People and businesses will always need banking, but, asks PETER ALKEMA, FNB Business CIO, will they always need banks?
People and businesses will always need banking, but will they always need banks? This question is driving a wave of disruption and new thinking in the industry. Discovery has recently announced plans to enter the local retail banking market; telco and tech companies are making similar moves. Fintech is offering completely new ways of doing business and customers are embracing exponential start-ups who offer frictionless, mobile services. Banks are responding with increased digitisation, new lines of business and highly innovative channels. What’s really happening, how will the banking landscape change and when will it take place?
The reason that non-traditional players are getting into main account banking is because of the customer intimacy and insight that comes with a transactional bank account. It’s the one place that all the money goes into and comes out of; businesses put their main account on all their invoices and many married couples don’t even share one! A home loan or insurance policy is important but still just a monthly debit order that doesn’t generate any behavioural insight about a customer. The relationship is also typically low key; you will only hear from your insurance broker on your birthday and only home loans collections department if you miss a payment.
Some banks have taken advantage of this and created additional stickiness through rewards programmes, improved channels and ecosystems of value-adds. Core transactional platforms are at the heart of a bank’s operations. Regulation and banking license approval ensures that banking platforms are robust and well managed. In addition, financial aspects such as capital adequacy and risk controls such as anti money-laundering mean the requirements for running a bank are significant barriers to entry.
The local banking industry is consistently rated very highly and its world class resilience and regulatory oversight provided a shock absorber for South Africa during the global financial crisis of 2008. Internationally, large banks have relied on these barriers to entry to block new entrants but the rise of fintech and trust-disintermediating technologies such as Blockchain is changing this mindset. Looser regulation in the UK is seeing a wave of banking license applications from start-ups and in the US, firms such as Google, Facebook and Amazon are actively launching financial services products.
Arguably much of this activity is still peripheral and the core business of running a large scale bank relies on well established processes. This was true for Kodak in the mid nineties when it employed 140,000 people, sold 85% of the world’s photo paper and was the fourth most valuable brand in the United States. In 2012 it filed for bankruptcy; it got left behind in an industry that was turned upside down by technology and its impact on their customers’ lives and the market. Kodak invented digital photography but they failed to embrace the disruption to their own business model that it caused to the industry. Similarly, the Walkman was the first portable device for listening to recorded music; Sony could have digitised it but Apple’s iPod eventually obliterated it.
In 2000, Blockbuster was the biggest video rental chain in America, and at the time internet startup Netflix offered to run its fledgling online business. Blockbuster turned this down and went bankrupt 10 years later, having failed to move its business from bricks to clicks while Netflix has become a global leader in streaming movies.
South African banks have been very successful at moving processes off of paper, out of physical locations and onto digital channels. FirstRand’s 2016 results indicate that overall electronic volumes increased 13%, while manual volumes grew only 2%. New ways of working are also extending beyond channels to back office operations.
The next decade is likely to be pivotal for the banking industry and it will be driven by the race for the customer and not by the fintech on its own. Digital is just the enabler of new business models built around improved customer centricity that according to Dimension Data’s Digital Advisory is something that banks should avoid just doing, they have to become digital in their thinking, operating models and execution.
Customers expect frictionless processes that are available where they are and not only where the bank is, the transport and accommodation industries have already delivered this with Uber and Airbnb. According to Google, the tipping point to mobile in South Africa happened in 2014 when internet searches from mobile devices exceeded desktops. Millennials don’t stand in queues or fill in forms, they build trust through convenience and they reward customer delight with loyalty and peer group recognition. By 2020 there will be 500 million people in Sub Saharan Africa with connected smartphones; these people will still need banking but it will probably look very different from today.
Revealing the real cost of ‘free’ online services
A free service by Finnish cybersecurity provider F-Secure reveals the real cost of using “free” services by Google, Apple, Facebook, and Amazon, among others.
What do Google, Facebook, and Amazon have in common? Privacy and identity scandals. From Cambridge Analytica to Google’s vulnerability in Google+, the amount of personal data sitting on these platforms is enormous.
Cybersecurity provider F-Secure has released a free online tool that helps expose the true cost of using some of the web’s most popular free services. And that cost is the abundance of data that has been collected about users by Google, Apple, Facebook, Amazon Alexa, Twitter, and Snapchat. The good news is that you can take back your data “gold”.
F-Secure Data Discovery Portal sends users directly to the often hard-to-locate resources provided by each of these tech giants that allow users to review their data, securely and privately.
“What you do with the data collection is entirely between you and the service,” says Erka Koivunen, F-Secure Chief Information Security Officer. “We don’t see – and don’t want to see – your settings or your data. Our only goal is to help you find out how much of your information is out there.”
More than half of adult Facebook users, 54%, adjusted how they use the site in the wake of the scandal that revealed Cambridge Analytica had collected data without users’ permission.* But the biggest social network in the world continues to grow, reporting 2.3 billion monthly users at the end of 2018.**
“You often hear, ‘if you’re not paying, you’re the product.’ But your data is an asset to any company, whether you’re paying for a product or not,” says Koivunen. “Data enables tech companies to sell billions in ads and products, building some of the biggest businesses in the history of money.”
F-Secure is offering the tool as part of the company’s growing focus on identity protection that secures consumers before, during, and after data breaches. By spreading awareness of the potential costs of these “free” services, the Data Discovery Portal aims to make users aware that securing their data and identity is more important than ever.
A recent F-Secure survey found that 54% of internet users over 25 worry about someone hacking into their social media accounts.*** Data is only as secure as the networks of the companies that collect it, and the passwords and tactics used to protect our accounts. While the settings these sites offer are useful, they cannot eliminate the collection of data.
Koivunen says: “While consumers effectively volunteer this information, they should know the privacy and security implications of building accounts that hold more potential insight about our identities than we could possibly share with our family. All of that information could be available to a hacker through a breach or an account takeover.”
However, there is no silver bullet for users when it comes to permanently locking down security or hiding it from the services they choose to use.
“Default privacy settings are typically quite loose, whether you’re using a social network, apps, browsers or any service,” says Koivunen. “Review your settings now, if you haven’t already, and periodically afterwards. And no matter what you can do, nothing stops these companies from knowing what you’re doing when you’re logged into their services.”
***Source: F-Secure Identity Protection Consumer (B2C) Survey, May 2019, conducted in cooperation with survey partner Toluna, 9 countries (USA, UK, Germany, Switzerland, The Netherlands, Brazil, Finland, Sweden, and Japan), 400 respondents per country = 3600 respondents (+25years)
WhatsApp comes to KaiOS
By the end of September, WhatsApp will be pre-installed on all phones running the KaiOS operating system, which turns feature phones into smart phones. The announcement was made yesterday by KaiOS Technologies, maker of the KaiOS mobile operating system for smart feature phones, and Facebook. WhatsApp is also available for download in the KaiStore, on both 512MB and 256MB RAM devices.
“KaiOS has been a critical partner in helping us bring private messaging to smart feature phones around the world,” said Matt Idema, COO of WhatsApp. “Providing WhatsApp on KaiOS helps bridge the digital gap to connect friends and family in a simple, reliable and secure way.”
WhatsApp is a messaging tool used by more than 1.5 billion people worldwide who need a simple, reliable and secure way to communicate with friends and family. Users can use calling and messaging capabilities with end-to-end encryption that keeps correspondence private and secure.
WhatsApp was first launched on the KaiOS-powered JioPhone in India in September of 2018. Now, with the broad release, the app is expected to reach millions of new users across Africa, Europe, North America, Southeast Asia, and Latin America.
“We’re thrilled to bring WhatsApp to the KaiOS platform and extend such an important means of communication to a brand new demographic,” said Sebastien Codeville, CEO of KaiOS Technologies. “We strive to make the internet and digital services accessible for everyone and offering WhatsApp on affordable smart feature phones is a giant leap towards this goal. We can’t wait to see the next billion users connect in meaningful ways with their loved ones, communities, and others across the globe.”
KaiOS-powered smart feature phones are a new category of mobile devices that combine the affordability of a feature phone with the essential features of a smartphone. They meet a growing demand for affordable devices from people living across Africa – and other emerging markets – who are not currently online.
WhatsApp is now available for download from KaiStore, an app store specifically designed for KaiOS-powered devices and home to the world’s most popular apps, including the Google Assistant, YouTube, Facebook, Google Maps and Twitter. Apps in the KaiStore are customised to minimise data usage and maximise user experience for smart feature phone users.
KaiOS currently powers more than 100 million devices shipped worldwide, in over 100 countries. The platform enables a new category of devices that require limited memory, while still offering a rich user experience.
* For more details, visit: Meet The Devices That Are Powered by KaiOS
* Also read Arthur Goldstuck’s story, Smart feature phones spell KaiOS