Digital transformation in South Africa’s banking industry
Few industries have been impacted by technology disruption as much as the banking sector. Transforming the operations of banks, who have been the dominant players, to serve the radically changing habits of today’s consumers is a great challenge as the digital transformation wave continuously gives users options to do just about everything digitally.
Digital transformation encompasses changing internal processes for banks and reworking an operational framework that has worked for them for decades. Banks have to digitise and digitalize quickly to meet and surpass today’s customer demands.
When was the last time you went to a branch, queued and eventually had a query sorted in person? Whereas you could have had the same query sorted in real time on your banking app as you enjoy a cup of coffee on your desk? If users increasingly avoid similar experiences when purchasing movies, music, insurance and news, why would they choose something different for banking? Convenience is king and banks are moving with the times to meet the changing demands with the least disruption to the client as possible.
Many financial institutions have recently put in place the elimination of jobs that once were considered stable. One of South Africa’s oldest banks, Standard bank has shut down 91 branches and retrenched 1200 staff in 2019 alone. First National Bank (FNB) has closed down 40 branches reducing the number of people employed and the other finance houses are following suit if not already. This has pre-empted a backlash and protests from former and current employees.
Banking union Sasbo said that over 40,000 finance sector employees were ready to take part in the strike against retrenchments on Friday 27 September 2019. Trade unions said that banks were unilaterally laying off employees instead of upskilling them so that they could remain relevant in the fourth industrial revolution.
Digital Transformation and the Future
So what has changed or is changing to disrupt the traditional South African banking model?
- Mobile Banking
Mobile banking users are set to reach 2 Billion by 2020! Most banking apps continue to create simplified solutions for users at the palm of their hand. Payments, loan applications, credit checks, spend tracking are just some of the current features users can enjoy currently. These and other offerings will keep evolving and quite simply put, the one with the best app wins.
- Mobile payments
Mobile payments have become a ‘normal’ part of retail across the board. Snapscan, Apple pay, Flickpay, Zapper and VC Pay are just a few of the options currently available for mobile app payments that are integrated with the backend of most banks. It is that convenience that more and more users are gravitating towards.
Blockchain will continue proving to be a huge asset in digital payments, escrow services, loan processing, and just about every other area where valuable information or currency needs the utmost security.
- Artificial Intelligence (AI)
Using advanced software and algorithms, AI bots can calculate the best investment opportunities, interest rates, credit scores, loan providers and more helping users be on top of their investment prospects. To remain competitive in this space in the industry, banks are digitizing and automating such processes.
- Job functions
Jobs are moving from repetition to more strategic roles that require critical thinking and/ or the creative engagement of a human. The jobs that however require repetitive tasks will most likely be eliminated. Customer support roles, data entry roles, data verification roles and many back office functions will likely become redundant.
On the upside, the digital wave has created new roles and functions. Banking is highly regulated and not everything can be automated. Some employees may require upskilling to fit these new roles. The re-skilling challenge is greater than we have ever seen in history and is approaching faster than any in the past. There is a need to assess each organization’s current talent pool, processes and determine what skills exist and what new skills will be required.
Digital banks to look out for
Digital banking by definition, is part of the broader context for the move to online banking, where banking services are delivered over the internet. It provides the ability for users to access financial data through desktop, mobile and ATM services. A few banks have already emerged as players in this new space in South Africa to compete with the traditional big four banks.
On the payment side, more digital payment merchants are emerging daily. Some of these are;
In conclusion, the fourth industrial revolution is here and in play. Employees might have to look at upskilling to meet new role requirements. The end-user has to look for the right service offering that meets their needs. Banks have to adjust their product offerings to compete and serve their clientele better as well as work with reputable tech firms to substantiate their digital transformation.
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Contact us today to get a quote on a custom digital transformation solution for your business.
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