Technology Banker January / February 2015 by Technology Banker

The Voice of Technology and Finance in Africa

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January/ February 2015 £3.99

AWARD-WINNING CWG REWARDED FOR OUTSTANDING PERFORMANCE Sure steps towards a

cashless landscape SureSwipe in focus: we interview both David Reynders and Paul Kent.

Deploying technology to

fight financial exclusion The beginning of a new era of Financial Inclusion powered by technology.

Scaling mPOS in the Emerging world Making the most of Africa’s m-commerce explosion.

…the ideal solutions for SME growth

• SMERP Platform built for Micro, Small and Medium Enterprises (MSMEs) • Manages accounting, inventory, sales and a lot more • Supports MSMEs in manufacturing, retail, distribution, service providers etc. • Cloud solution developed to manage the operations of MSMEs • Offered as a service thereby removing the barrier to technology adoption by this segment • Tailored solution for the different business segments within the MSMEs space www.smerp.com.ng

Computer Warehouse Group Plc Headquarters Block 54A, Plot 10, Off Rufus Giwa Street Off Adebayo Doherty Road Off Admiralty Way Lekki Phase 1, Lagos

CWG webshop (Openshopen) is a secure, web based, online e-commerce platform that enables a store owner generally referred to as merchant to open her own individual online store where her products can be sold online. This easy e-commerce platform allows merchants to have their online shops in just three simple steps. It is a comprehensive solution that enables merchants to sell on the internet by creating an online store that uniquely identifies the merchant and her business online. www.openshopen.ng

Tel: 234-1-2706065 01-2809800 Ext.: 1000 Fax: 234-1-2706064 Email: info.cwl@cwg-plc.com Website: www.cwg-plc.com

ew Year in 201

ll a Happy N Wishing you a

g models are tion in bankin va no in d an t’s Technology The Economis e, according to ris www.technologybanker.com e place th ok on to th ch bo ent, whi ev a’ ic fr A in g in nk Ba . of 14 e 20 ‘Futur November hannesburg, in in Sandton, Jo curity, data a, analytics, se at D g Bi d, ou As mobile, cl Contacts: tacks continue e and cyber at ar w al m , are es ry ch st du brea in es ic rv an Financial se nisations, Afric ga or help. e r ng fo le ns al to ch Publisher - Stefan Grossetti e solutio tiv va no in to g rnin increasingly tu Editor - Ian Powell ching ATMs in the lead by laun n ke sh ta ca s ha aw dr TN Deputy Editor - John Bennett ovider M stomers to with The service pr that enable cu e na th ha on G , d M IB an . a rd ca Sales & Marketing - Jenny Howard Rwanda, Ugand ithout a bank stry with a ey accounts w du on in M es TN ic M rv r se ei l Managing Editor - Remi Akinjomo from th ican Financia helping the Afr innovation. gy lo no ch te other hand, is d ice an Head of Operations - Monika Derfinakova proach to serv “Cloud-first” ap a be will continue to ile Technology ob M g away at th is Head Office UK ew to start shiftin ve ha ill For 2015, our vi w a ic fr er A m ss to ro us ac “c s as to 10th Floor, d bank hat IBM refers trendsetter an approach to w money ic ile tr ob en m -c er ve 88 Wood Street, ha om people from a cust – which s els. Why? More ie od tr m un ss co ne an si fric London activated” bu at least nine A leads the world nk accounts in le ba ho w an a th as ts t EC2V 7RS un inen acco – and the cont rm. 12 fo 20 at in pl ur ile fo ob m Tel: +44 (0) 1442 459 1536 is up from rvices on the n of financial se info@technologybanker.com in the adoptio itively fit with rvices that intu se d www.technologybanker.com an ts uc tterns – to develop prod ts and access pa in po Banks need to huc g to r in ys s’ preference fo trends by anal their customer anticipate user to le , Nigeria Partners M ab IB be to ill ording they w oural data. Acc the point that vi ha n ca be d ey an th Humid Links l rately sactiona ctors: how accu fa volumes of tran o w tw ne on e e al sc House 5B, Close D, ess will hing n roll out and any bank’s succ quickly they ca w ho d an , ds Oba Oyekan, tren pinpoint these trends. e es th to d re Lekki, e tailo services that ar ease write pl so s, er ad Lago s re our hear from you, to ve lo ld ou w As always, we email. your views by to us and send

Warm Regards, Remi Akinjomo r Managing Edito

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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.

©Technology Banker 2014 ISSN 2051-9443

JANUARY / FEBRUARY 2015

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JANUARY / FEBRUARY 2015

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January / February 2015 Edition

News in Brief

Making Big Data a Big Asset

How mobile money is transforming African economies.

Jerome Z. Hoffman of Broadridge Financial Situations talks about growth opportunities in Africa, the fast changing regulatory landscape and gaining a broader perspective from Big Data.

Celebration of Excellence: praise for PMEA’s award winners

Award-winning CWG rewarded for outstanding performance.

Technology: An agile partner in the diverse Africa finance landscape

Jemil Ben Romdhane explains why technology has become an agile partner in Africa’s diverse financial landscape.

Airtel and MTN expand mobile financial services in Sub-Saharan Africa using partnerships and interoperability

Expanding mobile money services in Sub-Saharan Africa.

18 Deploying technology to fight financial exclusion

Banking for all: the beginning of a new era of Financial Inclusion powered by technology.

Sure steps towards a cashless landscape

SureSwipe in focus: we interview both David Reynders and Paul Kent.

Looking through the Google Glass

Google Glass – expanding horizons for African banks.

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Availability and customer experience are key to mobile money success in Africa

Innovative payment technologies power African growth

The Future is Omnichannel

Why branches play a different role in an omnichannel world.

Cloud services and data centres: growth opportunities for telecoms operators

Reaching a security Zenith

Scaling mPOS in the Emerging World

Enabling multi-cloud interconnection

Upwardly mobile: how electronic payments are helping African economies to grow.

Exciting growth opportunities for telecoms operators in Africa.

Technology to trust – how authentication security solutions are increasing customer confidence.

Making the most of Africa’s m-commerce explosion.

Africa’s multi-cloud future: its challenges and benefits.

46 The transformational impact of mobile broadband

Capturing Africa’s networked society.

Events for your Diary

JANUARY / FEBRUARY 2015

NEWS IN BRIEF

New Partnership to Fight Quacks

New front-to-back investment management platform launched

he Nigerian Bar Association (NBA) has entered into partnership with Access Bank Plc in a bid to regulate legal practice in Nigeria, as well as to provide seamless banking services for lawyers all over the country. NBA President Austin Alegeh commented: “Access Bank undoubtedly has the capacity to guarantee the provision of bespoke banking services and welfare packages for Nigerian lawyers.” He said the new Visa Affinity Cards for lawyers will also be an identification card for lawyers. As a result, they will help NBA to fight the influx of quacks into the Nigerian legal system, as only fully paid-up members of the association will be issued with the cards sponsored by Access Bank.

ATMs a Key Channel for Retail Customers in Nigeria

PMG Nigeria, in its “2014 Nigeria Banking Industry Customer Satisfaction Survey,” stated the ATMs in Nigeria have continued to remain a key channel for retail customers with 96 percent of bank customers in the country highlighting cash availability through ATMs as one of their most important service measures. The Customer Satisfaction Index (CSI) was used in the survey to determine customer satisfaction. CSI is simply a weighted score that assigns importance ratings of service measures to the satisfaction ratings of those measures, as provided by customers on the service delivery of their banks.

JANUARY / FEBRUARY 2015

ROFILE Software has announced the release of the upgraded version of IMSplus 2.1, its industry-leading wealth and asset management platform. This release provides significant improvements to the existing modules boosting STP (Straight Through Processing) for front-to-back operations and deploys state-of-the-art technologies with web and mobile features to deliver service excellence, operational efficiency and productivity increase.

Mobile phone subscribers exceed 32 million in Kenya

enya’s mobile phone subscriptions have grown by 5.6 percent and now stand at 32.2 million, according to the latest sector statistics report for the period April to June 2014, released by the Communications Authority of Kenya. This increase was reflected in the country’s mobile penetration level, which stands at 79.2 percent. Mobile money transfer subscriptions declined, however, from 26.7 million posted in the previous quarter to a figure of 26.6 million, while mobile money agents grew by 4.8 percent to reach 109,286.

Smile Telecoms brings 4G LTE Broadband Internet to Nigeria

witter and IBM have joined forces to use social data to help businesses and institutions understand their customers, markets and trends. IBM plans to offer Twitter data as part of its select cloud-based services. These include IBM Watson Analytics, a new cognitive service that brings intuitive visualisation and predictive capabilities to business users, as well as a cloudbased data refinery service.

Global capital standard for insurers a step closer

he International Association of Insurance Supervisors (IAIS) has released its consultation paper on a risk-based global insurance capital standard (ICS). The paper is the latest installment in a multi-year program towards developing a global insurance capital standard. While this is one step closer to having a clear standard that global insurers can adopt, further regulatory reform may be required in order to ensure that it is consistent. ICS will apply on a group-wide, consolidated basis to around 50 of the largest international insurance groups (IAIGs) from 2018.

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NEWS IN BRIEF

NBC Tanzania Launches Deposit Taking ATMs

he National Bank of Commerce (NBC) has launched deposit taking automated teller machines (ATMs) at various branches in the country in order to boost customer services. “The introduction of these ATMs will ensure our customers enjoy the convenience of being able to deposit cash into their accounts through our network of deposit taking ATMs. They are fast, easy, convenient and real time,” said Mr Raymond Mutagahywa, NBC’s Head Digital and Alternative Channels. “All that one is required to do is to insert your ATM card, press More Services and choose Cash Deposit.” The ATMS will be available at Kariakoo, Kinondoni and Mlimani City, as well as Corporate branches in the Dar es Salaam region.

TECNO wins Top Brands and Most Promising Brand Awards 2014

ECNO Mobile Ghana, the Smartphone of the year, was adjudged to be the Top Brands of 2014/15 and the Most Promising Brand 2014 at Ghana’s Top Brands Awards of 2014, organised by the Premier Brands. TECNO said it dedicated its awards to the customers, agents and TECNO phone users “whose continual patronage and support has earned us these noble awards”.

Online Radar for Cyberthreats Launched

aspersky Lab is launching an online service that will bring together all of the information it currently holds on the most sophisticated cyber campaigns. The interactive Targeted cyberattacks logbook project displays the research and analysis of the company’s Global Research and Analysis Team. Through this users can explore the links between threats, their trends and impact, as well as investigate the behaviour of specific threats.

Zimbabwe – Banking Sector Profitability Falls

he latest figures show that banking sector profitability in Zimbabwe has fallen. In the nine months to September, it declined by 18 percent to $24,35 million, from $29,93 million reported in the comparable year ago period. The banking sector continues to be affected by institution specific deficiencies, as well as broad macro-economic constraints, according to the Reserve Bank of Zimbabwe Quarterly Report. A total of 13 banks out of the 20 operating banking institutions have recorded profits. The losses that were recorded by the other seven banking institutions are attributed to a combination of high levels of non-performing loans and a lack of critical mass to generate sufficient revenue to cover the high operating expenses.

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Tools to Help Financial Advisors Optimise Social Security Benefits

unGard has launched a new social security optimisation tool that will help financial advisors to guide their clients on the ideal time to file for Social Security benefits, helping them make one of the most important decisions affecting their overall retirement cash flow. SunGard’s WealthStation Social Security Optimiser calculates estimated Social Security benefits, analyses all possible ages to start receiving benefit, and then identifies the optimal benefit. By integrating with other WealthStation modules and retirement income concerns it helps advisors to use optimised Social Security benefit.

$500 million to support launch of Business Development Bank

he African Development Bank (AfDB) approved a funding of $500 million (€400 million) to support the launch of the Business Development Bank of Nigeria (DBN). The financial package consists of loans of $450 million and an equity investment of $50 million in the new bank, which will be dedicated to the financing of micro, small and medium-sized enterprises (MSMEs) in the country. “The MSME sector is critical to the development of the Nigerian economy,” said Stefan Nalletamby, of AfDB’s Director of the Financial Sector Development Department.

JANUARY / FEBRUARY 2015

EXECUTIVE INTERVIEW

Making Big Data a Big Asset Jerome Z. Hoffman, Business Development Director for Africa, Broadridge Financial Solutions, answers questions about the challenges that are facing the capital market, technology-driven solutions, the importance of flexibility and how Big Data can be turned into an asset for financial firms in Africa.

ooking at the capital market, what are some of the major trends and challenges that the industry is facing? Recent years have seen increased capital markets trade inflows in many African nations. This has been particularly noticeable in Sub-Saharan Africa, with outside investors attracted by the prospect of higher returns. The challenges for the investment banks and brokers that process these flows centre on how best to capture and sustain the growth opportunities, while minimising exposure to risk.

hat are your clients from the financial sector in Africa looking for and how are their necessary requirements met? Firms increasingly seek to adopt a best-practice approach to their operations and technology in order to increase efficiency levels and improve process controls, add scale and diversity to their business portfolios, and associate

JANUARY / FEBRUARY 2015

their brand with quality service provision. As a solutions and services provider, we believe that our clients are best served through a proactive and consultative local relationship, including the ability to identify local market trends and requirements. We combine this with a highly experienced global knowledge pool and proven ability to identify key international industry drivers, best practices and insights.

ow do you approach scalability and flexibility of business process and help to expand clients’ services? Choice and flexibility of deployment is of growing significance, and can help a firm to either achieve fast-track, lowrisk and cost-effective market entry or expansion in the way best suited to the firm’s strategy. This may range from on-site solution installation, through SaaS or a fully managed service. The key here is ‘mutualisation’ and the

creation of shared standards across the industry – leveraging a best-practice, proven solution and gaining the scale benefits of an entire user community, as opposed to the cost, effort and time involved in a one-off in-house development.

ow do you leverage technology trends for the financial sector and also meet the compliance requirements?

Because of our international vantage point, working with institutions and regulators across the financial services landscape, we are well positioned to help firms respond in a timely and effective way that minimises both cost and business risk at the level of international regulation. Due to our local presence, where regionally-focused staff work with a strong network of partnerships right across Africa, we can also work comfortably with regional or national compliance needs, which could otherwise

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EXECUTIVE INTERVIEW

potentially be missed by a global provider. Many firms appreciate the strength of an international solutions provider to deliver, but are also concerned that their individual needs may be lost in the global mix. Broadridge’s twolevel approach delivers solutions that can lever our international experience to solve a more local issue. The issue of compliance exemplifies the benefits of using a best-practice solution with an established user community that enables the cost and effort involved in regulatory change to be mutualised across a user community.

ow do regulations impact implementations of technology trends? The regulatory landscape is changing fast, creating an overwhelming need to enhance business processes. Increasingly financial firms are looking to leading external solutions and services providers that have established, proven credentials in supporting regulatory and market change through a best-practice model. According to TABB Group, the proportion of financial firms’ external IT spending have risen

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from 39% in 1995 to an estimated 65% in 2015. [See chart]

n terms of Big Data, how do you turn it into a big asset for financial services firms in Africa? And what challenges exist on that side? Big Data has the potential to provide insight, transparency and actionable business intelligence, as well as a more precise analytics process and improved forecasting accuracy. It can help firms to gain a broader perspective of their business, and learn more about

their customers in order to better serve them. The secret here is in managing the Big Data. It’s no good trying to gain the perspectives from a pool of data that isn’t sufficiently compiled, verified and updated. There is a high potential for errors in strategic thinking arising from even a modest degree of staleness or inaccuracy. The first step is to get the right data, get it validated and keep it fresh. From there we can help our clients see and capitalise on the value of the data that exists within their firm.

JANUARY / FEBRUARY 2015

COMPANY NEWS

Celebration of Excellence: praise for PMEA’s award winners

L-R: Paulo Gomes, President, Middle East and Africa, Wincor Nixdorf; Peter Woydich, Sales Director, Wincor Nixdorf; Olatayo Ladipo-Ajai, Head, e-Channels Business, CWG Plc; Ini Akpan, Managing Director, Softworks Limited; Eckard Heidloff, Chief Executive Officer, Wincor Nixdorf at the Wincor Nixdorf’s Portugal, Middle East and Africa (PMEA) Regional Partners’ Conference and Award Ceremony held in Mauritius.

omputer Warehouse Group (CWG) Plc has won the Wincor Nixdorf Best Absolute Achievement award again. The presentation was made at the annual Wincor Nixdorf’s Portugal, Middle East and Africa (PMEA) Regional Partners’ Conference and Award Ceremony held in Mauritius recently. A total of 10 partners were selected for

their top sales performance with CWG Plc, the leading Pan African business transformation ICT Company, coming first. Two other Nigerian Companies – Cyber Space Networks Limited and Soft Works Limited – came fifth and seventh, while Computer Networks from United Arab Emirates was the first runner-up. Wincor Nixdorf’s President, Mr. Eckard Heidloff, noted CWG’s

outstanding performance while presenting the award, saying: “CWG’s contribution in Fiscal Year 2014 made it possible for Wincor Nixdorf to meet her target in PMEA.” He added: “Wincor Nixdorf is favourably positioned to support retail banks and retailers in their efforts to combine digital and stationary channels to the customer.” Ladipo-Ajai expressed his gratitude, saying: “At CWG, excellent customer service delivery has been the bedrock for greater achievements. We hold our customers in high esteem, hence our commitment to deliver what we promise in spite of any challenge.” There are about 13,000 ATMs in Nigeria and over 6,000 are Wincor Nixdorf ATMs, according to an unpublished survey by both Wincor Nixdorf and CWG. CWG installed more than 4,000 of the Wincor Nixdorf ATMs and is supporting over 2,500 of them, which further buttresses CWG’s leadership in the e-Channels services.

Most critical technologies of 2015

James Agada Group CTO CWG Plc

“These will be the technologies that address the biggest issues of mankind at this time – technologies that will make big data accessible to a much larger audience. Software that allows users to see relationships and make inferences without needing deep data science capability will be almost magical. IBMs Watson for everyone. There are still more than 4 billion people not able to access the internet. With the efforts of Facebook and Google and innovations like Firechat, someone must solve the challenge of bringing the next billion into the internet. The internet itself has become more and more prone to attacks of various shades. Technologies to protect the connected community from rogue and even state-sponsored cyberterrorist are top of the list of the most important technologies.”

JANUARY / FEBRUARY 2015

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TECHNOLOGY INNOVATION

Technology: An agile partner in the diverse Africa finance landscape Jemil Ben Romdhane - Middle East, Africa Managing Director, Cassiopae explains why technology has become an agile partner in Africaâ&#x20AC;&#x2122;s diverse financial landscape.

he technology needs of the banking and finance sector in Africa are as varied as the continent itself. There are significant, regional differences in terms of the

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readiness of some countries to take advantage of technology, for example Morocco or South Africa versus Gambia or Sierra Leone. Technology adoption in Africa is further complicated by language

constraints, geopolitical uncertainties, geographic distance from suppliers, and other factors that have nothing to do with technology at all.

JANUARY / FEBRUARY 2015

TECHNOLOGY INNOVATION

In the Sub-Saharan region, finding the right technology to support lease and loan management is a realistic, even strategic endeavour. On the other hand, countries such as Gambia or Tchad face a critical lack of skills (IT, banking and project management) and equipment (hardware, network and secured data centers). Only subsidiaries of large international banks can manage newtechnology projects with significant customisation for local needs. In regions that are starved of equipment and skills, there is a demand is for less-complex, pre-configured solutions. The role for technology within this diverse environment ranges from basic connectivity, to pre-packaged solutions, to mobile, agile applications that can provide innovation, as well as a quick response to inevitable change. Fortunately, today’s solutions can deliver.

DIVERSIFICATION AND EXPANSION A well-thought out asset finance mix can be critical for business success. Multi-asset class software enables this type of diversity and can serve as the centerpiece of the strategic African banking platform. African banks should consider expanding the nature of financing offered to business and consumers. This expansion can come in the form of the types of leases made, such as finance leases and operating leases, as well as the types of loans made, such as term, revolving, syndicated, structured, consumer and microfinancing. Expanding industry sectors serve also to provide new opportunities from equipment finance, to consumer finance, to vehicle, commercial and real estate finance. In developing regions, the financing of physical infrastructure improvements may warrant particular consideration. Equally, technology can free the business from language, currency or local regulatory requirement constraints.

If there is an opportunity to make new business outside of the region, the technology can be ready too. Whether it is selecting languages or currencies for the business software from a dropdown list of pre-set options, or taking full advantage of advanced software configurability to deploy any number of language and currency options (even the businesses’ “own”), today’s technology is capable of managing these diverse requirements from a single database, delivering efficiency along with control and local compliance.

FLEXIBLE DEPLOYMENT Technology can also provide deployment options for African finance companies. For a new business venture, it might make best sense to manage the business in a cloud environment. With a hosted implementation, businesses can turn on features and services as are needed, in order to quickly adjust to changing demand. Hardware and software maintenance tasks are taken care of, which frees up internal resources for other priorities. However, a cloud solution requires a guarantee of telecom or satellite network availability. For more complex or sophisticated business environments, in-house deployment can be the better option. Either way, software can provide the ability to scale or right size relatively quickly.

MOBILE/WEB COMBINATION CREATES EXCITING OPPORTUNITIES The ever-expanding and powerful mobile network represents another opportunity for the African finance sector to leverage technology. Mobile has made access to remote areas more probable and possible. All mobile is not alike, however. In more technologically developed regions, mobile has enabled a very high penetration of mobile-based wallets and payments via smart phone

JANUARY / FEBRUARY 2015

users. In developing regions, customers have skipped the fixed-line technology to go directly to mobile. On the one hand, this trend is promising due to increased connectivity, but on the other hand, the typically low-technology phones in these regions provide little opportunity for creating highly valuable connections with customers. Where there is smartphone access, banks are gaining a new way to start conversations with customers and gain a better understanding of customer needs. They are able to market products very specifically, cross-sell and provide enhanced customer service throughout the loan and lease lifecycle. When mobile and web are combined, there is the even more exciting possibility of a secure twoway transaction exchange between the customer or field agent and the finance software platform. One advantage of this new web/ mobile combination is that it can help to streamline regulatory compliance. The mobile devices can leverage the comprehensive and complex authorisation, authentication and audit features of highly developed enterprise finance software to deliver a secured, compliant transaction out in the field,

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TECHNOLOGY INNOVATION

closer to customers. An improvement in regulatory compliance alone can significantly enhance return on enterprise application investment. Another plus to leveraging a web/ mobile gateway is the rich integration it can provide with front-end Customer Relationship Management and pricing systems, through the life cycle management of the lease, loan and related asset. A remote sales team can have mobile access to the latest rates and settlement figures with expiry dates, for example, and just as important, valuable end-user information can be captured at the point of sale or service and automatically incorporated into workflows and management dashboard views. Mobile gateway products truly give finance companies exciting ways to leverage the well-developed, high-value features of enterprise level applications for new gains.

ADVANCED AGILITY Agility is the most important contribution that technology can make. Today, more advanced business operations can leverage an underlying technology platform that has been

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designed from the start to be highlyconfigurable. Object-oriented, objectindependent systems provide a framework for true flexibility. Simple, flexible data models and intuitive user interfaces open up possibilities. New business requirements can be quickly accommodated in systems often without the need and cost of programming resources. In addition, the Software as a Service (SaaS) option, whether delivered in the cloud or out, further frees the business of burdensome infrastructure issues. There are varying levels of system configurability that can benefit African finance operations. Businesses should assess their current and projected requirements relative to the level of flexibility needed. For example, a business might be well suited to deploying a pre-set workflow based on pre-set business rules. Or it may want to garner strategic advantage from a workflow that dynamically adapts based on context such as company, product, channel, currency, value and role. In short, with advanced configuration capabilities, the user can be shown only those actions he or she can perform in each context.

Another example of how advanced agility may be provided relates to the ability to add new database fields to a system. Business and IT may be able to meet local configuration requirements with a limited number of predefined database fields. In most cases, however, these needs can be better met by using technology that enables users to dynamically create an unlimited number of new fields, with characteristics that are right for their business, effective immediately and are reflected in the appropriate screens, documents and reports.

RIGHT-SIZED AND FLEXIBLE In Africa, the trend is toward right-sized, right-featured systems that can scale and deliver additional flexibility as needed. Whether starting a new business or expanding a current one, opening a branch of global operation or being the only finance provider in a region, technology can play a major role as a platform for expansion, scalability and flexibility. It can deliver new gateways to customers and partners across mobile phones, devices and desktops. It can lower risks and raise rewards.

JANUARY / FEBRUARY 2015

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MOBILE MONEY

AIRTEL AND MTN EXPAND MOBILE FINANCIAL SERVICES IN SUB-SAHARAN AFRICA USING PARTNERSHIPS AND INTEROPERABILITY Mpho Moyo and Karim Yaici discuss the strategies that Airtel and MTN are using to extend the reach of mobile money services in Sub-Saharan Africa.

ub-Saharan Africa is one of the most significant regions for digital economy deployments, particularly mobile financial services (MFS). Analysys Masonsâ&#x20AC;&#x2122;s recently published Africa Digital Economy Tracker, a compilation of 167 initiatives by 80 operators and third-party providers in 40 countries across Africa, shows that the majority of operator-led financial services have been launched by Airtel, Millicom (Tigo), MTN Group, Orange and Vodafone, and mostly target East and West Africa. This article discusses the strategies that Airtel and MTN use to extend the reach of mobile money services in Sub-Saharan Africa by expanding partnerships and enabling interoperability.

Mpho Moyo

Analyst Analysys Mason

Karim Yaici

Senior Analyst Analysys Mason

OPERATORS IN SUB-SAHARAN AFRICA HAVE A VALUABLE OPPORTUNITY TO USE MFS TO DRIVE REVENUE GROWTH MFS continues to be a driver of revenue growth for operators in Africa. The limited availability of traditional banking services and the significant unbanked populations created an opportunity for operators to use their

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JANUARY / FEBRUARY 2015

MOBILE MONEY Airtel and MTN expand mobile financial services in Sub-Saharan Africa using partnerships and interoperability | 2

Figure 1: Mobile financial services initiatives in Africa, by country, October 2014 [Source: Analysys Mason, 2014]

Morocco (2)

Tunisia (3)

Burkina Faso (2)

Egypt (4)

Senegal Mauritania (1) (6)

Mali (2)

Guinea (2)

Niger (3)

Sudan (4)

Chad (2)

Nigeria (19)

Sierra Leone Liberia (2) (2) Côte d’Ivoire (6)

Benin Togo (3) Ghana (1) Cameroon (14) (5) Gabon (3) Congo (2)

Number of initiatives >10

6–10

3–5

1–2

Somalia (3)

Ethiopia (1) Kenya (12)

Democratic Republic of the Congo (3)

Tanzania (8)

Botswana (3)

Rwanda (5) Burundi (3) Mozambique (2)

Zambia (8) Namibia (3)

Uganda (10)

Malawi (2)

South Africa (7)

Zimbabwe (5)

Madagascar (3)

Swaziland (1) Lesotho (3)

mobile infrastructure and distribution base (for more information see Airtel and MTN Group have launched networks to deliver such services. our article Cross-border mobile more mobile money initiatives in FigurePartnerships 1 shows that there have been financial services in Africa: the next Africa than any other and interoperability are the pillarsSub-Saharan of Airtel and significant MFS deployments to date in big opportunity). Operators are also operator, according to data from our MTN’s mobile moneylooking growth strategies both East and West Africa. to enhance their MFS by Africa Digital Economy Tracker (see Operators have increasingly been adding features beyond core money Figure 2). Airtel and MTN Group have launchedtransfer more mobile money initiatives Sub-Saharan Africa than any other looking to provide access to MFS functionality to increaseinthe operator, according data from our Africa Digital Economy Tracker (see Figure•2). to users and extend reachtobeyond volume of transactions and improve • MTN offers mobile money services their domestic markets since midtheir margins. in 14 of the 21 African markets in 2013.To this end, theymobile have forged it operates. Its mobile MTN offers money services in 14 of the 21 African markets in whichwhich it operates. Its mobile moneymoney partnerships with local and regional PARTNERSHIPS AND customer base continues to grow customer base continues to grow strongly, increasing by 23.4% between 2013 and June 2014 to competitor operators and financial INTEROPERABILITY ARE THE strongly, increasing by 23.4% between 18.4 million registered users. institutions, and international PILLARS OF AIRTEL AND MTN’S 2013 and June 2014 to 18.4 million remittance companies, while using MONEY registered users.  Airtel launched ‘Airtel Money’ inMOBILE 2012 in India but itGROWTH has had limited success. It has since been more their mobile footprint across the STRATEGIES • • Airtel launched ‘Airtel Money’ in successful in Africa, where Airtel Money’s customer base increased by 191% to 5.3 million active continentsubscribers to target a regional user 2012 in India but it has had limited in 2Q 2014, compared to 1.8 million active subscribers in 2Q 2013.

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MOBILE MONEY Airtel and MTN expand mobile financial services in Sub-Saharan Africa using partnerships and interoperability | 3

•• Provide new service features. Figure 2: KPIs for Airtel and MTN Group’s mobile financial initiatives in Sub-Saharan Africa [Source: Analysys Mason, 2014] KPI

MTN Group (MTN Mobile Money)

Airtel (Airtel Money)

MFS country coverage

14 countries in Africa including Ghana, Rwanda and Zambia

17 countries in Africa including Ghana, Kenya and Uganda

Number of MFS initiatives

First initiative launch date

March 2009

December 2011

Partnerships with major financial institutions

Western Union

Ecobank

Visa

BGFIBank

MasterCard MFS Africa Partnerships with other operators

Airtel Burkina Faso

Partnerships with third-party providers

Fundamo

MTN Côte d’Ivoire Tigo Tanzania Zantel eServeGlobal Verifone

Airtel is expanding its product portfolio to include micro-insurance, micro-loans and micro-savings through its partners. For instance, Airtel Ghana launched Airtel Insurance, a life insurance product in partnership with MicroEnsure and Enterprise Life in January 2014, and Airtel Uganda launched a group savings product in partnership with Grameen Foundation in August 2014. •• Enable interoperability with other operators. Airtel is one of the first operators to interoperate its mobile money system in Tanzania with Tigo Tanzania and Zantel in June 2014. However, MFS interoperability in Tanzania is driven by regulatory pressure from the Bank of Tanzania to a great extent.

MTN Group: MTN been Mobile Money success. It has since more Ghana partnered with MFS Africa to successful in Africa, where Airtelstrategy to diversify providerevenue a micro-loan service MFS is a central part of MTN Group’s streams away fromwhile voice and to focus on Money’s customer by to extend MTNtheZambia MTN services EduSure, a Africa digital services. To thisbase end, itincreased has taken steps reach of launched its mobile money across Interoperability enables mobile and augment offeringactive with additional features. life insurance scheme for education, in 191% to 5.3itsmillion subscribers operators to extend the footprint in 2Q 2014, compared to 1.8 million partnership with Hollard Life Zambia. of MFS domestically and regionally. active Establish a wide network of partners. MTN partnered withinteroperability utility companies, with many other local banks and subscribers in 2Q 2013. •• Enable As illustrated by Airtel and MTN, we third-party remittance providers to offer a wide selection of financial services such as utility bill payments, operators. MTN worked with operators expect more operators in Sub-Saharan school fees payments and international remittances. MTN GROUP: MTN MOBILE in non-domestic markets to extend its Africa to take part in inter- and MONEY offering geographically. For instance,  Provide new service features. MTN is partnering with local insurance companies to expand its service intra-market partnerships to extend MTN Côte d’IvoireMTN partnered with with MFS offerings to include micro-insurance and micro-loans. For example, Ghana partnered the reach of their services. This will to provide a micro-loan service while MTN Zambia launched EduSure, a life insurance MFSAfrica is a central part of MTN Group’s Airtel Burkina FasoMTN to enable crosscreate opportunities to increase the schemetofor education, in partnership with Hollard Life Zambia. strategy diversify revenue streams border mobile money transfers across volume of monetary transactions away from voice and to focus on the networks. andtogenerate revenue from both a  Enable interoperability with other operators. MTN worked with operators in non-domestic markets digital services. To this end, it has taken and regional user base with extend its offering geographically. For instance, MTN Côte d’Ivoire partnered with Airtel Burkina domestic Faso to steps to extend the reach its mobile AIRTEL: AIRTEL MONEY enable cross-border mobile of money transfers across the networks. core money transfer functionality money services across Africa and such as remittance transfer and bill augment its offering with additional Airtel continues to make use of its payment. However, stronger growth Airtel: Airtel Money features. growing partner network to extend opportunities will come from moreAirtel continuesatowide make network use of its growing partner network to extend reach ofservices its financial services across •• Establish of the reach of its the financial across sophisticated MFS, such as insurance the continentMTN and cement its position using the following strategies. partners. partnered with in an increasingly thecompetitive continentMFS andmarket, cement its position and savings services developed utility companies, many local in an increasingly competitive MFS partnerships, which  Establish a wide network of partners. Airtel Group offers a diverse range of services through its through large banks and third-party remittance market, using the following strategies ecosystem in partnership with financial institutions, international remittance companies and mobilecommand higher margins. providers toinoffer wide selection of pay••TV,Establish a wide and network of remittances operators Africaa to provide bill payment, merchant payment international financial services such as utility bill partners. Airtel Group offers a diverse services, among others. payments, school fees payments and range of services through its large international remittances. ecosystem in partnership with financial •• Provide new service features. MTN institutions, international remittance is partnering with local insurance companies and mobile operators in © Analysys Mason Limited 2014 18 November 2014 companies to expand its service Africa to provide bill payment, pay TV, offerings to include micro-insurance merchant payment and international and micro-loans. For example, MTN remittances services, among others.

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MOBILE BANKING

DEPLOYING TECHNOLOGY TO FIGHT FINANCIAL EXCLUSION Financial Inclusion programs go beyond providing individuals with basic electronic transactions. The result? Revolutionary social change in the developing world.

inancial Inclusion1 has long been among the top priorities for governments and NGOs, as it aims not only to improve living conditions in unbanked communities, but also encourages greater contributions to a country’s economy. By enabling people with financial services benefits to develop communities in many ways, Financial Inclusion supports small business development, boosts trade, encourages innovation and much more. For example, many micro-finance programs offer loans to set up small enterprises, such as market stalls, shops and craft workshops. These can contribute significantly to female empowerment and gender equality, allowing women to support their families independently. The ultimate goal is to help individuals, families, communities and countries develop thanks to the use of financial services like credit, insurance and savings.

UNDERSTANDING THE FINANCIAL LANDSCAPE IN THE DEVELOPING WORLD In Africa, the number of people with a bank account is very low. To anyone familiar with the developing world, this is not breaking news, but the figures are surprising. In Nigeria, for example, 70% of the overall population is unbanked, and the percentage rises to about 85% in rural areas. On closer inspection, the reasons why are clear. Banks are only found in big cities, where the wealthiest part of society lives, and their services are expensive and exclusive because it’s costly to build branches and hire staff. In addition, bank branches favour high value savings accounts and loans, and of course, rich customers offer the best source of return on investment. As a result, households and microenterprises with a low income

make up most of Africa’s unbanked population. “The traditional banking approach doesn’t encourage Financial Inclusion and leads to the misconception that banking services are for ‘rich people’ only,” commented Mouna Fouillade, Head of Financial Inclusion at Ingenico EMEA.

OFFERING ‘BANKING FOR ALL’: LOW EARNERS NEED FINANCIAL SERVICES TOO In the past, it was assumed that the poor did not need ‘sophisticated’ banking services as they had no money to save, and no means to pay off credits or insurance premiums due to their irregular income. Actually, the opposite is true: banking services are even more beneficial for low earners. A number of interviews with unbanked populations2 showed that those with a low income (less than

Access at a reasonable cost for all households and enterprises to the range of financial services for which they are “bankable”, including savings, short and long term credit, leasing and factoring, mortgages, insurance, pensions, payments, local money transfers and international remittances. 2 Such as “The Road to Inclusion, A look at the financially excluded and underserved”, MasterCard, Q2 2014 1

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MOBILE BANKING

two dollars a day) rely on risky tactics to manage their money because they don’t have access to ‘responsible’ banking services. For example, they are more likely to buy gold as an investment or give their money to people they trust for safekeeping. When they need to borrow money, they ask their community to lend it to them; a request that often ends up being more costly than the formal credit services offered by banks. “Fortunately, this situation is being challenged by new technological developments and innovative business models which make it possible, and affordable, for everyone to access a wide range of financial services, like savings, credit, mortgages, insurance, pensions, money transfers and more. Ingenico works hand in hand with its customers to make this Financial Inclusion a reality,” explained Mouna Fouillade.

CONVINCING SCEPTICAL COMMUNITIES ABOUT THE BENEFITS OF FINANCIAL SERVICES People living on less than two dollars a day are understandably protective of their income and unwilling to risk losing money by using new payment services and technologies they don’t understand. There are also the added challenges of low literacy and numeracy standards, and huge linguistic and cultural variations within countries. These remote and financially excluded communities need easyto-use and easy-to-understand banking services. But that’s not all – understanding complex new concepts and an entire financial ecosystem requires expertise, time and patience. New customers often need a helping hand to feel comfortable with this new world, and completely trust the technology behind it, before banking can become second nature.

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ACCESS TO SERVICES IS NOT ENOUGH: EDUCATION IS THE KEY TO LONG-LASTING FINANCIAL CHANGE Mouna Fouillade stated, “To reach this point, we need to add a key element: education. That’s what Ingenico believes is the missing piece of the Financial Inclusion puzzle in the developing world. Our solution, combining hand-held wireless terminals and software, is a professional tool that helps agents and customers to truly understand how banking works and what it can offer them.” This is a key observation: it is not sufficient to simply offer tools and services and expect unbanked communities to adopt regular banking habits. But when we combine these tools and services with the right training and ongoing support, banking adoption and retention rates start high – and stay high. Done correctly, this can have a broad and long-lasting impact on communities.

BRANCHLESS BANKING BRINGS THE FRIENDLY FACE OF BANKING TO UNBANKED CUSTOMERS The ‘branchless banking’ model was developed to reduce upfront financial investment, as it works without relying on traditional bricks-and-mortar branches. Banking representatives, also known as agents, can travel by foot, bicycle or car around the countryside, equipped with a single smart terminal that allows them to offer all kinds of banking services. Remote communities are reached and a huge number of individuals, who would never normally travel to traditional bank branches, become loyal customers. Agents play a critical role in Financial Inclusion, as they become

the entry point into the banking ecosystem for financially excluded people. So, instead of seeing banks as expensive and confusing, customers see agents as friendly faces that are trustworthy, helpful and full of useful advice.

FINANCIAL INCLUSION IN ACTION: HOW AGENTS SUCCEEDED IN FINANCIALLY EDUCATING CUSTOMERS Several Ingenico customers have introduced branchless banking programs where agents with Ingenico terminals would travel to remote communities to explain and demonstrate financial services in a simple way. They were equipped with materials and trained to educate potential customers about savings, debt and bank accounts. The programs were so successful that they were rolled out on a national scale, with thousands of field-based agents reaching millions of beneficiaries. By changing attitudes to banking and providing vital education for its customers, these banks quickly positioned themselves as trusted leaders in a massive potential market. Helped by this knowledge, individuals across Africa now have the financial understanding they need to develop, escape poverty and make a better life.

MEETING LOCAL NEEDS DESPITE THE CHALLENGES OF RURAL OUTDOOR ENVIRONMENTS Overcoming the geographical limitations of traditional branches, Ingenico’s branchless banking solution uses wireless, hand-held and smart terminals. With decades of experience in the field, Ingenico has adapted its technology to the challenges of heavy use, rural travel and remote areas. Its terminals have been rigorously

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MOBILE BANKING

tested in the most adverse conditions: extremely high and low temperatures, salty and dusty air, water immersion and dry environments. “The aim is to provide agents in the field with trusted, reliable tools that are also well perceived by the target population,” confirmed Rachid Oulad Akdim, Africa Managing Director of Ingenico Group. The solution provides a reliable, always-on connection to central servers. The smart terminals support several connectivities (GPRS, 3G, Bluetooth and Wi-Fi), ensuring continuous transmission: when one connection is down, the system will pick up another working one. Any operation only needs a very small amount of data transmission, so even weak connectivity is still sufficient.

RUNNING ON A TECHNICAL SOLUTION THAT’S TAILOR-MADE AND EASY TO INTEGRATE This kind of solution is possible because Ingenico’s software can be tailored to suit any situation. Whether it’s created to integrate into legacy ecosystems, or designed from scratch on a new platform, nothing is off the shelf – it’s all custom-built by Ingenico’s experienced in-house teams and partners. This means that even the most complex and unique demands can be met easily. For example, one African government leveraged its existing deployed terminals to raise money for charity projects, simply by downloading a new software application onto the terminal. Using this new application, merchants were able to electronically collect donations for government aid programs in addition to their current business. Ingenico smart terminals allow multiple applications to coexist on the same device, so the deployed infrastructure can be shared with other programs if needed.

MOBILE TECHNOLOGY ENABLES THE NEWLY BANKED TO ACCESS SERVICES ANYWHERE, ANY TIME Ingenico’s approach to Financial Inclusion meets remote customer needs in two ways. On one hand, as we have seen, thanks to branchless banking, banks are now able to come to their customers in the form of mobile agents. On the other hand, customers can access all financial services through any mobile phone, regardless of which telecom network they are on. Ingenico’s solution is provided through its ‘Financial Inclusion platform’. This technology includes a robust Ingenico hardware device securely connected to the Financial Inclusion platform: a software platform that enables agents or existing merchants to enroll, issue accounts and assist customers with account management (e.g. balance queries, PIN reset, etc.). The Financial Inclusion platform allows customers to use their phone to initiate transactions. All Financial Inclusion services are supported: money transfer, bill payment, payment for goods, credits repayment, cash deposit and withdrawal, savings and so on.

RELIABLE, FLEXIBLE, SECURE SOLUTIONS GIVE BANKS THE TOOLS THEY NEED TO ACHIEVE SUCCESS Ingenico’s technologies give financial institutions the tools to attract more unbanked customers. Rachid Oulad Akdim said, “When our customers succeed, we succeed. We are a technology enabler. No matter what the geographical constraints are, our role is to provide best-in-class technical solutions. We inspire our customers.” Today, Ingenico has the most complete set of cross-channel technologies and solutions on the

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market. From hardware to software, its goal is to provide easy to deploy, endto-end solutions for maximum success. In a developing market where huge opportunities go hand in hand with huge environmental challenges, it’s a relief to be able to depend on robust, always-on solutions. Rachid Oulad Akdim added, “Financial institutions have a lot on their plate already. Ingenico has to provide them with the most reliable and secure technology, accompanied by the appropriate support.” With Ingenico’s help, hundreds of financial institutions across the developing world have built excellent programs that not only reach out to unbanked populations, but also keep them coming back as loyal customers.

FINANCIAL INCLUSION MUST BRING TOGETHER TECHNOLOGICAL INNOVATION AND EDUCATION As we have seen, technology, without education and trust in the service, is nothing. Branchless banking programs are starting to change this. Ingenico has defined the technology that supports education and promotes entrepreneurship among agents while extending customer access to key banking services. Branchless banking is becoming necessary for any kind of financial service adoption. A virtuous cycle is also beginning, where the newly banked are inspired to seek further training and educate others as agents. Financial Inclusion is opening up new worlds of change, with myriad benefits. These range from helping build businesses and boosting innovation to beating poverty. This is no accident; we are seeing the beginning of a new era of Financial Inclusion that’s powered by technology. Who knows what exciting changes it will bring for these newly energised and inspired communities around the world?

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Retail Banking Africa www.efma.com/africa

11-12 February 2015 – Johannesburg

This is Efma’s first event on the African continent and the aim is to make it an annual event. It will bring together a unique community of bankers committed to building and sharing the opportunities and challenges faced by the continent. The gathering will be full of surprises, with input from not only major consulting firms but also industry leaders who will share their experiences on how they make finance work for Africa. The creative format will enable you to benefit from in-depth case studies and learning lessons from financial services across this fast growing continent.

Mohamed Bennani Peter Schlebusch CEO CEO, Personal and Business Banking Bank of Africa Standard BankGroup South Africa Boubker Jaï Group CEO Attijariwafa Bank Vimal Kumar Retail Banking Director, Africa Barclays Bank Peter Schlebusch CEO, Personal & Business Banking Standard Bank

This benchmark event will also provide a forum for delegates to network and discuss innovative ideas with their peers.

Ciko Thomas Managing Executive Consumer Banking Nedbank

5 REASONS TO ATTEND Discuss trending issues, such as: • Banking the unbanked • Distribution networks • Cultivating innovation Get a deep insight into the best practices

Learn how major banks adapt their services locally, with the on-site visits Enjoy face-to-face interactions and quality networking time with thought-leaders in the African banking industry

#EfmaAfrica

EXECUTIVE INTERVIEW

Sure steps towards a cashless landscape David Reynders, Chief Operating Officer of SureSwipe, and Paul Kent, its Managing Director, answer our questions about key issues, such as mPOS, e-money, mobile collaboration and creating a cashless environment.

AFRICA’S BOOMING MOBILE MONEY AND FINANCIAL SERVICES SECTOR HAS EXPERIENCED A SHARP RISE. HOW DOES SURESWIPE ADDRESS AFRICA’S CASHLESS LANDSCAPE AND POTENTIAL FOR GROWTH? David Reynders: Our focus is on South Africa, where the fastest way to do cashless is to increase the number of payments made with a bank card. Most people in South Africa with money to spend have a bank card. In fact, more than half of them have at least two financial payment cards! The problem we face is that many of us don’t get the opportunity to pay with a card regularly. Somewhere between 50% and 66% of all stores (excluding your larger retailers) only accept cash! As the number of stores who accept cards increases, so the opportunities to use a card increase. Increased opportunity to use a card means it becomes a habit.

Paul Kent: It’s true that there have been pockets of success in creating a cashless environment in Africa and we have seen wallets increase. However, this is predominantly successful in the peer-to-peer payment. We have yet to see a massive shift within the major retail environments, where cash acceptance is still king. In South Africa alone, a staggering eight in ten purchases are still made with cash. A massive opportunity exists in the retail space to move consumers away from cash buying to driving purchase on cards. Our view is, increase the number of card acceptance points, regardless of the method of payment, be it wallet,

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financial card, etc. We have traditional machines to address the conventional cashless purchases and our mPOS solution addresses models for business that are typically cash or for those that could not afford to accept cashless payments as such – opening up access to acceptance.

HOW IS MPOS REVOLUTIONISING THE IN-STORE EXPERIENCE BOTH FOR CONSUMERS AND RETAILERS? David Reynders: First of all, let’s define mPOS. It’s the ability to accept bank cards by using a smartphone or tablet, combined with a cheaper and secure card reader. mPOS has the potential to revolutionise the in-store experience, in two ways: 1. Busting queues by having roving store assistants offering a ‘pop-up’ till at busy times. The smartphone reads the item’s bar codes and the card reader takes the payment. The customer leaves happy because they dodged the queue. Queue busting also increases the likelihood of single item customers buying, instead of giving up when they see the long queues at month end. 2. Sophisticated card acceptance in small stores. mPOS devices are far easier to integrate with traditional checkout (point of sale) systems. An integrated system is faster and it reduces cashier errors when they type in the amount due. Payment recon is also far easier and any reduction in admin is a big win for small business.

Paul Kent: mPOS, has moved into 2 channels: • Micro merchants – who typically accepted cash

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EXECUTIVE INTERVIEW

before (artisans, man in the van businesses, home industry and the like). • Bigger retailers, who are seeing increased personal customer service levels where shop stewards or business owners can now remove the barrier of a counter, by taking the payment experience to the consumer. Queue busting is adding great value to the overall shopping experience, with payment stations either available at points in a store or by assistants roving around, allowing for convenient and speedier payment instances.

WHAT DOES THE FUTURE HAVE IN STORE FOR INTEGRATING MOBILE COMMERCE WITH MOBILE PAYMENTS? David Reynders: Mobile commerce has been limited by low spec phones, with small screens and poor connectivity. This has made mobile shopping a lousy experience. Cheap smartphones and cool apps mean that shopping on your phone can now be fun, as most people who have money to spend have a bank card that can be used. Now that the necessary infrastructure is in place (lots of smartphones and lots of cards), mobile shopping apps will explode in the next few years.

Paul Kent: Looking at this from a South African point of view, e-commerce is still only in its infancy, compared to your traditional bricks and mortar businesses. Having said that, I believe we may skip the typical online e-commerce buying and move directly into mobile commerce, whether it be through surfing, browsing online, using a mobile device or going directly through the mobile app. What is exciting going into the future, is the value that mobile engagement brings, which we are already starting to see being used in smaller cutting edge retailers. We have the ability to directly connect with the consumer during the path to purchase and post purchase, as well as to understand the behaviours of shoppers throughout the journey and align efforts to increase moments of purchase.

WITH A SEGMENT ON E-MONEY AND HOW THIS AFFECTS ALL PRACTITIONERS IN THE ECOSYSTEM, DESPITE THEIR DISPARATE MARKETS, HOW WOULD REGULATORY ELEMENTS OF MONEY & DIGITAL PAYMENT WORK?

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David Reynders: It’s important to first understand the two types of e-money. There is traditional e-money – which is simply a credit card payment or bank EFT that is very well regulated. And there is ‘e-Money 2.0’, which is any new form of payment typically not offered by a bank directly. These include the likes of Google Wallet, Apple Pay, electronic vouchers and digital wallets, which we have seen an explosion of over the last year. Regulators are unsure as to how to treat this ‘e-money’. Is it really a cash equivalent? Can you cash out? If so, must they be guaranteed? If not, what security should the issues of ‘e-money’ offer people? While these answers are unclear, ‘e-money 2.0’ will remain small and niched. Both the regulators and providers of e-money solutions need to work closely together to bring clear answers to these questions.

Paul Kent: Currently regulation is moving at a slow pace. In order for both money and digital payments to take off, regulators need to keep up with innovation and apply the necessary rigor, without hindering the rate of innovation of new products and technology.

HOW SHOULD POLICY MAKERS AND PROVIDERS ENGAGE ON MOBILE COLLABORATION AND INTEROPERABILITY? David Reynders: Interoperability is one of the most important foundation stones for new ways of interacting to catch on. It is a big reason why mobile phones took off in South Africa. “It didn’t matter whether I had MTN, Vodacom, Telkom, I could phone anyone.” One of the key determinants of the success of e-money will be the answer to the question “Where can I use it?” If the answer is anywhere, it stands a good chance of taking off. Policy makers should work with providers to establish rules around interoperability that can increase adoption.

Paul Kent: Unless they work towards creating a standard through collaboration and interoperability, the current environment drives consumer confusion to the point where it will kill the benefit. Putting the consumer first will lead to great value and add to the longevity of these solutions.

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THOUGHT LEADERSHIP

LOOKING THROUGH THE GOOGLE GLASS The Google Glass is here and will revolutionise people’s lifestyle. It is now up to the financial industry to adapt this invention to renew and innovate new experiences in banking, writes Vishwanath Thanalapatti, Lead Product Manager, Infosys Finacle.

he next big thing in mobility devices that will shake up banking is ‘Google Glass’ (GG). It has undeniably expanded the horizon of thought for banks, as well as other businesses. This innovation in technology throws up interesting options for customer engagement and has the potential to disrupt engagement to an inspirational level. GG (or wearables) is businesscentric and will also definitely improve productivity. The question before us is, will GG simply replicate mobility banking on a wearable device? Not in my opinion, and for those of you who want to know what makes it a disruptor, you can find the answer on the Google Glass webpage The three themes – ‘Be Active’, ‘Explore Your World ’and ‘Live Lighter’ say it all. Now, if banking services were to be embedded into each one of these themes, look at the dimensions that would emerge; it would enable us to do active banking without disengagement, explore the world with the bank in tow, and have a lighter (more pleasurable) banking experience. The wearables market is growing rapidly and will clearly revolutionise people’s lifestyle. Banks will have to be part of this lifestyle to stay relevant to customers. According to some published sources, the global wearable computing market will grow at a compound annual growth rate (CAGR) of 43.4% from around $5 billion forecast for 2013 to $9.2 billion in 2014 and more than $30.2 billion forecast for 2018. The numbers are there in black and white. There’s no ignoring them. The power of GG in retail banking is illustrated by the following use cases of proactive engagement. Some of these will need apps though, to leverage GG’s native functionality.

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MARKETING John D is a busy person. He has to accomplish a few tasks in his ‘to-do’ list for the day. One item in his list is to open a deposit account that pays higher interest. He is not very happy with the rate of interest that his bank currently pays on his deposit account. A bank salesperson walks around a mall and gets into a conversation with John D, a prospect. The talk moves to banking products. At a strategic point, the salesperson offers John a GG to scan products. Together, they co-browse, match products to needs, discuss some more and he closes the sale. John issues voice instructions to transfer money to his new deposit account. One can easily see that this approach is more effective than sending unsolicited alerts or mailing a portfolio of brochures. GG offers the right mix of human contact and technology to personalise the experience.

GAMIFICATION Sheila S has registered for an undergrad course at a university. She is planning on taking a student loan to finance her studies, but does not know much about students’ loan and will take a decision once she understands how it works. She is planning on talking to her bank manager later in the week. Sheila S is browsing through the day’s news on her GG. Spotting an advertisement for a student loan product from one of the local banks, she launches the gamification app and plays around. As she games, she has the option of entering into a video/audio conversation to enhance her engagement with the bank’s advisor. The cool gaming app has won the bank a new customer.

In general, a bank can develop gamification apps for products that are far more engaging than the boring tools and calculators that one sees today.

FINANCIAL PLANNING Mike H has postponed planning his investments for a long time. He discussed this with his friend when he went over for dinner and decided he must plan and complete his investment in the next two days. Mike H is in his country retreat relaxing by the poolside. He just heard about his friend’s financial planning. His GG gives him the power of anytime / anywhere access to the bank’s financial planning app. Next, he needs professional advice to organise his portfolio. Mike converses with the bank’s financial advisor by using the audio/video trigger and selects a set of products from the catalogue and gets his portfolio in place. Once done, he sits back and relaxes.

HNI CUSTOMER PC (a premium high net worth customer) is ‘active’ and ‘exploring the world’. He plans his holidays perfectly. His second passion is golf, which takes him to the best courses around the globe, but his first passion remains investments. He always prides on the fact that his portfolio outstrips the index. He reads on his GG that the stock market has unexpectedly turned volatile. He then checks his investment portfolio and decides to quickly restructure it. PC gets into a conference with his relationship manager at that very instant and instructs him on the change. Using GG, they collaborate and co-browse new portfolios and simulate returns. Finally, they arrive

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THOUGHT LEADERSHIP

at an optimised portfolio. Once done, PC resumes his explorations without interruptions.

her new GG. The news is out in minutes. So banks beware - the use of Google Glass is not always rose-tinted.

SMART BUY

LOCATING AN ATM

Dan is eco-friendly and consciously avoids abusing the environment in every which way he can. For a while now he been looking out for a good car. A top automobile company has just released the most advanced ‘green’ car. Dan S is at a car showroom and decides to buy the most recent edition of a premium car. His bank locates his presence and makes a car loan offer. Dan has a quick conversation with the bank manager on his GG, scans the required documents and transmits through it. As a result, the loan is approved. Dan authenticates the transaction using the One Time Password (OTP) while logged into the audio/video chat. Finally, he instructs the bank to transfer the money to the car dealer for the purchase. Dan does this entire transaction sitting in the automobile showroom and drives the new car home.

Sam T is banking with a global bank that has a footprint in 12 countries. As a premium customer, he has a privilege card that he can use anywhere in the world. He is in Brazil on business and does not speak the Portuguese language. Sam T is looking for an ATM machine. He says, ‘OK Glass Google, where is the closest ATM?’ His bank, which has tracked his location (with his permission, of course), guides him through the GPRS and translates the instructions into English.

VIRTUAL BANK

BILL PAYMENTS

Winnie W is a very creative person. She is a student of architecture and classic architectural designs fascinate her. Winnie W loves visiting her bank for one reason – enjoying the lovely Greco Roman architecture of the bank’s office. Winnie’s bank uses the native video feature in the GG with an app that affords a virtual branch experience for this. Meanwhile, Winnie’s friend, a nature lover who banks there as well, enjoys an ambience of the fall season, throughout the year. That is augmented reality for you.

Kathy Y is an ardent cyclist. She loves going adventure cycling. As an active group member, she has organised an expedition in the Rocky Mountains bike trails. Kathy Y has a new media subscription and receives the bill in her electronic mailbox while on the cycling expedition. She scans it and takes a picture with her GG. Once done, she makes a payment through her bank account. Wow! That was as easy as it gets.

SOCIAL MEDIA Kathy G is very active on social media and has over 2000 friends online. She is present on Facebook, Twitter, LinkedIn, WhatsApp and what have you. She is very quick in acknowledging ‘likes’ and posting her experiences. In fact, her life revolves around social media. Kathy G goes to her bank about a problem with her account but has a bad experience. The bank manager does not pay much attention to her and so Kathy gets onto social media, like she always does. It is so easy now with

ALERTS Sam T’s bank follows the policy of abundant precaution and sends a one-time password for each ATM transaction. He receives this on his GG and completes his transaction. Phew! No more confusion in new places.

POSSIBLE USE CASES FOR THE FUTURE Technologies always improve. A case in point is the smartphone before and after the ‘touch’ technology. GG will keep growing with the tech growth curve. The potential will further expand in the days to come. There are two such technologies that we are familiar with, but which are not currently available – the NFC and Projection capabilities. I am speculating these will be available in the next generations of GG. The following two use cases focus on these.

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NFC Ujjwal M is tech savvy and surrounded by the latest gadgets, both at home and in the workplace. The column ‘Gadget Guru’ reviews the latest products for popular tech magazines. Ujjwal M has NFC enabled on his GG and an e-wallet account with his bank. As he walks around his favourite electronics store, he keeps adding products to the shopping cart by scanning through his GG. At the self-checkout counter, Ujjwal completes the transaction, using NFC to make the purchase. The consumer shopping experience has become that much easier. The banks now have another opportunity for innovation in the design of e-wallet products.

WALL PROJECTION Jim M prefers not carry a laptop for discussions with his clients, as he likes to make presentations with his GG. Jim M is meeting his client in his role as a financial advisor. He uses the projection capabilities to illustrate certain points in the course of his conversation as he discusses various options. This is more productive, as he has ready access to a wide range of information that is residing in the ‘cloud’.

THE EMERGENCE OF GEN GG The GG is finally here. The doors of innovation are now wide open as we move into the world of the ‘Internet of Things’. The interplay of cloud, social media, mobility and analytics will be the foundation of all the things we do. It is a new lifestyle to look forward to and it is now up to the financial industry to renew and innovate new experiences in mobility banking. Looking into the crystal ball, GG (and the clan of wearables) will, in all probability, replace laptops and tablets in the long run, and bring in a new generation of people who will see things very differently. They will think very differently and demand a personalised experience without parallel. The question is, will this mark the emergence of a Gen GG and how are organisations poised to leverage this development?

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AVAILABILITY AND CUSTOMER EXPERIENCE ARE KEY TO MOBILE MONEY SUCCESS IN AFRICA Howard Moodycliffe, Head of Marketing at wiGroup, explains how constant availability, convenience and customer experience are all key to mobile money success in Africa.

n 6 March 2007, the East African country of Kenya welcomed M-Pesa, a homegrown innovation that would change the face of the entire country’s economy. M-Pesa referred to the Swahili word for ‘money’, which was launched by mobile network operator Safaricom and has achieved astronomical success. By November 2007, the service would add one million subscribers, a figure that was set to double a mere four months later. Today, M-Pesa counts 20 million customers in Kenya, processing 2 trillion Kenyan shillings, via 733 million transactions in 2013 alone. The success of this lone mobile money service has given rise to hundreds of similar services, all hoping for the same revolutionary success. However, apart from a few notable exceptions, such as MTN’s Mobile Money, most of these services have had underwhelming adoption and usage rates.

THE EAST – WEST DICHOTOMY According to the GSM Association’s Mobile for Development report in June 2014, the major growth of mobile money services has thus far been largely outside West Africa. Countries, such as Kenya, Tanzania and the DRC, have been able to tap into extensive distribution networks and strong brand perception to quickly scale and initiate transformative change in other sectors through payments, transfers and insurance. In these countries, mobile network

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operators leverage their own infrastructure and strong brand perception to encourage adoption of a variety of mobile money services. The situation in Nigeria couldn’t be more different. The 2009 Regulatory Framework for Mobile Payment Services excludes telecom operators from providing mobile payment services, limiting their role to providing the infrastructure through which other providers’ services can be offered. The result? Nigeria currently plays host to 18 licensed mobile payment services from banks and companies that were established purely for this purpose. Nigeria, which is home to the largest population of any African country, has not seen the success in mobile money adoption of East African countries. According to recent statistics, Nigeria is home to 100 million mobile phones in a population of 160 million. In total, only 30% of adults have bank accounts, so the opportunity for mobile money to play a transformative role in the Nigerian economy is not in question. The major obstacles to mobile money adoption in Nigeria relate to technology and agent network challenges, in addition to general perception and market awareness issues. A recent study by NOI Poll showed that nearly 60% of all Nigerians aren’t even aware of mobile money services. Of those that are, only 13% actively use mobile money. Recently, the Central Bank of Nigeria, in partnership with mobile network

operator Globacom, launched a massive agent network of 500,000 mobile money agent outlets in the country in the hope of encouraging citizens to move to a cashless society. However, according to Wolfgang Decker, group vice-president of Executive Business Line Mobile Authentication at Glesecke and Devrient, it is the combination of a lack of a global regulatory standard, lack of trust and low awareness that is inhibiting the adoption and widespread penetration of mobile money services in Africa.

LOOKING SOUTH Southern African countries are showing encouraging signs of mobile money adoption. With a mobile penetration rate of 133%, South Africa – with its market leading mobile network operators and sophisticated telecoms infrastructure – leads the pack, but other countries in the region are also making great progress on the road to a cashless society. Just recently, Zimbabwe joined the ranks of countries where more people use mobile money than have bank accounts. According to First Bank Corp Securities of Zimbabwe, by end-2013 only 14% – or 1.8 million people ¬– of Zimbabwe’s 13 million citizens had bank accounts. Mobile money subscriptions to the country’s two largest operators have meanwhile reached 5 million. Recent research by Australian firm BuddeComm also showed that mobile penetration rates in Southern African countries are notably higher than is the case elsewhere on the continent. The

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MOBILE BANKING

rise of mobile money in the region can be ascribed to the availability and use of mobile phones in both urban and rural areas. Operators have also recognised the potential in offering services of this kind to the rural population, who often have no access to formal financial services. And while there’s been significant hype around mobile money services being a solution tailored to the needs of the unbanked population, there are other factors at play. According to Matt Bresler, and independent mobile payments specialist, mobile money unlocks economic opportunities for the millions of low income consumers who have access, but cannot afford costly formal banking services. He says that if you’re earning $200 per month, you don’t want to see $0.50 of that disappear every time you make a purchase. Mobile money offers a parallel to the banking sector that is designed to serve the needs of the end-consumer.

TRANSFORMING ECONOMIES More significant to Bresler is mobile money’s potential to break the deadlock that the major banks have on customer banking. In South Africa, for example, the major banks – dubbed the Big Four – have what is essentially an oligopoly. For the 9 million people in the country that are unbanked, mobile money can bring them into the financial fold, which brings direct benefits to the country’s economy. By way of example, for the price of a brief app connection or USSD string, consumers can deposit, withdraw and transfer money at any Pick n Pay till point. Bresler was instrumental in the rollout of MTN Mobile Money to Pick n Pay stores across South Africa. MTN Mobile Money was started in 2012 and has grown to over 2 million customers in South Africa alone. He says mobile money offers two key benefits that undermine the value offering of traditional banks. Firstly for him, is the fact that all of a customer’s transactions

can be done at home through their mobile phone, eliminating the need to go to their nearest branch to cash a cheque. Secondly, by using the existing functionality of the retailers, customers no longer need to draw money from an ATM and pay the associated transaction costs. Pick n Pay has a national footprint that is equal to that of any South African bank, and there’s little to no transaction fee because customers are basically going through the same process as they would when paying for goods and receiving change. At last, says Bresler, South Africans can bank for virtually free – it’s a real game-changer.

THE CATALYST FOR UBIQUITY Underpinning and enabling this formal retail-based mobile money success story is a mobile transacting platform that enables every retail outlet – and every till lane within individual retail stores – to offer the full suite of integrated mobile money services at a low cost. South African retailers, in particular, have turned it into a significant revenue generator. This is likely to be key to the future success for mobile money on the continent. Building mobile money services on top of the point-of-sale integrated platform enables any retailer to offer the same service to their customers, removing obstacles to adoption and usage. Situations, such as in Nigeria, where 18 different mobile money services all vie for the attention of customers and agents alike become moot. Any retail outlet can now offer all mobile money services through a single integration to their point-of-sale, meaning customers can choose which service they want to use without having to adapt their purchasing patterns. Adoption and growth of standalone services have in the past shown marked increases when built on open and ubiquitous platforms. The most famous example is Whatsapp, which built itself on the Android and iOS platforms and very quickly achieved astronomical

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success in terms of user numbers. The availability, standardised user experience across platforms and pervasiveness of Whatsapp all contributed to it becoming the number one instant messaging service – ultimately enabling Whatsapp’s founders to sell the service to Facebook for a record-breaking $19 billion. A standardised user experience – meaning customers interact with the service in the same manner, regardless of where and when they make a transaction – will also be key. In a low-income market where customers have little to no experience in financial services, making the user experience as simple and standardised as possible can often close the gap between subscribers and active users.

UNLOCKING OPPORTUNITIES The platform also unlocks opportunities for mobile money service providers to offer additional functionality by tapping into the established infrastructure of the retailers. For retailers, it becomes attractive as integration costs are significantly lowered and more feet come through the door, opening up opportunities to offer additional customer benefits. Mobile money success across Africa will depend on the service providers’ ability to simplify the customer experience and ensure constant availability. While many organisations and governments are putting a huge effort into activating extensive on-theground agent networks, they overlook the big opportunity offered by formal retailers’ existing market presence. By tapping into an open platform, mobile money services can quickly move into new territories, while still ensuring a consistent user experience and added convenience. The potential for continent-wide economic transformation is bright – and very exciting.

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MOBILE BANKING

INNOVATIVE PAYMENT TECHNOLOGIES POWER AFRICAN GROWTH Africa is fast developing into the continent of mobile money. Mitchell Elegbe, Founder and Managing Director, Interswitch and Mitch Armstrong, Vice-President Solutions Consulting EMEA, ACI Worldwide report on innovation and growth opportunities in the African Payments Industry.

Mitch Armstrong

Vice-President Solutions Consulting EMEA, ACI Worldwide

t’s hard to believe that just over 12 years ago there were no ATMs in Nigeria. Accessing cash, checking your bank statement and using electronic payment cards and other platforms to pay for goods and services are all services that the vast majority of people in developed countries take for granted. Now these technologies are really taking off in Africa and helping African economies to grow, as well as enabling businesses to operate more efficiently and counter fraudulent activities. Interswitch has been at the heart of the electronic payments revolution in Africa. Just over ten years ago, the company helped to set up Nigeria’s electronic payment and transaction switching infrastructure. Interswitch was responsible for connecting all of the 20 banks in Nigeria and rolling out a network of ATMs and point-of-sale (PoS) terminals. Over the last ten years, it introduced more than 11,200 ATMs and close to 120,000 PoS terminals, all of which are connected to the Interswitch network.

NIGERIAN SUCCESS STORY

Mitchell Elegbe

Founder and Managing Director, Interswitch

Today, there are more than 25 million electronic retail payment cards in circulation in Nigeria, more than 18 million of which are ‘Verve’ cards issued by Interswitch. Verve has been a particular success story. Prior to the

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emergence of electronic payments in Nigeria, transactions were solely cash-based, posing significant financial implications and economic challenges to both businesses and individuals. Verve was launched, using ACI’s Postilion as an enabling technology, to solve these challenges and the introduction of the Verve Chip + PIN card enabled individuals and organisations to adopt electronic payments for their everyday transactions. Verve offers issuers, cardholders and organisations payment card products and solutions in Nigeria; and its pan-African chip + PIN payment card has become the first chip card to be accepted across all payment channels in Nigeria.

VALUE-ADDED SERVICES Verve cards also have access to over 119,600 PoS terminals, 11,200 ATMs and over 1,000 online merchants. Verve has been developed with unique value-added services that are available to cardholders in Nigeria, including loyalty and ‘Reward Money’ at specific merchant locations. As a result of all of this, Verve is the country’s most dominant card brand with a growing 60 percent market share. Despite growth in the industry, there are still approximately only 11 ATMs for every 100,000 adults in Nigeria, according to the World Bank.

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This is significantly less than South Africa, where there are nearly 60 ATMs per 100,000 adults. As one would expect, developed markets have even more. For example, there are more than 125 ATMs per 100,000 adults in the UK. It is clear then that this region still has a very long way to go, but change is coming.

REVOLUTIONISING PAYMENTS What is most interesting about the African payments industry is that many Africans have skipped a traditional bank account and jumped directly to mobile and online banking and payment solutions. This is due to difficulties accessing physical bank branches, as the majority of Africans still live in remote rural locations. For example, M-Pesa, a mobile payment platform set-up by the mobile network Safaricom, has helped to revolutionise how people make payments and transfer money in East Africa. Most importantly, you don’t need a bank account to use the service. It has since rapidly expanded across the region and abroad to countries like India and Afghanistan. In West Africa, the Quickteller payment platform, built with ACI’s Postillion platform, can be accessed via mobile phones, ATMs and online. Currently, 2.2 million people regularly use Quickteller across all channels.

SPEEDY UPTAKE ACROSS AFRICA In our view, Africa offers a multitude of potential revenue opportunities for mobile and digital payments. Research shows that the uptake of mobile payments across the continent is happening faster than in other parts of the world. According to data published by the World Bank last year, 16 percent of adults in Sub-Saharan Africa have used a phone to pay bills or send or receive money in the past 12 months. More than half of all mobile money services globally are operating in SubSaharan Africa. It’s fair to say that Africa

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is fast developing into the continent of mobile money. The wide acceptance of digital payment platforms in Africa also benefits stakeholders beyond the payment industry. In Kenya, for example, many start-ups are attempting to incorporate M-Pesa as part of their entrepreneurial business models. One small business uses it to help parents make more timely schoolfee payments, while another uses it to establish informal savings groups. Even non-payment organisations are finding ways to use the new payment infrastructure. For instance, Bridge International Academies, a lowcost, for-profit educational franchiser, found that M-Pesa could help it obtain real-time financial data, which enabled it to become more trusting of franchisees and reduce recordkeeping.

REDUCING PAYMENT COSTS AND INCREASING CONVENIENCE Governments also gain when adopting digital payments, which not only reduce their payment costs but also increase transparency. And the public ultimately benefits too, when tax revenues grow concurrently with the increased documentation, transparency and overall economic growth that accompanies digital payments. When digital payments take hold, as they have in many parts of Africa today, consumers eventually profit from the related savings. The cost of making remittances via M-Pesa is about half that of other formal domestic-remittance services. Moreover, customers can instantly send payments from their mobile phones instead of traveling an hour or more to distant bank branches. Many customers in sub-Saharan Africa need banking services, but simply live and work too far from a branch office. Equally important is that electronic payments bring financial services to vast numbers of unbanked

and underbanked families. They dramatically reduce transaction costs, greatly increase customer convenience, and minimise the need for expensive physical infrastructure, including branch networks.

BRINGING BANKING TO MILLIONS The adoption of new payment platforms is absolutely essential if the majority of Africans are to benefit from fast economic growth on the continent. In most developing economies, a minority of people get very wealthy before the gap between rich and poor begins to narrow. By encouraging the adoption of new payment methods and financial inclusion, we can help everyone to have a stake in growth. New platforms will bring millions of Africans into the banking system, equipping small business owners and even street sellers with the technologies they need to access a new African middle class, grow their businesses, operate more efficiently and become wealth generators. These new technologies will also help businesses to overcome the problem of fraudulent bank notes, a serious issue across Africa. High cash usage also enables corruption, leakages and money laundering and other fraudulent activities. New payment platforms will help to curb the prevalence of corruption and demonstrate to international investors that Africa is, in fact, a safe place to put your money and do business. This, in turn, will encourage growth in a number of sectors — from agriculture to oil and gas, fashion to consumables, which are all teeming with untapped potential. There is still much work to do, but we are optimistic that through new payment technologies, we can help citizens, businesses and governments across the continent reap more benefits and realise more opportunities for years to come.

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TECHNOLOGY INNOVATION

THE FUTURE IS

OMNICHANNEL Recent research has highlighted the need to tailor digital and physical channels to the priorities of high-value customer segments, and integrate these channels into a single, seamless experience.

he Banking, Financial and Insurance Services Sectors are under constant pressure to deal with ever increasing regulatory demands, such as the Protection of Personal Information Act (POPI). In addition, ever increasing competition within these industries, new players entering the market and new and innovative products being launched, means that companies in these industries need a competitive edge. “We at Argility believe that the competitive edge is provided by having a single view of the customer,” says Paul Swartz. “POPI insists that clients may have access to their personal information upon request. It is imperative that, in these instances, organisations have this information on hand and have the ability to provide the customer with the details they have requested. Furthermore, the internal costs to organisations of managing data cleansing programs in various business channels are astronomical. Having a single customer view is therefore integral in ensuring compliance with this piece of legislation.”

VITAL TOUCHPOINTS He explains that companies have long emphasised touchpoints – the many critical moments when customers interact with the organisation and its offerings on their way to purchase and after. But the narrow focus on maximising satisfaction at those moments can create a distorted picture, suggesting that customers are happier with the company than they actually are. It also diverts attention from the bigger – and more important – picture: the customer’s end-to-end journey.

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TECHNOLOGY INNOVATION

“The real question is, ‘What do you truly know about your customer?’ Do they pay their premiums regularly? What products do they have? What segment of the market do they fall into for targeted campaigns?” says Swartz. A single view of the customer affords companies the ability to: •• Effectively track customer transactional history and behaviour •• Manage customer details in a central point, allowing integration to other applications within the business •• Understand customer market segmentation •• Create improved cross channel processing •• Understand which products clients are purchasing •• Market new products to clients, via promotions and campaigns, etc •• Reduce operating expenses.

KNOWING THE CUSTOMER IS KEY “In the retail sector, knowing your customer is key. The same should surely apply to the banking, financial services and insurance sectors. Bain & Company’s annual survey of consumer loyalty in retail banking proves this, indicating that the rewards for securing greater customer loyalty can be substantial, in the order of $10,000 more in net present value, over the lifetime of an afﬂuent US promoter customer vs. a detractor.” Two other survey findings – a surge in mobile banking and tepid loyalty scores given by afﬂuent customers in many markets – highlight the need to tailor digital and physical channels to the priorities of high-value customer segments, and integrate these channels closely with one another, instead of running them in parallel.

MEETING EXPECTATIONS Analyst company McKinsey agrees, stating in a recent report: “But to compete in this emerging arena, banks must meet the expectations of digital natives, delivering diverse tools to help customers make smart decisions across a range of financial services. They should begin by capturing their customers’ most frequent transactions with the new mobile channel and then proceed toward a fully digital relationship.”

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“Bain & Company’s research emphatically points to the fact that ‘the future is here and its name is omnichannel’,” says Swartz. “If banks can take out costs in the processes that handle routine transactions, they will be able to serve mass segments more profitably and invest disproportionately in high-margin services for the afﬂuent. The way to accomplish this is through an omnichannel approach – integrating disparate digital and physical channels into a single, seamless experience –tailored to address the priorities of each customer segment.”

INNOVATIVE CHANNELS Bain & Company also points to the fact that channel innovations are proliferating. For instance, banks in Asia and the US have launched video teller machines that connect customers via video chat with service specialists at a central location. Replacing branch tellers with video has reduced costs for banks and expanded hours for customers. In the omnichannel world, branches play a different role: more as product showrooms, sales centres and venues for expert financial advice on complex matters, and less as transaction mills. Light but sturdy branches include more self-service terminals for routine tasks or product application forms and interactive tutorials. “The most justifiable reason for creating a single customer view in any organisation is from a strategic imperative,” Swartz concludes. “All organisations, irrespective of industry, are striving for more revenue and improved profit margins. The provision of accurate and up-to-date customer data allows organisations to create efficient and effective cross-channel processing, provides the opportunity for improved customer retention, provides for targeted marketing campaigns and allows for informed product decisions based on customer history and preferences amongst a multitude of other business benefits. We at Argility believe that it would be remiss of any business leader not to have an initiative underway to consolidate and interrogate customer data.”

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INFRASTRUCTURE

CLOUD SERVICES AND DATA CENTRES: GROWTH OPPORTUNITIES FOR TELECOMS OPERATORS

The current expansion of cloud services and data centre business offers new growth opportunities for telecoms operators in Africa. Andrew Kloeden, the Principal at Analysys Mason, reports.

Andrew Kloeden Principal Analysys Mason

s growth in traditional telecoms businesses has slowed or begun to decline, operators worldwide have been looking for new sources of revenue. This is particularly marked in the enterprise telecoms business. Burgeoning cloud services, and the demand for associated data-centre infrastructure, offer substantial opportunities: global revenues from IaaS and SaaS alone are expected to double to USD32 billion by 2017, a CAGR of 12%..1

THE ECONOMICS AND SUCCESS FACTORS FOR DIFFERENT SERVICES VARY SIGNIFICANTLY The various services in the cloud and data-centre value chain are subject to very different economics and success factors. To understand the opportunity in detail, the definition of different service types is therefore a 1

central question. Figure 1 sets out a simplified conceptual view of the services at different stages of the value chain, and their typical characteristics. •• The simplest service is co-location, which involves the provision of floor space in a data centre for the customer to install its own infrastructure. It is typically sold to large enterprises or to cloud and hosting providers on a wholesale basis. •• Managed hosting usually involves the provision of capacity on dedicated servers and storage that are owned by the hosting service provider, and management and maintenance are included. • Infrastructure as a service (IaaS) is similar, except that capacity is shared between different customers in a manner that is invisible to the end customer. It is typically charged on a pay-as-you-go basis, per virtual machine or other unit of capacity. • Software as a service (SaaS) involves

Source: Analysys Mason

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significantly The various services in the cloud and data-centre value chain are subject to very different economics and success factors. To understand the opportunity in detail, the definition of different service types is therefore a INFRASTRUCTURE central question. Figure 1 sets out a simplified conceptual view of the services at different stages of the value chain, and their typical characteristics. Figure 1: Key cloud and data centre services and their typical characteristics* [Source: Analysys Mason, 2014] Service

Overview

Dedicated or

Access

Sales

Charging

channel

model

Public

Internet

PAYG

Internet

(automated)

Public

Internet

(automated)

Private

Sales force

PAYG

Sales force

PAYG

Sales force

Monthly

Sales Force

Monthly

shared infrastructure Public

SaaS

Software applications on

cloud

(public)

shared infrastructure

Shared

access though Internet IaaS

Shared servers/storage

(public)

accessed through Internet

Private

SaaS

Software applications on

cloud and

(private)

shared infrastructure

hosting

Shared Shared

PAYG

WAN

access though private network IaaS

Shared servers/storage

(public)

access through private

Shared

Private WAN

network Managed

Dedicated servers/storage

hosting

managed by DC provider

Co-location

‘Raised-floor’ space for customer to install own

Dedicated

Private WAN

Dedicated

Private WAN

servers/storage *

This is necessarily a simplification: there are many variants within these broad service classes, and their boundaries are somewhat blurred.

1 the provision ofAnalysys hosted applications. Source: Mason IaaS and SaaS may be delivered privately – for example, via an enterprise’s wide area network (WAN) – or publicly via the open Internet. © Analysys Mason Limited 2014 Managed hosting and co-location are, by their nature, private. This has implications for their economics and success factors. Because public IaaS and SaaS are sold and accessed over the Internet, they are often standardised products with automated online sales and provisioning, while private cloud and hosting services are more likely to be bespoke, and sold via a dedicated sales force.

TELECOMS OPERATORS HAVE STRENGTHS THAT THEY CAN USE TO COMPETE IN THE PRIVATE IAAS AND MANAGED HOSTING MARKETS Telecoms operators already provide WAN services to large enterprises, with which they have strong relationships.

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They also have large sales forces. As a result, they have an opportunity to bundle IaaS, hosting and SaaS (plus third-party software) with their established network services for their large enterprise customers. Operators can differentiate themselves by offering end-to-end network, IT and physical data centre security and service management – something that pure-play providers may not be able to do. This could be a compelling proposition in securityand compliance-conscious vertical sectors such as pharmaceuticals and financial services. It is more challenging for telecoms operators to compete in the public IaaS or SaaS market. This requires significant scale and a fully automated online sales process with nearinstantaneous provisioning and flexing of capacity; neither ownership of the network nor a dedicated sales force is an advantage. Entering this market would involve competing directly

with companies such as Amazon Web Services, which has massive scale in computing capacity, a fully automated online sales channel, and instantaneous provisioning and flexing December 2014 of capacity.

SUCCESS DEPENDS ON CAPABILITY AND ORGANISATIONAL CHANGE While telecoms operators have a number of strengths, executing a private enterprise cloud strategy is not straightforward and requires both investment and organisational changes. There are four key areas which require flawless execution for telecoms operators to be successful: • Go-to-market strategy and organisation. This includes pricing, branding, sales strategy and the sales organisation. • Service management. This includes provisioning time and process, uptime

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INFRASTRUCTURE

and reliability, monitoring and maintenance, as well as any changes to the customer implementation. • Product. This includes the nature of the service itself, including the extent to which it is standardised or bespoke, the technical implementation, service level agreement, security and any verticalspecific features. • Infrastructure. This includes the physical infrastructure needed to offer the service, including the relevant servers and storage devices, software, operating systems and the data centre estate itself. It is typically the first two areas (go-to-market strategy and service management) that present the greatest challenge to telecoms operators, because they require – amongst other things – changes in skills, organisation and culture. A key example of this is sales strategy and implementation. Whilst it is true that large telecoms operators already have established sales forces and relationships with enterprise customers, selling private cloud services requires different skills and organisation from selling traditional enterprise telecoms services. First, it is a consultative sales process that requires specific expertise: expert professional services personnel are needed to assist the enterprise customer during the sales and implementation process with issues such as architecture, migration and integration. But personnel with the correct level of expertise are scarce, expensive and typically do not work for telecoms operators. In addition, incentivising the sales force poses a challenge for telecoms operators used to selling traditional enterprise telecoms products such as WANs, which tend to be priced on a fixed monthly basis. Cloud services, however, are priced on a pay-as-yougo basis, which means the total value of the contract is uncertain at the time of sale and only becomes

apparent as the customer uses the service over the term of the contract. This can pose a challenge, especially if the sales force is accustomed to receiving a full commission for a sale in the year of the sale. Service management is another area which requires organisational and cultural change. Taking the example of monitoring and maintenance, the need to integrate these functions for both the customer’s network and for the cloud IT infrastructure in a seamless service requires significant changes in process and culture. This is because telecoms operators have been dominated by their network businesses. These three examples illustrate the fact that, despite some of the natural strengths of telecoms operators, success in this market relies on organisational change as much as investments in infrastructure or technology. In order to be successful, this kind of change needs to be driven from the top, with the full support of senior management. With well-targeted investments in infrastructure, products, sales and service skills, together with the leadership and support of senior management, telecoms operators could be well positioned to capture some of the growth in the cloud and data centre business.

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SECURITY

REACHING A SECURITY ZENITH Jan Valcke, VASCO Data Securityâ&#x20AC;&#x2122;s President and Chief Operating Officer, explains how Zenith Bank has used the latest authentication methods to provide secure online banking for its customers.

High-profile security breaches affecting globally recognised brands and their customers often cast a spotlight on the vulnerability of static passwords. In todayâ&#x20AC;&#x2122;s increasingly online and connected world, a weak password is often the only defence between all of your online digital assets and hackers eager to access them. Needless to say the banking sector, with its rigorous regulations,

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was among the first to act on the undependability of static passwords and offer its customers rigorous two-factor authentication solutions, thus providing them with one-time passwords that are nigh on impossible to hack. In Africa, Zenith Bank is one of the largest and most profitable commercial banks operating out of Lagos, Nigeria. Its goal is to become one of the leading

Nigerian technology-driven financial institutions, providing a wide range of specialised services. Over the years, the Zenith brand has become synonymous with the innovative use of Information and Communication Technology in banking. To that end, it offers customers a variety of electronic banking services, including internet banking, bill payment, as well as telephone banking services.

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SECURITY

AUTHENTICATION IN ACTION In order to protect the bank’s data assets and ensure confidentiality and the integrity of customer information and transactions, Zenith Bank acted to implement a banking level security solution. Recognising the emerging risks online, the company wanted to move away from vulnerable static passwords. While simple passwords are easy to remember, they are highly insecure. Complex passwords, on the other hand, also contain risks, as users easily forget them and tend to write them down and leave them exposed in public places. Historically, two-factor authentication has proven to be a reliable counter measure against hacking, password fraud and manin-the-middle attacks, making it an ideal solution for the bank and its customers. An additional requirement was that all heterogeneous banking applications needed to be consolidated and unified. Hence, Zenith Bank’s desire to implement one centralised authentication framework. This would allow the bank’s customers and staff to use the same authentication method, albeit for different applications. Furthermore, the authentication solution had to be PCI DSS compliant. PCI DSS are a set of comprehensive standards, designed to enhance payment and card data security. Banks need to fulfil detailed requirements

to ensure safe handling of cardholder information pertaining to prevention, detection and appropriate reactions to security incidents.

A NEW CHAPTER IN SECURITY WITH VASCO With these objectives in mind – and to secure access to the bank’s data assets and boost customer confidence by guaranteeing confidentiality and integrity – Zenith Bank worked with MAXUT Inc., a cybersecurity solutions consulting company that specialises in information security and fraud prevention solutions for the banking industry. Having assessed the needs of the bank, MAXUT recommended the DIGIPASS GO 6 and IDENTIKEY authentication server from VASCO. It is the world leader in providing two-factor authentication and electronic signature solutions to financial institutions. More than half of the Top 100 global banks rely on VASCO solutions to enhance security, protect mobile applications and meet regulatory requirements. VASCO also secures access to data and applications in the cloud, and provides tools for application developers to easily integrate security functions into their web-based and

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mobile applications. The company enables more than 10,000 customers in 100 countries to secure access, manage identities, verify transactions, and protect assets across financial, enterprise, E-commerce, government and healthcare markets.

TECHNOLOGY TO TRUST DIGIPASS GO 6 is a ‘one-button’ authenticator, based on VASCO’s proven DIGIPASS technology. With a single press of the button, DIGIPASS GO 6 displays a dynamic one-time password for each time a user remotely logs into an application, website or network. The user enters this one-time password in the login screen of the application. An additional password, as a second factor of authentication, can also be applied to eliminate unauthorised use if the device is lost or stolen. Banks and other organisations can effectively combat internet fraud by replacing static or paper-based password systems, using DIGIPASS GO 6. The integration of DIGIPASS GO 6 into an existing network is simple and quick. Static passwords or existing TAN lists (pre-printed lists of TransAction Numbers) can instantly be replaced with the more secure DIGIPASS GO6 dynamic password. DIGIPASS GO6 is

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SECURITY

fully interoperable with all members of the DIGIPASS family and works seamlessly with VASCO’s VACMAN or IDENTIKEY authentication service products and over 50 different VASCO partner applications. With DIGIPASS and VACMAN/IDENTIKEY, banks and other organisations can economically deploy a comprehensive, scalable, high performance two-factor authentication solution for secure internet banking and network access.

SECURITY BEHIND THE SCENES The IDENTIKEY Product Family is a range of authentication servers for onpremise installation. IDENTIKEY comes in various form factors, including software for Windows and Linux, a hardware appliance and a virtual appliance. IDENTIKEY is the backend server software that validates all authentication requests and it enabled Zenith Bank to create a centralised authentication infrastructure for all its applications and the Windows Log-on process. VASCO’s IDENTIKEY Server was integrated in the bank’s infrastructure by using a built-in SOAP API integrated web service. It allowed the bank to use DIGIPASS technology for several of its applications and create a centralised authentication framework. One DIGIPASS device can therefore be used for several applications, increasing user-friendliness and convenience as employees don’t need to resort to different authentication methods for different applications. DIGIPASS technology was quickly adopted amongst the bank’s staff members and customers. The bank noticed an almost immediate increase in user dependency, proving that the solution was rapidly accepted. Another

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factor in Zenith Bank’s decision to implement the VASCO solution was its flexible licensing model that allows for easy scalability when adding additional users and applications. This makes it an ideal solution to accommodate to the bank’s growing needs at its own convenience.

BEST OF BREEDS With its expertise and extended knowledge of implementing IT solutions, MAXUT showcased and highlighted the features and capability of VASCO’s offering, convincing Zenith that this was the superior solution and perfect answer to its security needs. As a solutions integration company, it was responsible for the planning, architecture, installation, configuration, integration and provision of ongoing support. Thanks to its expertise, the implementation went smoothly and the bank was able to deploy strong authentication devices to its internet banking customers and to over 12,000

staff members within a 30-day period. Implementing a strong authentication mechanism has not only enhanced loss prevention and allowed the bank to comply with PCI DSS requirements, but it has also helped boost customer confidence, knowing that they can conduct their online banking business in a secure manner. It has also hugely improved the security of the bank’s businesscritical data without hampering daytoday functioning, due to cumbersome identification procedures. In Zenith’s case, it proves that robust two-factor authentication can work hand in hand with the convenience demanded by end users.

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MOBILE PAYMENTS

SCALING MPOS IN THE EMERGING WORLD The m-commerce revolution has resulted in traditional channel barriers being torn down. We take a look at the challenges and opportunities that currently face payment providers, as well as the growing need for an Omni-Commerce channel strategy.

s m-commerce explodes across the African continent, breathing new life into legacy payment channels, vastly different payment methodologies are emerging. As a result, it has become increasingly difficult to keep pace with the nuances of these fledgling commerce ecosystems and even tougher to understand the plethora of operational and commercial models. At this stage, it is safe to say there is more noise than big wins, but make no mistake, the land grab has most definitely begun and there will be multiple winners in the not too distant future in this exciting new world. When you combine the uniquely African factors, such as large geographical distances between urban areas, low per capita income, limited access to formal infrastructure of internet and computers, cultural diversity and a high penetration of mobile subscriptions (which has been forecasted as 635 million by year end 2014), it is no wonder that such unique payment and trade ecosystems are being spawned. Africa has been labelled as the ‘Mobile Continent’ due to both its high mobile penetration and the leapfrog effect of consumers and businesses that have skipped many of the traditional steps of the technology revolution and First World trends.

TEARING TRADITIONAL CHANNEL BARRIERS DOWN Here at Emerge Mobile we identified that to have a truly relevant commerce offering in the African market the technology providers, MNOs and Acquirers need to be aware of the mass convergence that is taking place as a result of unique African mobile behaviour, which has resulted in traditional channel barriers being torn down. An ecosystem anchored around mobile is needed that crosses over into both online and offline channels and payment mechanisms, which requires an Omni-Commerce channel strategy. One of the fundamental needs for a successful strategy is the realisation that both merchants and customers want the freedom to choose their method of payment and payment acceptance at the point of exchanging value. Whether this method be card present, card not present, cash, tokenised mobile payments, contactless, P2P money transfer or even Bitcoin payments, the power to choose now lies in the hands of the consumer. As a result, both merchants and payment service providers alike need to stay ahead of the curve to differentiate themselves from competitors. In addition to the need for a broad acceptance offering, is the realisation that merchants

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and consumers alike are seeking out products and experiences that subtly incorporate additional layers of fabric and value, built on the back of the payment experience.

IMPORTANT PIECE OF THE PUZZLE African-focused providers need to offer a robust solution that enables acceptance of all forms of payment as part of a holistic offering that bridges the gap between online and offline payment, as this not only adds value, it also saves time for merchants and consumers. Understanding the needs of merchants is an important piece of the puzzle, as well as focusing product development on creating a payment experience and additional value adds that will assist the merchant in growing their business. As our team has taken a seat at the leading edge of the learning curve, it has therefore been fortunate to encounter many of the initial market misconceptions and merchant/ user challenges that are prevalent in this relatively new space. We have developed in-house the first fully PCI and EMV accredited African manufactured mPOS solution and, for our sins, also launched the first mPOS focused bank agnostic aggregator in South Africa, under the ‘iKhokha’ brand (meaning ‘to pay’ in Zulu). The system

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MOBILE PAYMENTS comprises of a small card acceptance unit called ‘The Edge’ that is plugged into a smartphone and utilises a free mobile application. This enables a merchant to accept card payments at a lower cost than traditional acquiring rates, which is all driven by a fully e-commerce based sign-up and KYC process.

BIGGEST MARKET MISCONCEPTION Through our dealings with Acquirers and PSPs from across the globe, the most common and damaging misconception we often face is the belief that mPOS is the introduction of a smaller and cheaper variant of a traditional POS device. And that to gain traction, an acquirer or provider merely bolts an mPOS device onto their existing legacy processing and on-boarding infrastructure and operational processes. The expectation is that overnight, they will triple their acquiring merchant base. The reality is that an effective and sustainable mPOS strategy is about revolutionising your entire legacy acquiring strategy and choosing a partner that can assist you in implementing multiple new Mobile specific platforms and strategies to unlock a new layer of accessible merchants, and prepare your institution for the next wave of payment acceptance. mPOS caters to multiple layers of the merchant pyramid and one of the key target segments is some of the traditionally underserved SMME verticals. These merchants are seeking more than just a payment device. They desire peripheral business tools packaged in an easy to use and affordable mobile application, with sign-up, distribution and support channels that leverage mobile and eliminate many of the traditional barriers that exist in Merchant Services.

CHALLENGES 1. Compatibility – Using mobile smart devices as an acceptance tool

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brings with it a new set of operational nuances, resulting in some new barriers, such as: a. Non-intuitive user interfaces b. Smart device compatibility handset specific and operating system nuances c. Connectivity and data usage challenges d. Non-tech savvy merchants 2. Inconsistent usage – many SMME businesses operate in an unconventional manner. Many users may only require card acceptance facilities bi-monthly, when for example they attend the local craft market. It is therefore critical to enable layers of stickiness through Value Added Services and digital products to drive usage fuelled by attractive rebates. A good example is prepaid airtime where merchants are rebated as a percentage of voucher value. 3. E-Commerce sign-up – while e-commerce driven sign-up has worked incredibly well for providers such as Square and iZettle in the US and Scandinavia, Africa is behind the online curve. This means that many SMMEs either do not have the means, or are not yet comfortable signing-up online and require assistance. One also needs to cater for the more tech savvy merchants and hence a dual strategy is required. Ultimately, e-commerce should become the predominant on-boarding funnel over time, which will drive down acquiring costs and minimise the need for large physical sales forces.

and immediately generate revenue whether they have product to sell or not. By taking into account the additional communication capability of a mobile smartphone, a full bidirectional communication and sale channel is enabled. It takes considerable investment in product and device education to ensure both merchant and customer satisfaction. There is at present a digital literacy gap in Africa, created through the slower penetration of smartphone devices in Africa. However, as smart device costs drop and technical functionality increases the barrier of low digital literacy will be radically reduced. The requirement for on-going merchant and customer training is one of the most important factors in overall solution usage and trust. These issues need to be addressed in ways that the merchants and clients will understand and identify with. In some demographics a simple tutorial video will be enough, in others it will take hands on face-to-face assistance and training. In conclusion, there is a large opportunity for payments providers that own existing footprint in their markets and have the resources to work through the initial challenges to end up driving mass adoption in this space. However, key partnerships are required to assist in moving your legacy acquiring strategy and infrastructure towards our mobile future. Choose those strategic technology partners wisely and your organisation will play a meaningful role in this exciting new era of mobile commerce.

OPPORTUNITIES AND THE WAY FORWARD Through the creation of a digital product suite, with accompanying payment acceptance, comes the opportunity for additional revenue streams. The possibilities for job creation and social upliftment are endless. Through this decentralised agency model, merchants are enabled to download an application

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INFRASTRUCTURE

ENABLING MULTI-CLOUD INTERCONNECTION Financial services firms can connect to multiple cloud service providers and overcome the barriers to cloud adoption by using a interconnection-oriented colocation approach that marries users, networks, clouds and other IT capabilities.

egulatory compliance is high on the agenda of the European banking sector right now, especially Basel III, along with all the associated technology implications. So it is perhaps not surprising that the financial services community is looking beyond traditional technology models to ensure compliance and future growth opportunity. Some firms are adapting to these market conditions, but many of their existing IT models are proving insufficient for the task, as firms will require more computer agility, power and data storage than their legacy equipment can provide. This is particularly the case with IT models that rely on batch jobs, excel spreadsheets and aging applications. From a technology standpoint, many financial firms are now starting

to realise that cloud technologies provide the additional compute and storage capacity that is required for their ever-evolving IT workloads, post-Basel III. In addition, the cloud is enabling users to completely change their technology architecture strategies to take advantage of this by introducing an efficient cost and resourcing model for delivering computing utilities as services.

WHAT ARE THE MAIN BARRIERS TO CLOUD ADOPTION? For the majority of financial services firms, the benefits of cloud computing are obvious: immediate cost savings, scalability, speed of deployment, resilience – the list is long. But when you’re dealing with an industry that still has fond memories of in-house or

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locally deployed console applications, many firms are nervous about the issue of data storage, particularly customer or sensitive market data, in the cloud. Many of the issues come from within a firm’s IT division. When applications are run in-house, the IT function has complete control and understand what’s involved from their many years of experience supporting the applications and the servers they run on. And therefore financial institutions often quickly highlight that their data, such as trading positions or client records, are confidential and so can only be stored locally.

BUT IS THIS A REALITY? When challenged about what happens to copies of the same data that is

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INFRASTRUCTURE

held at their trading counterparties, the exchange or execution venue, the clearing house or the regulators financial, firms often go quiet and realise that the cloud is actually as safe, if not safer, than current operating models. That’s even before talking about the cloud-based CRM and HR tools, emailed excel spreadsheets and numerous fax communications (yes fax!) that almost every firm uses these days. The careful selection of the correct cloud service provider and suitably negotiated SLAs can go a long way to ensuring that the platform used by cloud technology providers is as least as secure as anything built in-house. For example, ISO27001 and PCI accreditation are a given for any respectable cloud provider or data centre infrastructure. However, one of the main issues, which is often a forgotten about when talking about cloud, is how to securely connect to the service providers provisioning it in the first place. Many models rely heavily on the public internet as a means of connecting to the cloud for compute, storage and software services, introducing risks around data security, performance and customer experience. There are, of course, tools and technologies that mitigate the risks of transiting via untrusted third-party networks but – as we were reminded by the Heartbleed vulnerability – these are not infallible.

DOES A ONE-SIZE CLOUD FIT ALL? There is no “one-size-fits-all” cloud solution. Savvy users therefore deploy a combination of public and private cloud (hosted or on-premises) and legacy infrastructure (“hybrid-cloud”). They also leverage multiple public cloud service providers (“multi-cloud”), choosing the right tool for the job on a case-by-case basis – matching the workload and delivery model to the cloud service provision across IaaS, SaaS and PaaS models. Even the cloud

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MENA REGION CLOUD ADOPTION It is well known that the West has a faster rate of cloud adoption than the Middle East, but this could soon change. With the Middle East firmly on the map as a business destination, cloud adoption is set to quickly catch-up over the next 3 to 5 years and, as ever, the beneficiaries will be early adopters. Frost & Sullivan reveal that the Gulf market for data centres earned $231.7 million in 2012 and it expects revenues to surpass $705m by 2018. Moreover, a recent Gartner study estimates that $4 billion will be spent on cloud services in the MENA region from 2013 to 2017, of which $1.1bn will be spent on ‘business process as a service’ (known as ‘BPaaS’). Finally, research by the International Data Corporation, which revealed that the UAE’s cloud market is primed for annual compound growth of 43.7 per cent until 2016, shows that the UAE is a market that both cloud service providers and enterprises – including financials consuming the cloud – need to establish a presence within. They must focus on seeing the cloud as a longterm strategy and companies must ensure that they manage change through the project and also post live, and not apply a one-size-fitsall mentality. One of the key requirements for cloud technologies in MENA is the need for fast and reliable connectivity.

providers themselves are increasingly building other cloud services into their architectures (“inter-cloud”), in order to cost-effectively deliver a reliable service globally. For many, this is a very new way to think, coming from a single-IT source mentality. Companies now have choices. For example, they may source an application from Salesforce.com, but use AWS for the storage, while importing data from MS Azure database – and marry a complete mixture of IaaS, PaaS and SaaS. Moreover, once applications are moved to the cloud, they unlock some new behaviours. Firms can use automated software provisioning to

dial application and data services up or down. This is really a very powerful concept for them, since they’ve never experienced that level of flexibility with their fixed IT infrastructures.

HOW DOES INTERCONNECTIONORIENTED COLOCATION HELP A FINANCIAL FIRM’S MIGRATION TO THE CLOUD? Historically, a data centre has been thought of as little more than a back office ‘factory’, housing a financial services firms non-critical IT equipment and backup systems, albeit in a secure and reliable environment.

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INFRASTRUCTURE However, with the emergence of electronic trading and the ever increasing reliance of financial services firms on data, the data centre has transformed from being a pure cost centre to an actual business enabler. In some cases it has even become a strategic advantage, interconnecting hundreds of counterparties to facilitate global electronic trading. Equinix have seen first-hand, and in many cases led the transformation of the data centre from back-office administrative factories and cost centres to front-office profit enablers. And it is now widely accepted that the best places for connecting to execution venues, customers, component service providers and other market stakeholders is inside network-neutral data centres. Accessing cloud technologies, both public and private should be no different, you just need an interconnection-orientated approach to IT and colocation. Traditionally, enterprises whose users are having performance issues when they access applications throw more computing and bandwidth at the problem, especially in globally distributed organisations. But the primary problem really is their interconnection strategy. Most networks were built to be systemcentric, rather than user-centric. Enterprises need to think more about driving an enterprise interconnection strategy for everything (users, applications, data, IT, business processes, the cloud, etc.) and bringing services closer to users. The future of financial services enterprise computing is in taking a more regional approach, where you are bringing applications and data to where the user resides, rather than the other way around. This approach of pushing IT services to the edge of the network also extends to private and public cloud models, where applications are more interactive and require greater responsiveness. Firms of today need to deploy an interconnection-oriented approach

that marries users, networks, clouds and other IT capabilities. This will enable them to take their ‘spaghettimess’ of users, applications and networking and put everything closer together to better optimise traffic flow. To meet the challenges surrounding migrating to the cloud and appease the barriers to its adoption within the financial services industry, Equinix is enabling our customers to directly access multiple cloud service providers in a similar way to that with which we have interconnected over 800+ financial services firms in the past.

WHAT ARE SOME BEST PRACTICES FOR DEPLOYING SUCCESSFUL IT AND COLOCATION INTERCONNECTION STRATEGIES? • Think about where your users are and how they access applications and data – understand what service levels are expected across regions when it comes to user experience and application performance. • Consider that your business has different points of regional presence and requirements and explore how you can better serve globally distributed organisations at a local level. • Find an interconnection and colocation provider that can help you reliably support a demandside, rather than a supply-side networking strategy – they should enable you to consistently marry users and applications across multiple geographies worldwide. Working with our customers and partners to implement these practices, we have seen them greatly increase their ability to innovate, drive new levels of organisational performance and grow their businesses.

HOW IS EQUINIX HELPING FINANCIAL SERVICES FIRMS TO ADOPT THE CLOUD? Equinix is working hard to enable

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our customers to directly access multiple cloud service providers inside our global data centres. This provides faster, safer and smarter interconnection options to cloudservice providers, bypassing the public internet and leveraging our ‘cloud connect’ cross-connect and ‘Equinix Cloud Exchange’ Ethernet-based technology to improve performance and security, while reducing costs. Essentially, we are assisting our customers in their design of cloud connectivity architectures, taking the risk of internet connectivity out of the equation, so our customers can experience all the benefits offered by cloud technology within a secure and safe data centre environment, near to where their business offices and end users are. In fact, financial services firms currently located inside Equinix data centres are directly connecting to multiple cloud service providers, including leading public players, such as Amazon and Microsoft, as well as numerous private providers, such as Cloud Sigma, Lucera, DataPipe and Cloud Links. The Equinix Cloud Exchange plays an important role in bringing together distributed users and cloud services. It enables the dynamic environment required to make fast connections to hybrid cloud and multi-cloud services and manage their usage. If they can’t connect to multi-cloud services in an aggregated and automated way, companies can suffer poor performance and manageability within their cloud infrastructures. This makes it extremely difficult to deliver cloud services to global users efficiently and economically. We believe cloud computing’s software, platform and infrastructureas-a-service (SaaS, PaaS and IaaS) solutions can be used in a secure and effective fashion if they are implemented correctly, as part of a balanced IT infrastructure model and with securely controlled connectivity and cloud interconnection.

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TECHNOLOGY TRENDS

THE TRANSFORMATIONAL IMPACT OF

MOBILE BROADBAND Mobile broadband has penetrated every aspect of life in Africa and Hans Piet believes national broadband policies can make a positive contribution to the socio-economic well-being of a country, leading to more informed citizens that make better decisions.

tâ&#x20AC;&#x2122;s difficult to imagine life before mobile broadband, especially with its unequivocal impact on commerce, healthcare, education and everyday existence as we know it. Mobile broadband has penetrated every aspect of life, from matters as simple as sending an email via your mobile phone, to being able to access complex data, such as weather reports for farmers or diagnosing illnesses from a remote area. Indeed, Africa will never be the same and this is just the beginning. According to the latest Ericsson Mobility Report for sub-Saharan Africa, smartphone subscriptions are expected to rise from 58 million in 2013 to 557 million by 2019, mobile broadband subscription from 76 million to 710 million and mobile subscriptions from 600 million to 930 million.

ANTICIPATED GROWTH With the anticipated growth of mobile broadband in the coming years, made possible by cheaper smartphones, 650 million Africans are set to experience the transformational impact of mobile

broadband technology. Even today, the continent has begun to enjoy several dividends, such as real-time access to information, inclusion to financial services and the prospect of mobility in the consumption of television and other media services. The best part of this change is its unobtrusive nature and the seemingly natural evolution of the way that people work, play and learn.

A HUB OF INNOVATION In fact, it is important to note that the continent is constantly evolving and quickly becoming a hub of innovation. To date a number of innovations have been rolled out to take advantage of the broadband technology. For instance, mobile broadband has impacted financial inclusion of citizens through innovations like M-Pesa, which allow people to make and receive payments through a mobile phone. Using Kenya as a case study, the GSMA reported that by April 2013 there were 23 million mobile money users in Kenya, more than half of the total population. This has had a

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knock-on effect on the economy with an estimated $10 billion transferred through M-Pesa alone, which accounts for about 25% of Kenyaâ&#x20AC;&#x2122;s gross national product. Agriculture has also benefited through the creation of a number of apps that do everything from checking weather forecasts to up-to-date market information and prices. M-Farm is a transparency tool for Kenyan farmers, where they simply SMS a number to get information pertaining to the retail price of their products, buy their farm inputs directly from manufacturers at favourable prices and find buyers for their produce.

THE AFRICAN OPPORTUNITY: INCLUSION AND EMPOWERMENT In light of this immense opportunity, certain factors can leapfrog the continent quickly to the next phase, including the availability of cheaper smartphones, and the readiness of operators for this tremendous growth prospect by the provision and maintenance of well performing networks with wide population coverage cannot be over-emphasised.

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TECHNOLOGY TRENDS

As demonstrated by the M-Farm tool and M-Pesa, consumers in the region are fast becoming the creators of content and deciders of services that are provided in the market. Creating a seamless user experience, through improved network performance, will become paramount in operator differentiation strategies or business models, and vital to consumer retention. Prevailing national broadband policies will be another factor that can make a huge difference to the optimisation of mobile broadband dividends. Most countries in the region already have policies in place to deal with this, while the rest are in

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the process of instituting them. These include clear performance indicators to enable broadbandâ&#x20AC;&#x2122;s uptake and widespread deployment.

POSITIVE POTENTIAL These policies also address, among other things, spectrum allocation, tax incentives/reductions on devices and technologies that enable connectivity, and e-government initiatives to make broadband available to schools, healthcare and government services (both national and local). Such policies have shown they have the potential to contribute positively to the socioeconomic well-being of a country. The

targets set by policies and consumer behaviour will drive an increase in mobile broadband uptake. Spectrum harmonisation and allocation will drive mobile broadband. Perhaps the most exciting dividend of mobile broadband pervasiveness is the possibility that people will make better informed decisions, the better informed they will become. This could potentially result in changing behaviours, efficient practices and smarter social norms, thus developing our cities and the world around us. The architect of this change will be the man on the street who has a simple smart device.

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EVENTS FOR YOUR DIARY

Jan - March 2015

19 - 20 January 2015 5th ANNUAL MIDDLE EAST AND AFRICA INSURANCE SUMMIT

5th Annual Middle East & Africa Insurance Summit will gather industry peers to brainstorm on solutions that will achieve the vision to have a regulated, consolidated and lucrative business model in the dynamic and ever-growing insurance sector.

28 January 2015 4G MOBILE VAS INDIA SUMMIT & EXPO 2015

Being India’s leading forum on “Mobile VAS on 4G Networks” would offer a best platform in the country for your organisation to identify right customer matrix for converting low end VAS services users into high end users.

3 - 4 February 2015 eCOMMERCE AFRICA CONFEX

The eCommerce Africa Confex brings together a unique blend of compelling and knowledge filled conference sessions featuring a technology showcase from companies that will demonstrate and provide business solutions to improve eCommerce enterprises.

11 - 12 February 2015 RETAIL BANKING AFRICA 2015

Providing a forum for delegates to network and discuss innovative ideas covering topics including ‘Banking the unbanked, Distribution networks and Cultivating innovation’.

17 - 19 February 2015 ATMIA US Conference 2015

ATMIA USA’s annual conference and expo is the largest ATM-focused event in the world. The theme for this ATMIA USA conference is: “Enhancing the Consumers Self-Service Experience”.

25 - 26 February 2015 IDC MIDDLE EAST CIO SUMMIT 2015

The CIO Summit is a unique opportunity for CIOs and ICT professionals to gather to gain insight from industry experts as well as real–world experience from CIOs on critical business and technology issues.

JANUARY / FEBRUARY 2015

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10 - 11 March 2015 SOUTHEAST ASIA ATMs 2015

The event will bring together 200-300 banks, independent deployers, processors, ATM hardware and software vendors, CIT companies and other service providers, in one venue, for a unique conference.

10 - 11 March 2015 CARDS AND PAYMENTS AFRICA 2015

Cards & Payments Africa 2015 is the leading marketplace and ideas exchange for Africaâ&#x20AC;&#x2122;s payments community, who are hungry for innovative solutions.

16 - 17 March 2015 AFRICA CEO FORUM

The 2015 AFRICA CEO FORUM is designed to facilitate networking and to encourage participants to share their experience, know-how and best practices.

17 - 19 March 2015 3rd ANNUAL GLOBAL TELECOMS FRAUD, REVENUE ASSURANCE & RISK MANAGEMENT FORUM 2015

Fraud is one of the major concerns of the tele-communication sector causing estimated loss of 7 percent of their revenue annually.

17 - 20 March 2015 PAYMENTS INTERNATIONAL 2015

The programme is driven by extensive research with the payments community, including leading names from transaction banking, new payments providers and corporate customers from around the globe.

18 March 2015 CUSTOMER INSIGHT AND ANALYTICS IN FINANCIAL SERVICES

Customer Insight and Analytics in Financial Services is a cutting edge conference which tackles the expanding role of data and analytics in understanding customers and the challenges for financial service providers as they seek to use insight to improve the customer experience.

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PREMIUM VENDORS DIRECTORY

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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.

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 and Retail sectors.

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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.

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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.

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