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Africa’s fintech is migrating

Africa’s fragmented markets and lack of legacy foreign exchange trading infrastructure means that the continent has become a melting pot of fintech activity and innovation, writes TIM HUTCHINSON, Head of Digital for Financial Markets, Standard Bank.

The evolution to electronic foreign currency trading in Africa, while slow to start, is today gaining tremendous traction. 

In South Africa, only five years ago, almost 90% of foreign currency trades happened over the telephone. Today, despite challenges around illiquidity and complicated political and capital control environments, approximately 75% of trades are conducted digitally, with a mere 25% conducted on the phone. 

With 57.6% of the world’s 174-million active registered mobile money accounts in Sub-Saharan Africa, the continent is becoming a world leader in fintech generally, and in mobile money in particular. As African citizens and business people transact globally, Africa’s highly developed fintech culture is not only deepening on the continent, but is also migrating out of Africa.  

The foreign exchange flows that Africa’s expanding fintech culture supports are very important to the continent’s financial services providers, most of whom are developing fintech capabilities or partnering with the most popular or effective home-grown African fintech’s to ensure that they capture this flow.

Standard Bank has been an integral part of driving this rapid evolution to digital in Africa’s foreign exchange trading landscape.  

In order to function as an effective market maker, we need to source liquidity in market. We also need to, instantly, formulate risk-based pricing in an ever-changing world. Thereafter we need to distribute price. 

In Africa this requires developing solutions that allows retail, corporate and institutional customers to access foreign exchange markets across multiple jurisdictions. At the same time in most markets, “we also need to show central banks what we are doing,” adds Mr Hutchinson. All transactions need to be transparent and electronically traceable so that local authorities are prepared to approve digital trades. 

Today, however, banks are not only expected to provide the systems and networks to facilitate basic transactions but are also required to provide insight and guidance beyond pure execution by offering additional value-based services across research, hedging and, most importantly, settlement capability. Currency research for example, is increasingly a big client requirement. Having on the ground experience and local expertise as well as the ability to deliver this digitally, “differentiates Standard Bank’s distribution capabilities in this regard”. 

In addition, banks are also increasingly required to inform and guide clients through the broader economic, legal and political landscapes in which transactions occur. For example, one of the considerations in developing Standard Bank’s digital capability was how to combine market intelligence and research with real-time pricing, trade execution and post-trade services. Today it is not enough just to execute trades. It is equally important that we advise and inform the broader universe in which trades happen.  

From a technology point of view Regulatory Technology (Regtec), for example, is assisting Africa to manage new regulatory developments in heavily currency-controlled environments. Similarly, the rise in robotic process automation (RPA) and artificial intelligence (AI), “has allowed Standard Bank to develop solutions that leapfrog traditional business problems”. 

Digital trading in Africa is also evolving in its own often very different way. We have found that it is not just a question of importing developed world systems. Our approach with clients is to work with them to help understand their internal needs in terms of governance and operational efficiency. We then partner with clients to develop and implement digital solutions that talk to the heart of their business need. 

Standard Bank’s own Business Online (BOL) platform provides an example of how the bank has built digital transaction capabilities that exactly meet client need. BOL, for example, allows clients to view balances across the continent while making third party currency payments and also supporting general cash management. This kind of broad, business-wide digital cash view and capability puts control back in the hands of the clients while also allowing clients, rather than the bank, to manage their own cash flow.

From an Institutional perspective it’s very important to be able to offer customisable solutions to clients managing money on behalf of their investors. Standard Bank’s investment in Application Programming Interface (API) technology, for example, is tracking exactly its client’s growing ability to build these capabilities into their own systems. 

On the retail side Standard Bank’s SHYFT app – a digital wallet allowing global transactions in USD, EUROS, GBP and Australian dollars has extended this control element to the man in the street. SHYFT has been recognised both globally and locally for its innovation.

Standard Bank presents a very compelling, unique and globally competitive digital trading proposition to local and developed world clients seeking to access Africa. Our footprint across 20 territories – most at different levels of digital development – provides a compelling pan-African proposition for global and local clients alike.

While Africa’s record in digital adaptation and innovation is impressive, the technology part is often the easier part to implement. The human and cultural systems, and client behaviour changes, required to give this digital evolution life – like getting customer analogue systems to start pricing electronically to make trades visible 24/7 – is often a lot harder to achieve than the technology upgrade. In short, bank employees, customers and regulators all need to undergo fundamental cultural shifts in how they do things and understand the world.

It is often these broader cultural and market shifts that Standard Bank as a pan-African bank is called on to advise as clients seek to understand and engage Africa effectively. 

Given the rapid pace of digital evolution within Africa’s varied market, customer, legislative and cultural landscapes, we need to balance customer value and efficiency – and regulatory pressures to be more transparent – with what is, in the long run, best for the market. 

As a pan-African bank inextricably committed to the growth and success of the continent, Standard Bank’s digital journey requires a judicious blend of developed world technology with African insight and innovation. This blend should be capable of balancing customer need and legislative oversight in the development of efficient and inclusive markets that sustain long term growth. 

Africa News

Africa gets broadband boost

ITU and Nexpedience, a supplier of proprietary point-to-multipoint broadband infrastructure, are partnering to bring broadband access to Africa.

Under the terms of the deal, Nexpedience will provide 180 new Expedience base stations worth USD 1 million, to be deployed in six nations across the continent. The first nation to benefit from the new infrastructure is Burundi, with deployments also planned for Djibouti, Burkina Faso, Mali, Rwanda and Swaziland.

Designed to withstand extreme meteorological conditions and capable of providing up to 32 kilometres of sector coverage, Nexpedience’s base stations have been specifically designed for rural deployment.

ITU’s Wireless Broadband Network in Africa project aims to develop and implement wireless broadband connectivity and applications that will provide free or low-cost digital access for schools, hospitals, and under-served populations in rural and remote areas Africa-wide.

At the signing of the agreement in Geneva, Brahima Sanou, Director of ITU’s Telecommunication Development Bureau (BDT) emphasized the need to make developing countries part of the global broadband revolution: ‚”This partnership represents another important element in ITU’s efforts to bring broadband technology to the world even in the poorest nations. I am confident that this new partnership will accelerate broadband uptake right across the African continent, bringing the power of high-speed connectivity to users everywhere, from big cities to small villages.‚”

Kiriako Vergos, CEO of Nexpedience said: ‚”Giving access to broadband technology to underserved populations in Africa is of great importance to us. There are enormous benefits to be derived from a ‚’broadband-seed’ deployment strategy, and we decided to partner with ITU because we know that the organization has the team in place to get it done.‚”

ITU Secretary-General Dr Hamadoun Tour√© said the new agreement is a ‚”major step forward in getting Africa connected‚”. Dr Tour√© led the establishment of the Broadband Commission for Digital Development in 2010, which has the aim of putting broadband at the heart of the global development agenda.

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Nokia backs tech hubs for developing world

Nokia, AppCampus and infoDev are collaborating with mobile innovation hubs across Africa, Asia and Latin America to act as scouts for local talent.

Nokia, AppCampus and infoDev, a global innovation program of the World Bank, have announced a collaboration with mobile innovation hubs across Africa, Asia and Latin America – a move that will empower these hubs to act as scouts and agents for local talent, fast-tracking their access to AppCampus funding.

AppCampus was established in 2012 as a mobile application accelerator program managed by Aalto University in Finland. With an 18 million euro joint investment between Microsoft and Nokia, the aim is to foster mobile application development on Windows Phone and any other Nokia platform.

The announcement earmarks part of that investment fund for twenty six awards per annum for the best mobile innovation ideas to be made via the mobile innovation hub network, starting with infoDev’s mobile application labs in South Africa, Kenya, Armenia and Vietnam, as well as mobile application laboratories in Egypt (TIEC), Nigeria (CC Hub) and Mexico. The value of each award ranges from 20,000 Euro (US$ 26,000) to 70,000 Euro (US$ 90,000) depending on the complexity of the solution or business model behind the idea.

‚”By working jointly with the mobile innovation hubs, we are able to connect more effectively with local developers in emerging markets and provide support in terms of funding, especially for locally relevant innovations,‚” says Pekka Sivonen, Head of AppCampus. ‚”Although the criteria to access the AppCampus funding remains the same, with ideas needing to be original, competitive and scalable, the advantage is faster processing and the mentorship provided by these innovation hubs.‚”

The hubs and mLabs will be responsible for scouting talent and vetting ideas to be submitted to the global pool. infoDev’s mLabs foster regional entrepreneurship, employment and competitiveness by providing open spaces where developers can find training, mentoring, technical expertise and access to financing. In a short time, mLab-supported startups have brought over 120 commercial apps to market The best new entries from this network will compete against each other each quarter for the available awards.

‚”Nokia, working closely with infoDev, has supported the establishment and operation of a number of mLabs across emerging markets in support of local developers,‚” says Jussi Hinkkanen, vice president corporate relations for Nokia Middle East and Africa. ‚”The AppCampus collaboration showcases our commitment to strengthening the growing mLab network around the world and infoDev’s vision of supporting emerging market entrepreneurs in conquering local, regional and global markets‚”.

The official launch of the program took place during the mobile stream at the Global Forum on Innovation & Technology Entrepreneurship in East London, South Africa, organized by infoDev and the South African Department of Science & Technology. A key theme of the Forum is how innovation can lead to high-growth entrepreneurship which creates sustainable jobs. Valerie D’Costa, infoDev’s Program Manager says, ‚”The AppCampus initiative fits with the philosophy of infoDev of supporting innovative entrepreneurs from developing countries. We want to support those who can excel with some level of mentorship, skills training and seed financing. We provide potential job-creators better access to markets, which is what we are all about.‚”

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