDermott of Stanchion Payment Solutions explains how advances in payments expertise and communications technology have enabled Nigeria to transform its electronic payment systems and develop an economy that no longer depends on cash.

With Nigeria having recently eclipsed South Africa as the continent’s biggest economy, it is worth taking a look at the nation’s progress from the perspective of electronic payments, an indispensable service that depends on telecommunications and banking systems.

Liam McDermott Head of Skills Development

The pace of change in Nigeria is unbelievable and, having been in the country for an extended period around the year 2000, it is evident that that change is nowhere more noticeable than in the banking sector.

IMPRESSIVE PROGRESS

S TA N C H I O N

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From being a largely cash-based society ten years ago, where travellers cheques were a necessity for visitors and you’d be lucky to find a single MasterCard machine which would connect directly to America, it is now a country where ATMs and credit card Point-of-Sale devices are everywhere. A decade ago, there were almost no electronic payment systems and telecommunications were in a dire state. Telephone wires festooned on poles or attached in an entirely

haphazard fashion to the side of buildings, and companies had to establish their own connectivity using microwave towers.

SUCCESS OF SCALE

Then, in 2005, the Central Bank of Nigeria, promulgated a policy which consolidated a total of nearly 100 banks, each operating within a limited fiefdom, to just the 22 that are currently in play. This process is regarded as a case study for the success of scale – but it has also had another, more organic effect on customers. Up until that point, ATMs were never really viable in Nigeria, as there was no interlinking switch that would allow customers from a bank in one area to withdraw cash from a bank in another. However, this facility – considered indispensable for modern banking – was introduced. Similarly, credit card machines just didn’t exist in any real scale in the country, as they rely on a connection from the merchant to the merchant’s bank and to the card issuer’s bank, which needed to be facilitated by some central system.

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OPINON LAYING THE FOUNDATIONS

A sense of perspective is required where Nigerian telecommunications are concerned. The country has a population of nearly 170 million people, but has just over 2.5 million landlines today. It is thanks to the revolution of mobile telephony that the foundations for better payments systems were laid. Today, there are 164 million GSM lines and nearly 15 million CDMA (3G) connections. With all this happening in the banking and telecommunications sectors, something else started to occur which has almost certainly played a role in helping Nigeria to its current position as the continent’s biggest economy. More people were getting ‘banked’ or gaining access to bank services. Transactions were increasing exponentially and when people are banked, and transactions begin to flow freely, the economy benefits. As a result, people move up the LSM scale, which means they also contribute more to the economy of the infrastructure of a country. Those who have been to Lagos, especially a decade or more ago, will remember chaotic roads mostly in a state of disrepair, as well as traffic jams on a colossal scale, and an almost complete absence of traffic lights.

STARK DIFFERENCE

The state of the roads are, to an extent, a reflection of what’s going on in a country and the situation couldn’t be more different in Lagos today. New tarmac can be seen everywhere, traffic management is vastly improved and there are high-rises climbing into the sky. People from the regions now go to Lagos to spend their holidays. The economy no longer depends on cash and now has the payments systems required to support modern means of transacting, improve security, increase convenience and ease the process of doing business.

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THE ROLE OF A SPECIALIST PAYMENTS PROVIDER A common and significant barrier to business growth and future expansion, particularly in emerging economies like Nigeria, is the shortage of skilled and experienced workers. The problem is more pronounced when the skills in question are highly specialised and mission-critical, such as building, managing or expanding an electronic payments environment. In such environments, a viable option is to entrust a payments solution provider to handle these functions. One such company is Stanchion Payment Solutions (Stanchion), which is widely entrusted to implement, manage and enhance payment systems and solutions in complex payment environments. Stanchion has presences in South Africa (servicing Africa) and Dubai (servicing the Middle East), and has recently opened another office in the UK to service Europe. Stanchion’s team of technical, systems and businessprocess consultants (whose joint experience exceeds 150 years) provide specialist

services to enable payment system and financial switch owners to deliver business value through quality, service, stability and innovation. The company has helped retailers, banks, payment processors, system integrators and payment system vendors by optimising the performance, stability, reliability, security and efficiency of payment environments. This is achieved through managed service products, by putting the existing investments of its customers to better use, and by supporting the delivery of new initiatives. When an outsourced service provider like Stanchion gets involved, it doesn’t mean giving up complete control. Payments are a strategic asset which, if managed appropriately, can deliver a competitive advantage. Payment solutions partners should therefore provide strategic information about payment industry trends, and accessible business metrics relating to the payments environment and infrastructure capability of individual clients.

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INNOVATION

DELIVERING INNOVATIVE SOLUTIONS IN AFRICA David S. Shapp, Senior Vice President at Global Bankers Institute, answers our questions about his experiences of deploying rich media content to clients in Sub-Saharan Africa, and his success in achieving more than 99.9% uptime over the past few years. MR. SHAPP, PLEASE TELL OUR READERS ABOUT YOUR EXPERIENCE DELIVERING RICH MEDIA CONTENT IN AFRICA.

As Chief of Technology of Edcomm Bankers Academy and now Global Bankers Institute, it is my responsibility to identify a solution to serving up eLearning, video, animation and sound to our clients in Africa.

WHAT DO YOU DO FOR CLIENTS IN OTHER PARTS OF THE WORLD?

We have delivered eLearning and Learning Management and Content Management Services across the globe and typically our clients access one our server farms located in data centers in Dulles, Virginia, San Jose, California or Sterling, Virginia with no difficulty. For our clients in Africa this simply wasn’t an option.

– but then came the Trans-Atlantic hop. The Trans-Atlantic hop was over 2 seconds and sometimes more and latency quickly built up rendering the applications virtually useless. With smart buffering, we were able to improve performance, but it was still not up to our quality standards.

SO WHAT DID YOU DO?

We evaluated hosting solutions in Sub-Saharan Africa – quickly narrowing our options down to Nigeria and South Africa. Because of the sensitive nature of many of the bank procedures and policies we were training on, we required a solution that offered adequate performance as well as security and availability. We used a mirrored hosting solution to augment our servers in the US. The servers in Africa handled all traffic to and from our local clients and a robust and fault tolerant mirroring application was used to ensure timely

data replication.

WHERE DID YOU FINALLY DECIDE ON?

Largely because of the greater stability in its power grid and telecom infrastructure, we chose a well-respected provider with the largest server farm in South Africa.

HOW HAS YOUR EXPERIENCE BEEN?

It has been excellent. I am proud to say we have achieved over 99.9% uptime over the past several years!

WHAT ADVICE CAN YOU GIVE ANYONE WITH SIMILAR NEEDS?

Recognize that deployment of rich media around Sub-Saharan Africa is not easy and any solution must be thoroughly tested in real-world conditions.

WHAT WAS THE PROBLEM?

Well typically if you run a packet TraceRoute you will see a dozen or so hops of a few milliseconds each – yielding acceptable response time performance. But when we began testing with our first clients in Nigeria, the first few hops were the same as data moved from our servers to the high-speed backbone

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About David S. Shapp Before joining Global Bankers Institute and his tenure at Edcomm Bankers’ Academy, David S. Shapp served in the US Marine Corps. David has been involved with computer technology in the government and private sectors for nearly three decades, with over 20 years focused on internet technologies and content deployment. In addition to his work at Global Bankers Institute, David is Battalion Chief at his local fire company, and his volunteer work has been recognised and praised by the US Senate and House of Representatives. His full LinkedIn profile is at: www.linkedin.com/in/davidshapp/

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EXECUTIVE INTERVIEW

MAKING MOBILE DEVICES MORE SECURE Riaan Badenhorst, Managing Director of Kaspersky Lab Africa, answers questions about the growing importance of mobile technology, the latest security threats to mobile devices, and explains how cybercriminal activity is on the increase in Africa.

RIEFLY DESCRIBE KASPERSKY LAB, ITS OBJECTIVES, COVERAGE AND MARKET SHARE IN AFRICA? Kaspersky Lab is the world’s largest privately held vendor of endpoint protection solutions and one of the fastest growing IT security vendors in the world. Firmly positioned as one of the top four leading vendors of security solutions for endpoint users*, we continue to improve our market position through offering security solutions that are needed by both consumers and enterprises today. Kaspersky Lab officially opened an office in South Africa in November 2009 and, having seen the need to raise awareness around cyber security as Africa’s telecommunications infrastructure continues to develop, we have increased our presence in Africa over the past few years. As a result, we now have a strong presence in the regions of Africa, including South

Africa, Kenya, Côte d’Ivoire and others, as well as a large global network. We are also actively developing our partner network in the region to make security solutions more available for customers, as there is no doubt that cybercriminal activity remains on the increase in Africa.

AN YOU TELL US ABOUT YOURSELF? HOW LONG HAVE YOU BEEN IN THE INDUSTRY? WHAT IS YOUR EXPERTISE? I have been working in the IT industry for more than 15 years now, where I have gained extensive experience in IT security, compliance, governance and risk management. I joined Kaspersky Lab in January 2011, where my focus as a Corporate Sales Manager was on growing our Enterprise and Small Medium Business sectors in SubSaharan Africa. On 1 October 2012, I took the role of Head of Operations for Kaspersky Lab Africa and today I am

Riaan Badenhorst Managing Director for Kaspersky Lab Africa

* The company was rated fourth in the IDC rating Worldwide Endpoint Security Revenue by Vendor, 2012. The rating was published in the IDC report, “Worldwide Endpoint Security 2013–2017 Forecast and 2012 Vendor Shares” (IDC #242618, August 2013). The report ranked software vendors according to their earnings from the sales of endpoint security solutions in 2012.

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EXECUTIVE INTERVIEW the Managing Director of Kaspersky Lab Africa. The territory consists of more than 40 countries and I am in charge of all Kaspersky Lab’s operations in the designated area.

OW DO YOU DESCRIBE THE CURRENT MOBILE TECHNOLOGY LANDSCAPE IN AFRICA? WOULD YOU SAY THE BEST IS YET TO COME? In my experience, the mobile technology landscape in Africa is definitely growing and it will continue to do so, as mobile technology innovation grows and continues to shape the lives of African citizens for the better. In fact, there is a 67% smartphone penetration rate in Kenya alone in 2014, according to Safaricom*. This figure represents the strong growth of the local economy in Kenya, as today more people are accessing smartphones and so have access to the Internet and face the associated risks that come with this. As mobility continues to trend, becoming a critical tool for businesses operating within the African context, it is transforming lives and shaping the businesses of tomorrow. However, this growth also indirectly opens up opportunities for cybercriminal activity, which is what we need to be careful of. Kaspersky Lab is highly influential in managing these risks.

OBILE TECHNOLOGY HAS BEEN AN AFRICAN SUCCESS STORY. WHAT ARE THE TOP 5 MOBILE SECURITY THREATS TO THE ENTERPRISE, ESPECIALLY THE BANKING SECTOR? WHICH OF THESE THREATS ARE PREVALENT IN THE REGION AND WHAT STEPS SHOULD BE TAKEN TO MITIGATE THESE RISKS? For a long time, mobile devices were actually untouched by cybercriminals. To a large extent, this was due to the first generations of mobile devices having limited functionality, which meant writing software for them

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was difficult. Then in 2004, Kaspersky Lab discovered the first ever worm designed to attack mobile phones. Today’s versatile devices, with Internet connectivity and publicly accessible application development tools, attract much more attention from cybercriminals than ever before. For several years now, our experts have been recording a large annual increase in the number of malicious programmes that target mobile devices, particularly those running Android. Most of the malicious programmes for mobile devices, including many backdoors and some malware in the Trojan category, are designed to steal money from users. But one of 2013’s most dangerous trends in mobile malware was the growing number of programmes designed to steal people’s online banking credentials and gain access to their money. The most widespread malicious objects detected on Android smartphones are Trojan viruses and Exploits, which are used to gain root access to smartphones. An example of such malware is the mobile Trojan called Svpeng. Recently detected by Kaspersky Lab, it combines the functionality of financial malware with ransomware capabilities. It has also started spreading in the USA and UK and will most probably go active in other English-speaking countries. Another acute mobile-related threat facing companies has come about as a result of the Bring Your Own Device trend. Employees work more effectively when, for example, they can respond quickly to a customer by accessing corporate e-mail and data. However, there is now an issue with the loss or theft of devices and the data on them. The Global Corporate IT Security Risks 2013 survey – conducted by B2B International in collaboration with Kaspersky Lab and other IT professionals in companies from 24 countries across the globe – showed

that 36% of respondents in South Africa have experienced loss or theft of mobile devices by staff, and 20% of respondents reported that information had been leaked or inappropriately shared on a mobile device through e-mail, SMS, etc. To mitigate these risks companies should ensure they have good security policies in place, which are understood and followed by employees. They should also have effective, easy to manage security and mobile device management solutions, such as Security for Mobile, as a separate targeted solution or within the Kaspersky Endpoint Security for Business platform. Another hot issue for banks is how to secure their customers’ transactions. Kaspersky Security Network data shows that our products protected 1.9 million users in 2013 from malware that is capable of stealing money online, and the number of financial cyber threats is constantly growing. According to Kaspersky Lab statistics, every fourth phishing web page imitates the website of a legitimate bank, online store or payment service. These fake pages are used to trick people into handing over their banking details. It is not very surprising that cybercriminals prefer to attack users’ computers rather than the protected IT infrastructures of banks, as it is much easier to steal data from a privately owned device. We have a good understanding of the problem and provide financial and e-commerce organisations with the Kaspersky Fraud Prevention platform, which addresses important trends in the financial market, such as the use of tablets and smartphones for conducting online payments. This solution, which helps to secure the transactions of financial organisations and their customers, also includes Kaspersky Lab’s professional services in the sphere as a part of the platform.

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EXECUTIVE INTERVIEW Our comprehensive approach to security and the tried-and-tested technologies in Kaspersky Fraud Prevention allows banks to secure their reputation by reliably protecting their customers from cybercrime.

live in a developing continent like Africa are excited about the benefits of mobility and so invest in it as a trend, but they don’t necessarily understand the security threats that come with it.

S A LAB DEVELOPER OF SECURE CONTENT AND THREAT MANAGEMENT, WHAT DIFFERENTIATES YOU FROM OTHERS? Technology leadership is the key differentiator. Undoubtedly, our most valuable asset is the wealth of expertise we have gained through combating major IT threats over the years, including malware research and our cooperation with such organisations as INTERPOL, Europol and CERTs in fighting cybercriminals, etc. This has helped the company to remain one step ahead and allows us to provide our users with the most reliable protection against new types of attack. About a third of the company’s employees are R&D specialists, whose expertise help us to develop award-winning integrated solutions for both corporate users and consumers.

OW WOULD YOU DESCRIBE MOBILE THREATS AND WHAT DO YOU THINK ARE THE MOTIVATION BEHIND THEM? With more and more people using their smartphones and tablets to surf the web, update social networking sites, do their shopping and bank online, cybercriminals are developing malware threats that are increasingly targeting mobile devices. We constantly find new variants and modifications of known mobile threats, which can come from the Internet, SMS, connecting to free Wi-Fi networks, etc. Data and money are the main motivations for these mobile threats, as more people are using mobile devices that hold valuable information – information which can make cybercriminals rich. Many people who

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AN YOU OUTLINE THE STEPS THAT ENTERPRISE CUSTOMERS SHOULD TAKE TO MAKE THEMSELVES SECURE AS QUICKLY AS POSSIBLE AFTER THEY HAVE BEEN COMPROMISED? First of all, Enterprise companies should have security policies and security solutions in place to prevent such a situation. If a security incident does happen, such as an employee having their mobile device stolen, they should act according to the company’s policies and inform the right people in the organisation, who can block the device, wipe any data that is on it or even identify its location. If such precautious measures are not taken, handling the situation becomes way more complicated. If an organisation has been compromised, there should be a review of what has happened, what the risks are and what should be the next steps. A company can also get professional assistance from a security company like Kaspersky Lab, who can investigate and deal with the situation, and provide advice on how to prevent it from happening in the future.

S A GLOBAL BUSINESS, WHAT SOCIAL RESPONSIBILITY INITIATIVE/S DO YOU HAVE IN AFRICA? We openly share our knowledge and technical findings with the public to encourage stronger security practices, and pay a lot of attention to raising awareness about security issues. We also invest heavily in educational initiatives in the area of IT Security as one of our core corporate social responsibility strategies. One such example is the annual ‘CyberSecurity for the Next Generation’ international student conference. Students from Africa take part and achieve great results.

HAT ARE YOUR PREDICTIONS FOR TECHNOLOGY TRENDS FOR AFRICA IN THE YEARS TO COME? I believe that Africa’s technology landscape is expanding at an alarming and very fast rate and, as such, I think that the following trends will start to make an appearance in the years to come: • The use of mobile devices will continue to expand even more in Africa, with Apple, Android and Windows phones leading the market. This will create a more elusive platform for cyber threats via mobile devices. • Cybercriminals will continue developing tools to steal cash, either directly or indirectly. To plunder pockets directly, the fraudsters will further refine their tools designed to access the bank accounts of mobile device owners (mobile phishing and banking Trojans). Mobile botnets will be bought and sold and used to distribute malicious attachments on behalf of third parties. To support indirect thefts, it is likely that we will see more sophisticated versions of Trojans that encrypt the data on mobile devices, preventing access to photos, contacts and correspondence until a decryption fee is handed over. Bitcoins made quite an appearance at the end of 2013 and I expect they will continue to grow in the years to come. However, as this is something relatively new for consumers, I predict that cybercriminals will continue to hack into consumers’ accounts until they become aware of how to protect themselves. Lastly, as the Cloud continues to grow and increase in popularity with businesses across Africa, hackers will look to target cloud organisations in an attempt to gain access to critical information.

* http://www.techzim. co.zw/2014/04/kenya-67smartphone-penetration-waycontinents-figures/

JULY / AUGUST 2014

SECURITY

STAYING ALERT TO SECURITY RISKS Information security breaches can cost organisations millions of dollars as criminals find new ways to steal confidential information. Dr. Linda Eagle explains what banks can do to reduce the risks and protect their customers.

Information security is a constantly changing and never-ending challenge in the world of banking. With laptops, smartphones and other devices being used by the banking workforce and clients to access sensitive and often confidential data from a variety of locations – including at home, hotels, airports, restaurants, coffee shops and the bank – the risk of fraud and the exposure of banking systems and confidential information increases. It is important that this risk is taken seriously by all banking staff and that each and every employee is not only aware of its policies and procedures for protecting this confidential information, but also follows them. It is equally important that tried and tested policies and procedures are developed over time because, quite simply, they are the best weapon against the theft and misuse of bank and customer information. DATA BREACHES COST MILLIONS It is our job at Global Bankers Institute

JULY / AUGUST 2014

to train bank employees to recognise and be alert to the many ways that this confidential information is at risk, as information security breaches cost organisations millions of dollars. The chart below illustrates the average total organisational costs of information security breaches by country during 2012. This chart illustrates that the average total organisational cost of a data breach for companies in the United States is $5,403,644. Information security breaches cost more than the amount the criminal may have stolen. After a breach, there are other significant costs the organisation faces. These include: • The cost to repair any infected/ damaged machines • The cost of losing customers due to a breach • The cost for the overheads needed to correct these problems, contact customers, etc.

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SECURITY TOP TRENDS As technology evolves, hackers and criminals are quickly identifying new ways to exploit new technology. For 2014, the top trends affecting Information Security include: • Continued securing of eCommerce sites • Securing cloud storage • Securing mobile devices • Securing smartphone apps • Securing digital wallets • Securing mobile workforces and wireless computing • Protecting against cross-platform, mass-outage attacks. CARING ABOUT SECURITY Balancing security and customer service may seem like a tough act at times, but by always following proper procedures we can ensure the best protection for our customers. Remember that, in the grand scheme of things, customers will appreciate the fact that you care about the security of their confidential and personal information much more than any temporary shortcut or bent rule.

Tips for balancing both security and customer service include: • Always following policy and procedure • Treating each customer as a unique individual • Educating customers about the purpose of security policies and procedures • Answering customer questions • Being positive about security policies and procedures • Always trying to be as efficient as possible. Most importantly, it is absolutely critical for every employee to feel that the security of all the bank’s information, especially all of its confidential customer information, is part of their job and to take this responsibility both seriously and personally. This is especially true in today’s world of ever changing technology and ever increasing access to information. Safe banking to you all!

About Dr. Linda Eagle Dr. Linda Eagle is President and Founder of Global Bankers Institute (www. globalbankersinstitute.com). Linda’s understanding of the business requirements of the banking industry and her expertise in human and organisational communication have enabled her to address the most important elements in solving today’s business problems, including people, technology and bottom-line results. Her full LinkedIn profile is at: www.linkedin.com/in/lindaeagle/

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JULY / AUGUST 2014

COVER STORY

MAKING BANKS MORE EFFICIENT What does it take to create a more efficient, profitable and well-managed bank that exceeds its customers’ expectations? Technology Banker looks at five key areas where significant improvements can be made. Faced by the pressures of globilisation, turmoil in the financial markets and volatile market dynamics, banks are constantly looking for new ways to add value to their services, reduce costs and improve the efficiency of their performance. This is especially the case in Africa, where much has been done in the past decade to modernise the way banks are managed to create a stable and well-captilised African banking sector. So, what is required to ensure that a bank is efficient, profitable and wellmanaged? There are five key areas to examine: customer service, staff, capital, operational efficiencies and technology.

CREATING CUSTOMER LOYALTY

Awards have been created to reward outstanding contributions to the development and growth of Africa’s banking industry, such as African Bank of the Year. This year’s winner was the Nigerian bank, Guaranty Trust Bank (GTBank) Plc, which was presented in May by African Banker

JULY / AUGUST 2014

Magazine. GTBank has become one of the continent’s best run financial institutions and was praised by the awards panel for its excellent service quality.

attractive product displays and literature to attract the interest of visiting customers in additional products or services.

Creating and ensuring customer loyalty is vital in today’s competitive banking environment, so it is vital that banks not only strengthen their in-branch service, but also aim that little bit higher, so that customers’ expectations are not only met, but also exceeded.

With so much emphasis on creating the right mix of products and services, banks can pay too little attention to whether they have the best quality staff, and whether are using them in the most effective way.

Some banks put pressure on their employees by stipulating stringent turnaround times for customer service activities, but it is just as important to make sure that all staff receive adequate customer service training so that they realise consistency is an integral part of service quality. When customers find that things are done right the first time, every time, their confidence in the bank rises significantly. A well-managed bank will also use its marketing expertise to provide

HIGH QUALITY STAFF

This is a mistake, as human capital is one of the most valuable assets a bank has in its favour. It is therefore essential that banks ensure their recruitment policies are effective enough to attract high calibre staff, and they have the right number of employees working in the right capacity. An overstaffed bank will fail to make the most of its resources, as many of its staff will be unproductive at times and tie up valuable resources, such as computers, desks and supplies. Being understaffed means overworked employees will struggle to finish their tasks, leading to longer customer

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COVER STORY waiting times and a greater risk of mistakes that could damage the bank’s reputation. Staff training is also vital, not just to improve their professional expertise and customer service skills, but also to keep employees abreast of the latest technological changes in the banking sector.

IMPROVING CAPITAL EFFICIENCY

Banks can improve their capital efficiency through a series of structured strategic initiatives, which review the components that drive the regulatory capital requirements.

A bank’s appetite for risk and its business strategy can often determine which segment of the bank should grow. So the adoption of measures, like risk-adjusted return on capital can help the senior management determine where they can have the best return from deploying scarce capital. Another important aspect is to revisit existing products and structure them so that they are more capital-efficient. Therefore, a thorough cost-benefit analysis of existing products, which takes into consideration not just the profitability and operational costs but also the relative capital costs, should drive the capital deployment decisions of the bank. Operational interventions can also be made to improve the credit and risk processes, as well as data and information technology infrastructure to plug the leakages in capital usage, which can result from poor data quality and IT systems.

MAKING OPERATING IMPROVEMENTS

A steady, continuous improvement in operating efficiency is vital in improving a bank’s fortunes. This can be achieved by reducing budgets, cutting back on external contractors and reducing expenses. Strategies also

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need to be developed to ensure that branches are adequately equipped with hardware and software systems to make sure that business is not disrupted by infrastructural problems. These are all effective measures, but increasing efficiency over the long-term often demands more fundamental changes to a bank’s business processes, such as trying to embed a commitment to efficiency and performance improvement into its culture and identity. Some banks have gone further and made significant changes to their structure. For example, the United Bank for Africa (UBA) Plc has recently spilt its operations into two broad divisions, UBA Africa and UBA Nigeria, in order to accelerate the level of achievement of its Project Alpha objectives. This is a 3-year road map of key transformation initiatives, designed to reinforce the Group’s strategic positioning and fully exploit the burgeoning opportunities in Africa’s economic renaissance.

BENEFITS OF TECHNOLOGY TRENDS

Technological progress plays an important role in improving the efficiency of the banking sector and reducing cost, and the rapid expansion of electronic banking systems has had a profound impact on financial institutions. These IT innovations have enabled banks to process information quicker, market their banking products more easily and led to the growth of internet banking and the transfer of money through mobile phones. Many African banks, like Ecobank, are now facilitating money transfers, collections and payments through e-Wallets created on mobile phone numbers. Speaking at the Africa Outlook 2014 Summit, South Africa’s Standard Bank joint Chief Executive, Sim Tshabalala, said that mobile banking “spurs

economic activity, reduces the cost of product and service delivery and eliminates the security risks involved in cash-based transactions”. And it isn’t just for customers living in the cities. Mobile Money is increasingly being used to reach people without bank accounts in rural communities. Banks are also increasingly using Big Data to formulate their product portfolio, detect fraud and predict attacks. Also known as predictive analytics, Big Data can track factors, such as the location they most often use to access an account, which can be very useful in eliminating costly processes and improving fraud detection. Any well-managed bank will also be acutely aware of the benefits of the Cloud, a secure technology that enables them to attract more customers, act on information more quickly, reduce IT operating costs and conduct business more efficiently. South African company Entersekt is working with a number of African banks to help them take advantage of the Cloud. Its mobile applications allow users to authenticate individual transactions, such as online card purchases and ATM withdrawals, by “accepting” transactions on their mobile phones. (See last issue’s article “Banking on the Cloud” for full details). It is clear that new technological investments will help banks to broaden their scope and adopt new ways of managing their business, but it is also important that a wellmanaged bank does not forget about the importance of human interaction. As African banking consultant Edward Randolph Koranteng said: “We should interact more with the customer and obtain their side of the story. Then we can come out and offer them tailor-made solutions.” It is worth remembering that, however technologically advanced a bank is, it will only be truly successful if it fully focuses on satisfying consumer needs.

JULY / AUGUST 2014

Mobile Money Transfer VTN VCASH and Western Union Mobile Money Transfer service with Western Union and VTN is an easy, fast and convenient way for VTN customers in Nigeria to receive money from abroad on their VCASH account.

In a few quick steps, a Western Union® Money Transfer can be added into a VTN VCASH account in Nigeria. 1 Western Union sender makes a money transfer at a Western Union® Agent location or online on a Western Union transactional website (where available). 2 Sender provides the VTN receiver the Western Union MTCN tracking number. 3 With the MTCN number, the VCASH customer can follow the Western Union menu prompts on their VTN phone to add the funds directly* onto their VCASH account! 4 The VCASH customer will enter their PIN, for user authentication. Additional information about the transaction may also be requested. (See diagram below) A 1. Send Money 2. Western Union 3. Check Balance 4. Mobile Top-up 5. Pay Bill Select

Western Union

1. Pick-up money

Western Union

Please enter 10-digit Western Union MTCN: _ (3 unsuccessful attempts will result in account blocking)

Select

Cancel

Select

Cancel

Western Union

Please enter the amount you are expecting to receive: _ (3 unsuccessful attempts will result in account blocking)

Select

Cancel

Western Union

Please enter your PIN to continue: _

Pick-up Confirmation: Western Union has deposited XXXXX into your account No. 00045XXX

Select

Cancel

5 The VCASH customer will receive an SMS notification confirming the deposit of funds into VCASH.

If the Western Union sender provides their mobile number on the Western Union Send Form, they will also receive a text message when the funds are delivered1.

Did you know? VCASH consumers in Nigeria can use funds in their VCASH account as determined by VTN, including: • Pay bills • Withdraw cash • Purchase airtime • Buy goods and services For more information, visit virtualterminalnetwork.com or WesternUnionMobile.com Available through:

* Funds will be paid to receiver’s VTN VCASH account provider for credit to account tied to receiver’s mobile number. Additional third- party charges may apply, including SMS and account over-limit and cash-out fees. Funds availability subject to terms and conditions of service. See Send Form for Restrictions. ** Service options are determined by the mobile phone service provider. 1 Standard Message and Data rates may apply. VTN, VCASH and the VTN logo are trademarks of Virtual Terminal Network. © 2013 Western Union Holdings, Inc. All Rights Reserved.

PAYMENTS

MONEY TO THE MASSES

The benefits of upgrading the payments infrastructure in Africa are many and wide-ranging. Doug Martin, Business Development Manager at card manufacturer and implementation partner, Thames Card Technology, looks at the technology of financial inclusion.

With close to 80% of African families still without access to a conventional banking system, a great deal of work has still to be done to get basic financial services into the hands of the continent’s 1.1bn population. With average incomes rising, demand is outstripping supply, creating opportunities for traditional financial institutions, together with providers of other key municipal services, like mobile communications, to deliver current account and payment services to the populace. For example, Kenya’s mobile phone-based money transfer and microfinancing service, mPesa, has been the darling of African financial services for some years now, capturing the attention of the international media and the respect of the global banking industry.

SECURING THE FUTURE OF AFRICAN BANKING

Other mobile services are also

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coming to the fore, but if the continent is to bring its infrastructure in line with other geographic locations, the use of secure plastic payment cards is key. In its World Payment Report for 2013, Capgemini identified cards as the “basis for innovation and growth in non-cash payments” in Africa. The problem, however, is that “cards still suffer from limited acceptance networks outside large cities or tourist areas”. Many African banks currently utilise local and national switch networks, making it difficult to move money across the continent’s borders and for visiting tourists to make card payments. Additionally, the cards are reliant on outdated magnetic stripe technology which, with the notable exception of the US, most countries around the world have now abandoned in favour of the more secure EMV chip payment technology.

Doug Martin Business Development Manager

EMV is a global standard for credit and debit payment cards based on

JULY / AUGUST 2014

PAYMENTS secure chip technology. More than 80 countries worldwide have adopted, or are in the process of adopting, EMV to increase transaction security, reduce fraud, enable cardholders to execute payments worldwide and take advantage of a payments infrastructure capable of supporting a variety of new value added applications. Building an African retail banking infrastructure that is reliant on magnetic stripe cards, together with cash and cheques, needlessly exposes African banks, merchants and cardholders to a high risk of fraud and theft. As a result, bringing the current infrastructure in line with globally accepted payment standards should be the sector’s biggest priority.

WASTED OPPORTUNITY

Continuing to rollout an all but obsolete payment card infrastructure is a wasted opportunity. It will merely equip Africa’s consumers and merchant account holders with tools that the rest of the world has already disregarded and ultimately inhibit the engagement of Africa’s member nations with today’s globalised economy. Fortunately, times are changing. Merchant communities and banks in some of Africa’s major metropolitan areas have already migrated from magnetic stripe to EMV chip payment cards and acceptance terminals. The challenge now is to extend this migration across the continent and ensure that new deployments start from an EMV-compliant baseline. There are two sides to this activity. Firstly, from an issuance perspective, work needs to be done to get the banks to buy into the benefits of EMV and implement the technology. Equally important is the task of unifying support for EMV amongst merchants in order to drive the adoption of an EMV terminal

JULY / AUGUST 2014

acceptance infrastructure. Success can only be achieved when both sides are working towards the same goal. Africa’s banks can work with strategic technology and consultancy partners to ease this transition. International card manufacturers and payment processors can quickly deliver best practice in EMV migration, having already conducted countless implementations across other regions around the world. However, Africa’s banks need to first of all recognise the benefits of upgrading their infrastructure, not just in terms of revenues and brand recognition, but also in extending their customer base by driving greater financial inclusion.

NEW TECHNOLOGIES

Other technologies are being mooted for near term rollout in Africa, which will support EMV and bring financial inclusion to as much of the continent as possible. The first of these is biometric authentication, which replaces the signatures or personal identification number (PIN), and can help banks to achieve widespread adoption in areas where the required levels of literacy and numeracy are not widespread. Not only will this remove the need for cardholders to remember a PIN or to write a signature, it is also widely accepted to be more secure. Secondly, financial institutions could reach more people quickly by equipping themselves with ‘instant issuance’ cards. By working with card manufacturers they could develop this technology and issue cards in a matter of minutes, rather than days or weeks. This would dramatically accelerate widespread deployment, especially in remote rural areas. Such technologies have the potential to remove barriers for banks and users, increase financial inclusion and make the whole transaction process more secure.

benefits the banks and supports continued economic growth. Bringing the technology in line with other countries globally will enable easier and more secure spending for Africans and tourists alike, providing a boost to the banking industry and the wider economy. EMV will also allow money to move more freely within Africa by lifting the restrictions imposed by the local switch networks and giving cardholders the freedom to make transactions across national borders. Security will be key for everyone concerned as it enables consumers to adopt payment instruments that keep their funds safe and banks to reap the rewards of increased protection and uptake. Greater demand for cards means banks would benefit from more bank accounts and increased revenues. As a consequence, more bank branches would be required, delivering more jobs, increasing the bank’s brand recognition and attracting more customers. Issuing the latest and most sophisticated card technology to their customers also generates kudos for banks, helping to ensure their cards remain ‘top of wallet’ as the system evolves and more products enter the market.

SEIZING THE OPPORTUNITY

The benefits of upgrading the payments infrastructure in Africa are many and wide-ranging. Now is the time for banks to seize the opportunity to reduce fraud and increase their customer base. There are unavoidable costs to contend with, but EMV migration opens the door to new revenue streams that can quickly offset the required investment. After all, any bank that is able to secure even a small percentage of Africa’s financially underserved populace will face a bright future indeed.

WIDESPREAD BENEFITS

Upgrading the payment infrastructure and moving to EMV technology

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LEGISLATIVE FRAMEWORK REQUIRED FOR AFRICA’S M-ECONOMY Africa has yet to harness the full potential of the mobile economy because of a lack of coordinated activities. Idongesit Williams calls for a legislative framework that would facilitate a thriving M-economy in Africa. Remote mobile communications, transactions, governance, learning and commerce are all now possibilities as a result of the advancement of mobile telephony and broadband internet. Various initiatives adopted globally by national governments, which have led to expansion of the mobile network infrastructure and subsequent upgrades of the mobile networks, have also played their part.

BENEFITS TO SUBSCRIBERS

Today, the existence of broadband and the move towards Next Generation Networks (NGN) means that subscribers are benefiting from greater data rates accessed through mobile terminal equipment with greater computing abilities.

M-economic) possibilities are created.

UNFULFILLED POTENTIAL

in various regions of the world, attempts have been made to create an M-economy. Unfortunately, Africa as a continent is yet to really harness the full potential of an M-economy. There have been some successful stand-alone initiatives in Africa, initiated by the private sector, but a general lack of coordinated M-economic activities in each of the different African countries has led to the failure of more than three quarters of private M-economic activities.

In addition, mobile subscribers can afford sophisticated mobile terminal equipment, thanks to competition in the production of this equipment, as well as public initiatives in many Third World countries, which aim to remove or reduce import tariffs.

Although the development of broadband and NGN infrastructure is important, there is the potential to acquire a huge mobile capacity, which would only be used for voice and SMS services. Under these circumstances, the possibility of remote mobile communications, transactions, governance, learning, commerce – all attributes of an M-economy – will not be achieved.

Hence, with the availability of the network service, the ability of the end user to afford the mobile terminal equipment and the services offered by the equipment, mobile economic (or

A critical look at the problem from the bottom up shows that Africa is endowed with many mobile app developers who are either redundant

JULY / AUGUST 2014

CRUCIAL ROLE OF MOBILE APPS

or cannot create M-economic startups. Mobile apps are critical in all formats for delivering mobile services. If an M-economy is to be developed, then being able to facilitate the development of the relevant M-economic apps is important. It is therefore vital to find out what challenges this section of the M-economic value chain in Africa faces; to understand the instrument needed to ‘rally’ these developers; and to discover what can be done to enable financial institutions to facilitate this process. This article not only identifies some opportunities for facilitating an M-economy in Africa, it goes further and also lists some ongoing M-economic activities to prove that they can thrive in Africa. Finally, it outlines the challenges that face app developers and makes a recommendation for national legislative frameworks that will take these challenges into account. It is my belief, and the sole idea behind this article, that the mobile apps which are needed to facilitate a mobile economy would be produced in Africa if app developers could be encouraged and properly guided.

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COMPLIANCE OPPORTUNITIES FOR A MOBILE ECONOMY

There are a number of opportunities for a mobile economy, which are created by: • The number of mobile subscribers in Africa. Data from GSMA indicates that mobile telephony subscription in Africa in the middle of 2013 was approximately 60% (GSMA, 2013), which implies that most Africans own or have access to mobile telephony. The same source indicates that household penetration of mobile telephony in Senegal, Nigeria, Ghana, Kenya and South Africa in 2012 was above 100%. The table below indicates the actual percentages. Country

Household Penetration (%)

Senegal

420

Nigeria

139

Ghana

190.9

Kenya

120.7

South Africa

228.5

Table 1. Mobile household penetration There are countries like Tanzania which recorded household penetration of 32.3%, but the hope is that the African mobile telephony market is growing at a rapid rate, as was indicated in the ITU report 2013 (ITU, 2013). • The existing knowledge of potential users. Most mobile users in Africa are already familiar with using apps to access social media platforms, such as Facebook, etc. They are also familiar with the use of feature phones to conduct mobile money transactions. Hence, the development of apps is bound to be accepted if they are useful, affordable and easy to use.

SOME EXISTING MOBILE INITIATIVES

There are attempts to create a mobile economy in Africa in a number of sectors, including: • Health Sector: Child Count,

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mPedigree, mTRAC, Text-to-Change, SMS for Life and Txt Alert (Crentsil, 2014). • Mobile Money: M-Pesa, MTN Mobile Money, Tigo Money, Airtel Money, etc. • Agricultural Sector: The Esoko project provides information needed for farmers on the mobile platform, including weekly advisory packages for them in the form of current market prices, matching bids and offers, weather forecasts and news (Gyaase & Owusu, 2014). The platform exists in Burkina Faso, Burundi, Cameroon, Cote d’Ivoire, Ghana, Kenya, Madagascar, Malawi, Mozambique, Nigeria, Rwanda, Tanzania, Uganda, Zambia and Zimbabwe. • Education Sector: M-learning initiatives have been adopted by a few educational institutions in Africa. In Ghana, for example, there is the Central University College M-learning initiative, Ghana Teacher Mate trials and Ghana Reads (Annan, OforiDwumfou, & Kwofiie, 2014).

CHALLENGES TO AFRICA’S M-ECONOMY

The challenges facing app developers are: 1. Lack of public support: African countries do not have M-economic policies. 2. Lack of funding from the financial institutions: M-economic business proposals do not attract loans from financial institutions. 3. An inadequate financial infrastructure: electronic payment platforms are not adequate enough to support M-economic activities. 4. The perceived illiteracy rate of the people: many app developers perceive end users as not being sufficiently educated to use their end products. 5. The limitations of the mobile telephony infrastructure in areas that are not commercially viable. Although the penetration of mobile telephony is perceived to be high in most Africa countries, there are pockets of uncovered rural areas. There are a number of reasons for this, ranging

from low population density to the non-viability of commercial activity in the area.

THE WAY FORWARD

While investigating these challenges, the author realised that app developers are unable to identify usecase scenarios in order to utilise their expertise. As the financial institutions cannot identify the possible Return on Investment in developing an M-economy, they cannot fund an M-economic business proposal. If there is to be a market potential that facilitates the relationship between the app developer and the financial institutions, it will come from the public sector as this stands to benefit more from an M-economy in Africa. If the financial institutions saw a potential market, they would be encouraged to develop their financial infrastructure and eventually fund app developers. Hence, the public sector now has to define its M-economic objectives, as well as develop legislation that will outline: • The Public M-economic goals • Public facilitation for mobile app developers within the framework • Incentives for financial institutions to develop their infrastructure to support M-economic activities and give out loans to promising start-ups within the legislative framework • M-economy public education activities.

THE CHALLENGE AHEAD

The major challenge for Africa is the prospect of having a great deal of mobile capacity that will be wasted in the future. This is the time for African governments to think about how the mobile app developers and financial institutions could work together to create an M-economy that is able to harness the capacity that is required for meaningful economic activity. The key to this future is a mobile economic legislative framework.

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EVENTS FOR YOUR DIARY

July - Sept 2014

01 July 2014 THE FUTURE OF RETAIL BANKING IN THE UK

The Future of Retail Banking in the UK conference will explore the current state of the retail banking landscape in the UK and highlight the measures that still need to be taken to restore trust, meet customer needs and achieve future growth and innovation.

01 - 03 July 2014 BIG DATA AND ANALYTICS FOR FINANCIAL SERVICES, LONDON, UK

The 3rd Annual Big Data & Analytics for Financial Services summit, is to help the financial services industry deliver a big data strategy which delivers insight, value, ROI to your organisation.

09 - 10 July 2014 AITEC BANKING & MOBILE MONEY WEST AFRICA ACCRA 2014, Ghana The event will address the key issues faced by the regionâ&#x20AC;&#x2122;s increasingly dynamic financial services sector.

15 - 16 July 2014 AITEC BANKING & MOBILE MONEY WEST AFRICA LAGOS 2014, Nigeria

African banks have a great challenge in overcoming their heritage of colonial banking, which was designed to cater primarily for government, corporate and high-worth individuals.

05 - 07 August 2014 KENYA IT WEEK 2014, KENYA

The 2014 Kenya IT Week Agenda will explore the impact of IT leadership across various organisations and the opportunities or pitfalls this presents for business.

12 - 14 August 2014 AFRICA TELECOMS FRAUD, REVENUE ASSURANCE & RISK MANAGEMENT FORUM, JOHANNESBURG, SOUTH AFRICA

The telecom industry has had its share of losses due to sophisticated technology-aided frauds estimated to cost the industry US$40 billion despite significant efforts made by operators and their IT vendors to limit theft.

JULY / AUGUST 2014

www.technologybanker.com

09 September 2014 IDC’S CLOUD COMPUTING AND DATACENTER ROADSHOW 2014, DAKAR, SENEGAL

Recent IDC cloud research shows that worldwide spending on public IT cloud services will be more than $40 billion in 2012 and is expected to approach $100 billion in 2016.

09 - 10 September 2014 BIG DATA & CIO WORLD SHOW MALAYSIA 2014

The event is recognised as a prestigious platform in the industry with the largest scale, most professional attendees, richest content, most advanced experience and most senior speakers in Asia-Pacific region and around the world.

10 - 11 September 2014 AITEC BANKING AND MOBILE MONEY COMESA 2014, NAIROBI, KENYA AITEC Banking & Mobile Banking COMESA 2014 will address the key issues faced by the region’s increasingly dynamic financial services sector.

10 - 12 September 2014 ATM AND MOBILE INNOVATION SUMMIT 2014, WASHINGTON DC, USA

Join a high-level group of payment executives, government officials, ATM deployers, attorneys, security experts and mobile analysts as they explore the developing trend of ATM and mobile convergence.

29 September - 02 October 2014 SIBOS, BOSTON, USA

The Sibos conference offers you the opportunity to engage with leading financial industry figures to debate the latest developments and trends.

30 September - 01 October 2014 CLOUD & VIRTUALISATION AFRICA SUMMIT 2014, JOHANNESBURG, SOUTH AFRICA Share experiences with invaluable opportunities to discover next-generation transformations addressing critical industry cloud computing, virtualisation and enterprise-related issues.

JULY / AUGUST 2014

PREMIUM VENDORS DIRECTORY

Computer Warehouse Group offer integrated ICT solutions that add value to the operations of diverse clientele, using highly skilled and well motivated workforce. CWG work with best-inclass partners and technologies from all over the world.

Fiserv, Inc., a leading global provider of information management and electronic commerce systems for the financial services industry, providing integrated technology and services that create value and results for our clients.

Website: http://www.cwlgroup.com

Website: http://www.fiserv.com/index. htm Website: http://www.grgbanking.com/ en/index.asp

Global Bankers Institute is a Training, Communication and Consulting Firm dedicated to serving the financial services community. It provides modern training without sacrificing the principles on which todayâ&#x20AC;&#x2122;s banks were built.

Infosys is a global leader in consulting, technology and outsourcing solutions, helping enterprises transform and thrive in a changing world in areas such as in mobility, sustainability, big data and cloud computing.

Website: http://www.globalbankersin- Website: http://www.infosys.com/ stitute.com/index.php pages/index.aspx

GRGBanking, a leading provider of currency recognition and cash processing solutions in the global market with great potential and rapid development with comprehensive solutions widely used in Finance, Telecom, CIT, Railway and Retail sectors.

Entersekt is an innovator in transaction authentication and introducing an isolated communication channel between phone and financial institution that avoids reliance on the open Internet for user and transaction verification. Website: http://www.entersekt.com/

INETCO and our global partner community provide business transaction management, communication gateway solutions, consulting and implementation services for the electronic processing and financial payments industry.

VCASH allows you to transfer and receive money locally and through Western Union using your phone or online, plus much more. VCASH is fully licensed by the Central Bank of Nigeria to deploy mobile payment services in Nigeria.

SatADSL offers corporate internet access by satellite, with flexible subscriptions, state-of-the-art equipment and attractive price-setting with a set of tools which allow Distributors, Corporate and Individual users to monitor the terminals they operate.

Website: http://www.inetco.com/

Website: https://www.virtualterminalnetwork.com/Home/

Website: http://www.satadsl.net/

Your business not listed here? Get brand awareness and Win new business with Technology Banker Premium Pages Contact Jenny Howard on: +44 (0) 208 528 1536 jenny@technologybanker.com

Human Capital Performance Improvement Audit Are you completely satisfied with the Return on Investment (ROI) from your current training? Are your training budgets driven by business goals and Key Performance Indicators (KPIs)? Are you holding training vendors accountable for quantifiable business improvements? Based on over 25 years of providing the BEST! Training, Communication and Consulting Solutions to the banking industry worldwide, the leaders of Global Bankers Institute have designed the Human Capital Performance Improvement (HCPI) Audit. The HCPI Audit is the first-of-its-kind service to offer the following benefits: 1) Ongoing Performance Improvement Plan based on cascading Strategic and Operational Goals. 2) Comprehensive Training Plan with behavioral outcomes aligned to Key Performance Indicators (KPIs) and Key Performance Measures (KPMs) resulting in a concrete Return on Investment for all training. 3) Effective Training showing measurable benefits in Sales, Customer Satisfaction, Operations Productivity and Quality, Employee Motivation, Risk, and Compliance, as well as any other identified bank goal. 4) Efficient Use of Training Budget through improved curriculum priorities and vendor selection and negotiation. 5) Holding Training Vendors Accountable by making them partners in the HCPI Audit process and requiring that they accept responsibility for delivering measureable improvement through their programs. Please contact me to let us know how we may best serve you. Global Bankers Institute brings experience, innovation and value, providing the BEST! Training, Communication and Consulting solutions to the financial services industry.

Dr. Linda Eagle Founder and President Global Bankers Institute 245 Park Avenue New York, NY 10167 +1.212.579.5500 ext. 3106 +1.646.236.7538 (mobile) linda.eagle@globalbankersinstitute.com www.globalbankersinstitute.com

Global Bankers Institute

Organised by

23 – 24 November 2014, Dubai - U.A.E

KEY HIGHLIGHTS OF PAST EDITION

Global Islamic FInance Awards

7 GLOBAL CEOS

OVER 200 PARTICIPANTS

MICRO FINANCE WORKSHOP

10 HEADS OF RETAIL BANKS

CEO ROUNDTABLE DISCUSSION

OVER 20 LEARNING SESSIONS

9 SPONSORS

ANNUAL FATWA SESSION

NETWORKING SESSIONS

What is NEW In 2014?

havE a look at thE coNfErENcE agENda to kNoW our spEakEr lINE-up, kEy sEssIoNs aNd partIcIpatINg compaNIEs. . . . Media partner:

The Voice of Technology and Finance in Africa

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for all information about the conference kindly contact mohor mukhErJEE | E: mohor.mukherjee@fleminggulf.com t: +71 4609 1570 / 1555 f: +971 46091589