NETinfo, an innovative technology company, conducted a survey which revealed that around 93 percent of banking institutions plan to implement omnichannel technologies postCovid-19.
Omnichannel technology leverages Big Data to enable clients to shop or carry out transactions with a bank via multiple channels such as desktop or mobile devices, in a brick-and-mortar store, and through telephone banking.
For the financial institutions, adopting omnichannel capabilities ties-in with their digital strategy drive.
According to the report; “Omnichannel makes sense on so many levels and it is true to say that financial institutions that do not embrace this motion will be left behind. Digital onboarding is joint second and this technology has shown just how important it is to obtain new customers without having them visit a branch.”
It went on to say; “Open banking is the other second-place technology and further proves how forward-thinking African banks are.”
The coronavirus pandemic has caused a schism in the banking industry and the way customers interact with financial institutions. People have visited bank branches less frequently, and this has occasioned a shift to apps, and a reduction in footfalls, especially in April and May.
Globally, Kenya is ranked as the country with the largest share of internet usage on mobile phones, when compared to desktops. However, even with Kenya’s 91 percent penetration in the use of mobile technology and the resultant explosion in mobile banking, there is still a big difference between tier-one banking institutions and other financial institutions.
Digital Banking
Thomas Yieke, the business development manager at NETinfo, reckons that the absence of tier-one banks from the digital space in the period since the start of the pandemic has seriously affected them.
According to him; “However, most tier-one institutions and banks have adopted the online and open banking and therefore have been advantaged because they were able to offer same banking services to their customers.”
The survey, focusing on accepting change and the digital transformation drive of banks, was released in June. It revealed that just 54 percent of Africa’s financial institutions had been able to provide 360 degrees customer visibility by implementing the omnichannel solution previously. While around 46 percent were still dependent on silos, using separate systems for mobile banking and internet banking.
According to the report; “This shows us that from our participant banks while many have embraced the omnichannel motion there are still those running silos. We believe omnichannel will become a necessity going forward and it seems some African banks must re-think their current silo approach.”
The poll has revealed that a majority of the banks have mapped out different digital channels to drive their omnichannel strategies following the recent experiences they’ve had with the coronavirus situation.
Mobile banking channel app takes the biggest chunk of the plans at 92 percent, followed by Internet and Open banking (Open APIs) at 77 percent and 69 percent respectively. Automated Teller Machines (ATMs) take 54 percent, agency banking 38 percent, kiosks 23 percent, and wearable technology channels take 15 percent respectively.
With the recourse to virtual meeting apps such as Zoom, Google Hangouts, and Go To Webinar for employee training, engagement, and information sharing, resulting from the pandemic, around 54 percent of institutions surveyed are set to include provisions for video conferencing or chat in their plans.
The report stated that “As expected, financial institutions in Africa are planning to embrace the full set of digital channels going forward. In a world where the mobile phone is king it is not surprising that most banks plan to have mobile as part of their strategy going forward with Internet banking a close second.”
“Forward-thinking banks in Africa are also trying to replicate the success of open banking in other parts of the world and see the motion as an opportunity to be grasped early, without the need for legislation to impose this,” it continued.
It is obvious that over the last couple of years, bank customers have already become used to the changes that have been implemented by the transforming banks.
Measures to Reduce Cost
For instance, in its 2019 financial statement, the KCB group reported growth in digital transactions from 88 percent to 97 percent, an increase of 9 percent from 2018. KCB Group, which acquired an erstwhile tier-two lender, the National Bank of Kenya, said it is working to restore the subsidiary’s digital banking offerings according to the lender’s strategic goal of becoming a leader in the digital banking space.
According to the KCB Group’s financial statement; “This is aimed at delivering competitive financial solutions as well as meeting the changing needs of customers who are increasingly using the digital platform.”
It went on; “In this regard, a renewed focus is being laid on mobile banking, Internet banking, and agency banking channels.
“This is in addition to optimising the branch network bolstered by the opening of four new branches post-acquisition, as guided by an ongoing mapping and audit exercise.”
On the other hand, Equity Group, in its investor briefing for the year ended December 2019, revealed that 93 percent of all loan transactions go through the mobile channel while 97 percent of all transactions take place outside the branch.
The bank has continued to operate on a business model that leverages on cost-saving measures majorly through the use of agency, Internet, mobile, and merchant banking infrastructure.
