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How digital revolution will change financial services

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People have different views on the impact of technology, with some welcoming it and some fearing it. Despite this, it has made our live easier and CHRISTOPH NIEUWOUDT, CEO: FNB Consumer Segment explains the impact it will have on the financial industry.

People have strong views on the impact of digital technology on their lives, from the excitement of getting a new gadget to the satisfaction of doing in minutes what used to require a trip or a long phone call. Contrary perspectives include the fear of being left behind or even what technology will do to their employment prospects over time.

One thing we can all agree on is that digital progress is inevitable. The implications of the use of technology by society are immensely profound, with terms such as “The Second Machine Age” or the “Fourth Industrial Revolution” being used to give this evolution a name.

Let’s takes a closer look at the impact of digital transformation on consumers and the broader financial services industry:

Digital revolution is already at an advanced stage

In 2016 FNB customers had over 10 billion interactions with the bank, of which only 120 million (just over 1%) was on a face-to-face basis. Roughly 8.5 billion (85%) was purely on digital channels and the rest via point-of-sale (card swipes or online purchases) and ATM transactions.

The number of FNB customer interactions has tripled since 2010, growing at more than 20% per annum every year, based on the growth in digital channels. Meanwhile at branches, customers are making significant use of in-branch digital zones.

The reasons for the growth and migration of volumes to digital are obvious as almost every customer knows they can do basically any payment transaction, account or card service function and get most products, including loans, overdrafts, credit card upgrades, savings products and insurance on a 24/7/365 basis via the FNB app, online or cellphone banking. Customers can also buy airtime, pre-pay electricity, play lotto, trade stocks, get a homeloan approved, order a car licence renewal, buy forex, send money to any cellphone in SA, buy stuff via eBucks and the list goes on.

What does this mean for branches and do we still need them?

Branches and branch personnel are no less critical than before, but their role has changed from performing transactions to re-focussing on sales and advising customers on how to bank. In spite of the powerful digital technology, today the bulk of banking consumers still want to talk to someone when opening a new account and even for most product categories.

Additionally, consumers often need help with the new technology, even just to get going and start using it. In my view this leads to much richer and meaningful client interactions. In most cases, branches can be much smaller, but with more room for digital zones and self-service devices such as ATMs and ADTs (deposit taking machines).

This journey is not unique to banking – virtually every sales or service business is or will be going through some elements of digital transformation.

The important effect of such changes is the opportunity to continuously upskill a workforce. At branch level, it’s important for consumers to interact with consultants who understand how the technology works. On this end, we now have e-Bankers who help customers get to grips with banking digitally

Broadly, banking is also seeing a large contingent of specialised roles – IT specialists, analysts, actuaries, engineers, who play a significant role in ‘re-inventing’ solutions all the time

Automating credit decision making and fraud prevention

Today, only a very small percentage of credit decisions are made by people – rather statistical models are used to make fully automated decisions instantly at low cost and with accuracy not achievable by a person. For consumers, this means your risk profile and behaviour determines your loans size and pricing. Importantly, technology has helped reduce fraud loss rates for card and digital transactions.

Move from product-centric to a customer-centric model

FNB has been through a major mind-shift to consistently put the customer at the centre of the universe like never before. Interactions through all channels need to be considerate of making the customer’s experience the best possible by providing a consistent experience across all products and services.

The future for financial services

Often, the question is which banks will “win” the race, or will Apple/Amazon/Facebook/Google or other ‘fintech’ players win?

There are two simple thoughts in this regard. Firstly, due to the massive (data analytical, channel & customer experience) advantages a customer centric approach offers, I believe an integrated player like FNB with a compelling offering across transactional, lending, save/invest, insurance (and in our case telco also) has a major competitive advantage over any player with a limited offering.

Secondly, financial services players that embrace technology and data analytical capabilities in a customer centric manner can and should be the beneficiary of the digital revolution. However, at the end of it all, it comes down to a philosophical decision around business strategy – rather than falling prey to fintech disruptors, banks can unlock the incredible power of innovation for their customers to fulfil the ever changing needs of bank customers.

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Queues and cash-only frustrate SA’s commuters

A new study by Visa reveals the success factors for improving travel and creating smarter cities

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The use of cash-only payments was a frustration for 38% of Johannesburg commuters and 37% of Cape Town-based commuters, according to a new global study by Visa. Another commuter frustration when paying for public transport has been long queues – 67% of Johannesburg commuters and 64% of Cape Town commuters.

Visa, in collaboration with Stanford University, came up with these findings in one of the largest global studies examining the growing demand for public and private transportation, and the important role digital commerce plays in driving sustainable growth.

According to the UN[i], by 2050, 68 percent of the world’s population will live in urban centres – and the number of “megacities” with populations greater than 10 million people will rise from 43 today to 51 within that same period. South Africa is no different, with the majority of the country relying heavily on the public transport system. In fact, according to the General Household Survey (GHS) for 2018, a total of 54 209 000 minibus/taxi trips take place in South African per month. 

Building on Visa’s experience working with transit operators, automotive companies and technology start-ups, Visa commissioned a global study, “The Future of Transportation: Mobility in the Age of the Megacity” to better understand the challenges commuters face today and in the future. The key findings were combined with a view of existing and near horizon innovations provided by experts at Stanford University, to better understand the technology gaps in addressing their pain points.

The South African Perspective

Payments lie at the heart of every form of travel, and will continue to become more integral as more cities move to contactless public transportation, digital payments for parking and rental services such as bikes or scooters.  Malijeng Ngqaleni, Deputy Director-General of the South African Inter-governmental Relations, states that a high as 60% of South African households spend on average of 20% of their monthly income on transport, while in rural areas this number can be as high as 31%.

Aside from cash-only payments, another commuter frustration when paying for public transport has been long queues – 67% of Johannesburg commuters and 64% of Cape Town commuters. Over the last few years, a number of mobile-driven taxi-hailing apps have been launched in the South African market to counteract these concerns and commuters are open to the possibilities presented by mobile apps. The Visa study echoed this by showing that 77% of Johannesburg commuters and 76% of Cape Town commuters would be willing to try a consolidated app to make payments for public transport.

 Mike Lemberger, SVP, Product Solutions Europe, Visa says: “The future success of our cities is intertwined with – and reliant on – the future of transportation and mobility. Visa and our partners have an important role to play, both in streamlining the payment experience for millions of commuters around the globe, and supporting public transportation authorities in their quest to build sustainable and convenient transportation solutions that improve the lives of the people who use it.”

Herman Donner, PhD and Postdoctoral Researcher from Stanford University co-authored the report and summarised: “When looking across the technology landscape, there already exist many products that could easily address people’s daily frustrations with travel.  However, none of these solutions should be developed in isolation. A major challenge therefore lies in first identifying relevant technologies that provide suitable products for the market then managing implementation in conjunction with  a broad set of stakeholder including  mobility providers, technology companies, infrastructure owners and public transport agencies.  From our research, we think that many of these small, incremental changes have the potential to make a significant difference in people’s daily travel,  whether it’s to help find parking, get the best price to refuel their car or plan their journey on public transportation.”

Click here for the detailed global findings.

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Women take to tech, but more needed

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By HAIDI NOSSAIR, Marketing Director META, Dell Technologies

$12 trillion – that is the value in additional global GDP that remains locked behind the gender gap. This is according to the latest Women Matter report from McKinsey, which also reveals startling disparities in the workplace. Even though women make up more than half of the human population, only 37% contribute to GDP on average – and in some countries that proportion is significantly lower.

The reasons for this can be put in three areas. Fewer women – 650 million fewer than men – participate in the global labour force. Women are also more likely to be in part-time employment and thus work fewer hours. Finally, female employees are more common in lower-productivity sectors than in higher-productivity areas.  Are women not being offered the opportunity or are they holding themselves back?

Among STEM careers this ratio is particularly dismal: only 24% of engineering professionals are women, and as few as 19% of careers in ICT are filled by women.

What is the cause of this? Studies have found that women pursuing STEM careers are higher in countries with more oppressive policies towards women, because those careers hold the promise for financial freedom and more social autonomy. In contrast, countries with progressive attitudes towards women tend to produce fewer female STEM graduates. Then how can we encourage women from early ages to take the path of STEM education?  And how can organizations ensure women have equal opportunity at the hiring stages.

Certainly addressing gender inequality is crucial and must not stop.. Where women are increasingly more part of the workforce, there are often still barriers preventing them from assuming higher management roles. Female entrepreneurs often struggle more to gain investment capital. Corporate cultures are rarely aligned with the pressures of balancing work and family obligations. Decision makers may simply lack exposure to the potential of female candidates. Female pioneers have also argued that women are too risk-averse when compared to men. 

Whether these assertions are true is a matter for debate – and that’s exactly why every professional man and woman should be talking about them and identify action to change the status-quo. This is not just about female rights, but about social upliftment: companies with a mixture of male and female leaders perform better across the board and companies in the top-quartile for gender diversity are 21% more likely to outperform on profitability.

The digital economy we live in today represent a golden opportunity for increased women contribution to the workforce as technology breaks the boundaries of location and time for the workplace and where labor intensive jobs may today be performed by data scientists. 

For two days in March, top professionals will gather to talk and exchange ideas around creating more roles for women, larger appreciation for female professionals, as well as counter the attitudes among women holding them back from greater career success and autonomy.

If you want to be part of this conversation, join the Women in Tech Africa summit today at the Century City Conference Centre in Cape Town – learn more at https://www.women-in-tech-africa-summit.com/ and use the code DELL20 for a 20% discount.

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