For the longest time, established banks seemed immovable from their perches. Their positions were solid and the cost to take them on remained prohibitive. A rift is, however, emerging among banks in Africa as small specialist challenger banks are set to storm ahead of their larger rivals, producing better returns as they target underserved markets, explains Andries Brink, CEO of Andile Group Holdings.
“Banks increasingly view other banks – rather than non-bank entrants – as their main competitive threat. New challenger banks are now perceived as the leading competition. There is also a growing acceptance that companies providing new financial technology could help banks alleviate competitive pressures, but traditional banks face challenges working with these companies, because their internal procurement process is a major hurdle to successful collaboration,” says Brink.
According to Brink cheaper technology, the shrinking presence of international banks and a population demanding better financial services will cause a rise in African based challenger banks that will take the lead from the continent’s more traditional banks and foreign competitors.
“Many don’t realise that an opportunity has arrived for African challenger banks that could spark a dramatic change in the established order. For several regions, the 2009 financial crisis was a curse that brought heavier regulation to the finance industry. One of the consequences was a refocusing of international banks’ core assets. Due to regulation, they’ve been forced to look at how they allocate capital within their global banking operations.
“As a result of such reallocation of capital, numerous services had to be removed from non-core markets, including Africa. This action expanded the vacuum in an already under-exposed and underserved banking sector in Africa. According to the Global Finder Database a staggering 66% of Sub-Saharan Africans did not have a bank account in 2014,” says Brink.
He says small national markets, lacking minimal financial literacy, poor judicial systems and low-income levels all contributed to this situation. Meanwhile, a fast-growing young population with a taste for technology hints at a vast untapped market. “Traditional banks don’t have the agility to tackle that opportunity and it can often cost them dearly, as seen with Barclays’ exit from the region. But challenger banks have a chance to shine.
“Challenger banks can be more agile. They can focus on specific services, which reduces their regulatory burden, and they have the flexibility to move with small yet active markets. Large international banks are sometimes too big to succeed in nuanced markets. But local challenger banks have the attitude, the grassroots view and the ability to move fast.”
Brink says the technology required to run a bank used to be very expensive, but this is no longer true. “Along with 2009’s tightening regulations, the less expensive technology shifted fortunes in favour of challengers. Systems that used to cost hundreds of millions of dollars can now be acquired for not even tens of millions.
“Since challenger banks don’t have the enormous legacy of established banks, they can leapfrog their competitors without the restrictive technical debt. Mobile systems, true Know Your Customer capabilities and other opportunities wait to be explored. Challenger banks are characterised by their ability to focus more closely on the customer journey. Their access to technology galvanises that advantage.
“Challenger banks are not a fad or a blip. Many are attracting significant investments, motivated by their nimble nature due to lack of technology legacy. This shouldn’t be understated: technology is arguably any financial institution’s biggest expense – even more than staff costs – due to the regulatory complexity that has to be navigated. Any opportunity to cut back on that cost is a massive boon.
Incumbents know this. According to the 2018 Temenos survey, banks cite challenger banks as their top competitive threat. That’s higher than other incumbents and fintech start-ups.
Brink says the technology and experience is available in Africa for challenger banks to make the leap forward. “We have good solutions on offer and have partnered with some of the leading fintechs in the world to tailor the available solutions for our customers in Africa. Recently with cloud and our Financial Markets Fabric, we are able to significantly speed up the rate of change at significant savings to our customers.”
Brink says as the big banks focus their energies elsewhere, an entire continent with a booming population and many unbanked customers and underbanked corporates demands attention.
“This is a huge opportunity, a place where small banks can take the lead and win over customers. The game has changed. The technology is accessible and moving faster than ever. We often hear talk of how financial services are being disrupted by new ideas. This is one of the big ones. Challenger banks, by finding their groove, will spearhead growth in our region by driving trade and trust.”
New iPhone pricing for SA
The iStore has announced that the latest iPhones, the Xs and Xs Max, can now be pre-ordered at www.myistore.co.za , and will be available in stores starting 28 September 2018.
|iPhone Xs and iPhone Xs Max feature 5.8-inch and 6.5-inch Super Retina displays that offer remarkable brightness and true blacks while showing 60 percent greater dynamic range in HDR photos. iPhone Xs and iPhone Xs Max have an improved dual camera system that offers breakthrough photo and video features, A12 Bionic chip with next-generation Neural Engine, faster Face ID, wider stereo sound, longer battery life, splash and water resistance,
Pre-orders will be open for cash purchases and on iStore’s revised payment plan in partnership with FNB Credit Card, allowing customers to pay off their iPhone at a reduced interest rate. However, the contract period is 37 months rather than the usual 24 months.
Accenture opens Fjord design centre in Johannesburg
Accenture has launched its first design and innovation studio on African soil, Fjord Johannesburg.
The company says the move significantly expands its design capabilities and demonstrates its commitment to unlocking Africa’s innovation potential through the creation of experiences that redefine industries in our constantly evolving digital era.
The new studio, opening in November, will be located at Accenture’s new 3875m² offices in Waterfall. It will be led by Marcel Rossouw, design director and studio lead for Fjord Johannesburg.
Said Rossouw, “Brands are constantly asking, ’how does one take a business need or problem, build that out into a definition of a service experience, and then bring it to market?’ It’s about re-engineering existing service experiences, identifying customer needs, prototyping rapidly, iterating often and proving or disproving assumptions. But it’s also about getting feedback from customers. The combination of these factors helps companies advance towards the ultimate service experience.”
Fjord is the design and innovation consultancy of Accenture Interactive. The Johannesburg location marks its 28th design studio globally, solidifying its position as the world’s leading design powerhouse.
Working in the same location as Accenture Interactive will allow Fjord to fuse its core design strategy DNA with the digital agency’s expertise in marketing, content and commerce to create and deliver the best customer experiences for the world’s leading brands.
Accenture Interactive Africa‘s blend of intelligent design and creative use of technology has already been used by some of South Africa’s largest and most prominent brands, including Alexander Forbes, Discovery, MultiChoice and Nedbank. The digital agency has also earned industry accolades for its innovative and compelling business results, most notably two gold awards in the Service Design category at the 2017 and 2018 Loeries awards.
“Great design tells great stories,” says Wayne Hull, managing director of Accenture Digital and Accenture Interactive lead in Africa. “It unifies a brand, drives innovation and makes the brand or service distinctive and hyper-relevant in both the digital and physical worlds. This is critical to achieving results. Having Fjord Johannesburg as part of Accenture Interactive, and collaborating with all of Accenture Africa, will provide unique experiences and forward-thinking capabilities for our clients.”
“Businesses in South Africa are becoming more design-aware and are looking to take greater advantage of design skills to compete with the rest of the world,” said Thomas Müller, head of Europe, Africa and Latin America at Fjord. “We’re excited to open our first design studio on the continent and to be part of an emerging market that is ripe for design and innovation, and open for business. Developing markets like South Africa are challenging assumptions and norms about what digital services and products are meant to be, and we’ll strive to put design at the heart of the innovation being produced there.”