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3 ways tech will change banking in 2017

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This year will see three financial areas change due to technology. Customer relationship management, the processes of banking and the regulatory environment which these financial institutions operate, writes MARK WALKER of IDC.

From a broader economic outlook perspective, we will see heightened political influence as the country gears up for another round of elections. The uncertainty in the political environment potentially translates into economic movements that may impact interest rates, the exchange rate, and other factors. The country’s politics have a proven history of impacting the macro economy and this, in turn, will impact the micro economy and may result in lower consumer spend and a decrease in business confidence.

The South African housing market is already seeing very low growth in the mid and high sections, which means consumers are already more cautious when it comes to investment. Inflation is relatively stable now but could go up, which will result in higher interest rates.

From a regulatory perspective, the banking sector is under increased pressure. There are many more international compliance requirements, as well as from the Reserve Bank and SARS, which increases administrative pressures at a time when they don’t want to spend more money on non-revenue generating activities.

Access to financial services will be key in 2017 as financial institutions attempt to further remove obstacles between the bank and the customer, not only from a compliance point of view but also in terms of services offered. Banks want to make it easier for the individual to access the bank, hence the continued focus on online and mobile banking, as well as making services available to the previously unbanked through these platforms and social media channels.

The second focus area is understanding and exploiting customer data, so big data analytics and use of artificial intelligence and algorithms are coming to the fore. The objective is to use the data about their clients to understand their credit worthiness, propensity to earn and spend, and then to pre-empt their requirements to provide the right products to that specific customer at the right time in their lives. Multichannel delivery will also be a focus area, but that is more about using all social, mobile and online channels to make it easier to reach the client. We will also see an increase in the use of integrated applications to make payment mechanisms simpler and more accessible.

The financial services environment is very harsh and banks are finding it difficult to maintain profits. They will continue to evaluate automating more processes to increase the use of self-service banking. In some countries, entire processes, such as loan generation, have already been automated from a customer, product and regulatory point of view and we foresee the South African institutions following suit.

Security is another big focus area. With the Internet of Things or IoT, more devices are being connected to the internet, creating more vulnerabilities. As more devices are connected and being used for banking purposes, security becomes a major concern. December 2016 was already a bumper month in ransomware activity and as more devices are connected this is set to increase.

We do foresee 2017 deliver a couple of innovations in FinTech, with innovative companies applying technology to create ways to do banking in a virtual environment. Financial institutions are also waking up the opportunity that this brings as it is a way for them to retain customers and profitability, while at the same time cutting costs.

Telecommunications companies could plausibly use FinTech to get into the banking sector. The biggest challenges they face are in obtaining banking licenses, existing competition and monopolies, and being able to comply with the regulations associated with having a banking license. That said, these company will make forays into the banking environment on a partnership or shared risk type model. They will partner with the smaller, already licensed financial institutions, and will then introduce FinTech using technology. Both the banks and telecommunications companies are under pressure from a growth and performance perspective and they both have access to customer data that they can utilise to offer new and innovative products and services. Already we know that the telecommunications providers are looking for ways to increase their market share and profitability, and this approach creates an opportunity for them to do so. That said, it’s very much a ‘wait and see” scenario at this stage. We will also continue to see emerging currencies such as blockchain and bitcoin, but suspect that the regulator environment must catch up before it becomes mainstream.

We will also start seeing far more use of social media platforms to help complete or compliment banking transactions. These platforms will be used both for internal communications as well as to communicate more effectively with their customers. We will also see an increase in automated CRM to solve customer queries. Here the only challenge will be the need to record all communications as part of their compliance requirements.

So, to recap, while virtual reality and augmented reality are starting to come into play, it will still be a while before they become mainstream in the financial services environment. Cognitive computing will also increase to some degree. The big bets, however, for financial services will be next generation security and IoT, with mobile also remaining a key priority in the South African market.

* Mark Walker, Associate Vice President for Sub-Saharan Africa at International Data Corporation

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When will we stop calling them phones?

If you don’t remember when phones were only used to talk to people, you may wonder why we still use this term for handsets, writes ARTHUR GOLDSTUCK, on the eve of the 10th birthday of the app.

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Do you remember when handsets were called phones because, well, we used them to phone people?

It took 120 years from the invention of the telephone to the use of phones to send text.

Between Alexander Graham Bell coining the term “telephone” in 1876 and Finland’s two main mobile operators allowing SMS messages between consumers in 1995, only science fiction writers and movie-makers imagined instant communication evolving much beyond voice. Even when BlackBerry shook the business world with email on a phone at the end of the last century, most consumers were adamant they would stick to voice.

It’s hard to imagine today that the smartphone as we know it has been with us for less than 10 years. Apple introduced the iPhone, the world’s first mass-market touchscreen phone, in June 2007, but it is arguable that it was the advent of the app store in July the following year that changed our relationship with phones forever.

That was the moment when the revolution in our hands truly began, when it became possible for a “phone” to carry any service that had previously existed on the World Wide Web.

Today, most activity carried out by most people on their mobile devices would probably follow the order of social media in first place – Facebook, Twitter, Instagram and LinkedIn all jostling for attention – and  instant messaging in close second, thanks to WhatsApp, Messenger, SnapChat and the like. Phone calls – using voice that is – probably don’t even take third place, but play fourth or fifth fiddle to mapping and navigation, driven by Google Maps and Waze, and transport, thanks to Uber, Taxify, and other support services in South Africa like MyCiti,  Admyt and Kaching.

Despite the high cost of data, free public Wi-Fi is also seeing an explosion in use of streaming video – whether Youtube, Netflix, Showmax, or GETblack – and streaming music, particularly with the arrival of Spotify to compete with Simfy Africa.

Who has time for phone calls?

The changing of the phone guard in South Africa was officially signaled last week with the announcement of Vodacom’s annual results. Voice revenue for the 2018 financial year ending 31 March had fallen by 4.6%, to make up 40.6% of Vodacom’s revenue. Total revenue had grown by 8.1%, which meant voice seriously underperformed the group, and had fallen by 4% as a share of revenue, from 2017’s 44.6%.

The reason? Data had not only outperformed the group, increasing revenue by 12.8%, but it had also risen from 39.7% to 42.8% of group revenue,

This means that data has not only outperformed voice for the first time – as had been predicted by World Wide Worx a year ago – but it has also become Vodacom’s biggest contributor to revenue.

That scenario is being played out across all mobile network operators. In the same way, instant messaging began destroying SMS revenues as far back as five years ago – to the extent that SMS barely gets a mention in annual reports.

Data overtaking voice revenues signals the demise of voice as the main service and key selling point of mobile network operators. It also points to mobile phones – let’s call them handsets – shifting their primary focus. Voice quality will remain important, but now more a subset of audio quality rather than of connectivity. Sound quality will become a major differentiator as these devices become primary platforms for movies and music.

Contact management, privacy and security will become critical features as the handset becomes the storage device for one’s entire personal life.

Integration with accessories like smartwatches and activity monitors, earphones and earbuds, virtual home assistants and virtual car assistants, will become central to the functionality of these devices. Why? Because the handsets will control everything else? Hardly.

More likely, these gadgets will become an extension of who we are, what we do and where we are. As a result, they must be context aware, and also context compatible. This means they must hand over appropriate functions to appropriate devices at the appropriate time. 

I need to communicate only using my earpiece? The handset must make it so. I have to use gesture control, and therefore some kind of sensor placed on my glasses, collar or wrist? The handset must instantly surrender its centrality.

There are numerous other scenarios and technology examples, many out of the pages of science fiction, that point to the changing role of the “phone”. The one thing that’s obvious is that it will be silly to call it a phone for much longer.

  • Arthur Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter on @art2gee and on YouTube
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MTN 5G test gets 520Mbps

MTN and Huawei have launched Africa’s first 5G field trial with an end-to-end Huawei 5G solution.

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The field trial demonstrated a 5G Fixed-Wireless Access (FWA) use case with Huawei’s 5G 28GHz mmWave Customer Premises Equipment (CPE) in a real-world environment in Hatfield Pretoria, South Africa. Speeds of 520Mbps downlink and 77Mbps uplink were attained throughout respectively.

“These 5G trials provide us with an opportunity to future proof our network and prepare it for the evolution of these new generation networks. We have gleaned invaluable insights about the modifications that we need to do on our core, radio and transmission network from these pilots. It is important to note that the transition to 5G is not just a flick of a switch, but it’s a roadmap that requires technical modifications and network architecture changes to ensure that we meet the standards that this technology requires. We are pleased that we are laying the groundwork that will lead to the full realisation of the boundless opportunities that are inherent in the digital world.” says Babak Fouladi, Group Chief Technology & Information Systems Officer, at MTN Group.

Giovanni Chiarelli, Chief Technology and Information Officer for MTN SA said: “Next generation services such as virtual and augmented reality, ultra-high definition video streaming, and cloud gaming require massive capacity and higher user data rates. The use of millimeter-wave spectrum bands is one of the key 5G enabling technologies to deliver the required capacity and massive data rates required for 5G’s Enhanced Mobile Broadband use cases. MTN and Huawei’s joint field trial of the first 5G mmWave Fixed-Wireless Access solution in Africa will also pave the way for a fixed-wireless access solution that is capable of replacing conventional fixed access technologies, such as fibre.”

“Huawei is continuing to invest heavily in innovative 5G technologies”, said Edward Deng, President of Wireless Network Product Line of Huawei. “5G mmWave technology can achieve unprecedented fiber-like speed for mobile broadband access. This trial has shown the capabilities of 5G technology to deliver exceptional user experience for Enhanced Mobile Broadband applications. With customer-centric innovation in mind, Huawei will continue to partner with MTN to deliver best-in-class advanced wireless solutions.”

“We are excited about the potential the technology will bring as well as the potential advancements we will see in the fields of medicine, entertainment and education. MTN has been investing heavily to further improve our network, with the recent “Best in Test” and MyBroadband best network recognition affirming this. With our focus on providing the South Africans with the best customer experience, speedy allocation of spectrum can help bring more of these technologies to our customers,” says Giovanni.

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