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Tips for banks to reach all ages in Africa

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DEWALD NOLTE, VP Business at Entersekt, offers some tips on how African banks can attract and retain customers, despite their age to ensure they are preparing for future generational expectations.  

As mobile internet connectivity grows, African youth are fast embracing the opportunity to connect, converse and transact on the web.

According to the GSMA (Mobile Economy Report 2015), mobile internet penetration in Sub-Saharan Africa was expected to reach 38% by 2020. This has largely been driven by lower costs of smartphones, which the GSMA says have decreased by 20% since 2008. A rapidly growing local app market and easy access to games and social media have captivated the youth market.

Although the Millennials generation is a Western construct, African youth (18 to 34) – particularly the urban youth – are displaying similar online behaviour patterns to their counterparts in developed countries. And, while the older generations may accuse them of being driven by a need for instant gratification, the youth’s expectation of simple, fast and always-on service is shifting how organisations design their offerings.

Banks, meanwhile, have built their credibility by portraying themselves as the bastions of the economy, institutions designed to protect your money, with caution built into their organisational DNA. While this is important, of course, it isn’t something that necessarily attracts their fastest growing potential customer base.

Here are five pointers to help African banks attract and retain customers, no matter what their age, and to ensure they are preparing for future generational expectations.

1. Prepare to be compared

At the very outset, it’s important for banking institutions to understand that the younger generations are swiftly getting used to having information at their fingertips.

Research published by Pew Research Centre (2015 Global Attitudes Survey) shows that African youth are jumping at the opportunity to engage online. In Tanzania, those aged between 18 and 34 are 17% more connected to the internet than their elders. This climbs to a significant 31% in both Nigeria and Kenya. The research also shows that the connected youth are active on social media on a daily basis.

Social media is being used to ask questions and to make comparisons based on experience. Price comparison websites are also making it easier to make informed decisions.

This significantly changes the dynamic of how the youth choose products and interact with brands. It is obvious then, that banks will need to change the way they engage with the younger generation.  Designing for a frictionless experience must be priority.

2. Just make it work

User experience becomes a key issue when servicing customers across generations.

Based on their engagement with global sites, the connected youth have an expectation that everything must work immediately, offer real value, in a seamless experience.

While the younger generations have a better understanding of technology, continued literacy challenges and multiple regional dialect demographics adds complexity to the user interface served up by financial institutions. Complex security terms such as phishing and pharming can cause mistrust of the service. In many instances, this lack of understanding may lead to customers avoiding digital channels altogether, which in turn drives up the cost of delivery for the banks.

Making use of technology that appears exceptionally simple to the user takes away the fear factor. When it comes to authentication, banks must guarantee their customers’ protection against phishing and other digital fraud vectors without the costly and clumsy use of one-time passwords. These may give the appearance of good security, but they are less effective and overly complicated, particularly for those accessing services on their phones. Removing complexities at the very outset of the transaction resonates with both the older and younger generations.

3. No one reads anymore 

No generational cohort reads lengthy warnings or instructions. People will click through to the end of an instalment or process without actually being fully aware of the details – or this may again increase their mistrust of the service. Moreover, in our experience, when an organisation uses text-heavy instructions, abandonment rates shoot up. When communicating instructions, the “keep it simple” rule reigns supreme.

4. Markets are not the same

Companies also need to understand that new markets work very differently. What may have worked in Botswana, may not be obvious to those in Kenya. People use and engage with technology, language and each other differently in every market. This includes generational quirks.

Banks will need to tweak their user engagement depending on where they are operating. Working with partners who have experience in a region allows a bank to learn from their experiences, which can save time and costly mistakes.

5. Innovating for future generations

We see a lot written about banks becoming simple transaction pipes. To avoid this, they must adapt in order to provide better value for their customers.  This can be achieved in three ways:

  1. A simple user authentication, which has excellent security, is a great way to build trust with customers.
  1. Once this is in place, you can confidently open up your channels and add new services.
  1. Banks can then begin leveraging their merchant network in order to start on-selling their products to their customers – essentially becoming an aggregated merchant platform. By nurturing trust, banks are able to capitalise on a captive customer base and bring to bear vast economies of scale.

The complexities of catering across borders and language barriers and for different generations with different user expectations are enormous. However, if banks invest in technologies that are simple, seamless and flexible, they can not only ensure all age groups form trusting, lasting relationships with them, but also take an important step towards building new revenue opportunities for the future.

Arts and Entertainment

VoD cuts the cord in SA

Some 20% of South Africans who sign up for a subscription video on demand (SVOD) service such as Netflix or Showmax do so with the intention of cancelling their pay television subscription.

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That’s according to GfK’s international ViewScape survey*, which this year covers Africa (South Africa, Kenya and Nigeria) for the first time.

The study—which surveyed 1,250 people representative of urban South African adults with Internet access—shows that 90% of the country’s online adults today use at least one online video service and that just over half are paying to view digital online content. The average user spends around 7 hours and two minutes a day consuming video content, with broadcast television accounting for just 42% of the time South Africans spend in front of a screen.

Consumers in South Africa spend nearly as much of their daily viewing time – 39% of the total – watching free digital video sources such as YouTube and Facebook as they do on linear television. People aged 18 to 24 years spend more than eight hours a day watching video content as they tend to spend more time with free digital video than people above their age.

Says Benjamin Ballensiefen, managing director for Sub Sahara Africa at GfK: “The media industry is experiencing a revolution as digital platforms transform viewers’ video consumption behaviour. The GfK ViewScape study is one of the first to not only examine broadcast television consumption in Kenya, Nigeria and South Africa, but also to quantify how linear and online forms of content distribution fit together in the dynamic world of video consumption.”

The study finds that just over a third of South African adults are using streaming video on demand (SVOD) services, with only 16% of SVOD users subscribing to multiple services. Around 23% use per-pay-view platforms such as DSTV Box Office, while about 10% download pirated content from the Internet. Around 82% still sometimes watch content on disc-based media.

“Linear and non-linear television both play significant roles in South Africa’s video landscape, though disruption from digital players poses a growing threat to the incumbents,” says Molemo Moahloli, general manager for media research & regional business development at GfK Sub Sahara Africa. “Among most demographics, usage of paid online content is incremental to consumption of linear television, but there are signs that younger consumers are beginning to substitute SVOD for pay-television subscriptions.”

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New data rules raise business trust challenges

When the General Data Protection Regulation comes into effect on May 25th, financial services firms will face a new potential threat to their on-going challenges with building strong customer relationships, writes DARREL ORSMOND, Financial Services Industry Head at SAP Africa.

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The regulation – dubbed GDPR for short – is aimed at giving European citizens control back over their personal data. Any firm that creates, stores, manages or transfers personal information of an EU citizen can be held liable under the new regulation. Non-compliance is not an option: the fines are steep, with a maximum penalty of €20-million – or nearly R300-million – for transgressors.

GDPR marks a step toward improved individual rights over large corporates and states that prevents the latter from using and abusing personal information at their discretion. Considering the prevailing trust deficit – one global EY survey found that 60% of global consumers worry about hacking of bank accounts or bank cards, and 58% worry about the amount of personal and private data organisations have about them – the new regulation comes at an opportune time. But it is almost certain to cause disruption to normal business practices when implemented, and therein lies both a threat and an opportunity.

The fundamentals of trust

GDPR is set to tamper with two fundamental factors that can have a detrimental effect on the implicit trust between financial services providers and their customers: firstly, customers will suddenly be challenged to validate that what they thought companies were already doing – storing and managing their personal data in a manner that is respectful of their privacy – is actually happening. Secondly, the outbreak of stories relating to companies mistreating customer data or exposing customers due to security breaches will increase the chances that customers now seek tangible reassurance from their providers that their data is stored correctly.

The recent news of Facebook’s indiscriminate sharing of 50 million of its members’ personal data to an outside firm has not only led to public outcry but could cost the company $2-trillion in fines should the Federal Trade Commission choose to pursue the matter to its fullest extent. The matter of trust also extends beyond personal data: in EY’s 2016 Global Consumer Banking Survey, less than a third of respondents had complete trust that their banks were being transparent about fees and charges.

This is forcing companies to reconsider their role in building and maintaining trust with its customers. In any customer relationship, much is done based on implicit trust. A personal banking customer will enjoy a measure of familiarity that often provides them with some latitude – for example when applying for access to a new service or an overdraft facility – that can save them a lot of time and energy. Under GDPR and South Africa’s POPI act, this process is drastically complicated: banks may now be obliged to obtain permission to share customer data between different business units (for example because they are part of different legal entities and have not expressly received permission). A customer may now allow banks to use their personal data in risk scoring models, but prevent them from determining whether they qualify for private banking services.

What used to happen naturally within standard banking processes may be suddenly constrained by regulation, directly affecting the bank’s relationship with its customers, as well as its ability to upsell to existing customers.

The risk of compliance

Are we moving to an overly bureaucratic world where even the simplest action is subject to a string of onerous processes? Compliance officers are already embedded within every function in a typical financial services institution, as well as at management level. Often the reporting of risk processes sits outside formal line functions and end up going straight to the board. This can have a stifling effect on innovation, with potentially negative consequences for customer service.

A typical banking environment is already creaking under the weight of close to 100 acts, which makes it difficult to take the calculated risks needed to develop and launch innovative new banking products. Entire new industries could now emerge, focusing purely on the matter of compliance and associated litigation. GDPR already requires the services of Data Protection Officers, but the growing complexity of regulatory compliance could add a swathe of new job functions and disciplines. None of this points to the type of innovation that the modern titans of business are renowned for.

A three-step plan of action

So how must banks and other financial services firms respond? I would argue there are three main elements to successfully navigating the immediate impact of the new regulations:

Firstly, ensuring that the technologies you use to secure, manage and store personal data is sufficiently robust. Modern financial services providers have a wealth of customer data at their disposal, including unstructured data from non-traditional sources such as social media. The tools they use to process and safeguard this data needs to be able to withstand the threats posed by potential data breaches and malicious attacks.

Secondly, rethinking the core organisational processes governing their interactions with customers. This includes the internal measures for setting terms and conditions, how customers are informed of their intention to use their data, and how risk is assessed. A customer applying for medical insurance will disclose deeply personal information about themselves to the insurance provider: it is imperative the insurer provides reassurance that the customer’s data will be treated respectfully and with discretion and with their express permission.

Thirdly, financial services firms need to define a core set of principles for how they treat customers and what constitutes fair treatment. This should be an extension of a broader organisational focus on treating customers fairly, and can go some way to repairing the trust deficit between the financial services industry and the customers they serve.

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