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.”
Here is 2019’s tech
From AI to flexible displays, this is the tech that will shape 2019, writes CY KIM, MD of LG SA
2018 was incredibly exciting for the technology sector which has seen myriad advancements. These include the fundamentals of artificial intelligence (AI) being established, robots helping around the house and consumer electronic innovations such as TVs that are so thin, they might be mistaken for windows, or paintings.
2019 promises to be another significant year as people’s attitudes are changing and technology becomes embedded in our lives. Smart electronics manufacturers will ensure their plans for the future match evolving consumer needs with suitable technology.
We take a look at the biggest innovations for 2019 from AI to lightning-fast internet speeds and flexible viewing surfaces, and we shed some light on how these evolving technologies will impact on how we live and work.
AI will come of age
AI has experienced a marked increase in investments and according to Forbes, 80% of enterprises are investing in AI while 30% are planning to expand their AI investments in the next three years. It’s estimated that during 2017, venture, corporate and seed investors put about $3.6-billion into AI and machine learning companies.
This investment trend has given rise to innovation in deep learning products that have the potential to change the world for the better.
Yes, AI has been around since the 1950s, but its consumer benefits weren’t visible until recently and 2019 will be the year when AI starts to really take off and become a necessity, not just in the home, but in every facet of our lives.
The potential of AI is endless as this technology goes into everything from small watches to cars and even gigantic, connected smart cities. AI is also starting to find its way into TVs, washing machines, refrigerators, speakers, mobile phones and even air cons as products adapt to human behaviour.
Lightning-fast internet speeds
Faster internet speeds enable quicker response times for business tools that we all rely on to get the job done. It will increase the efficiency of workers and will provide reliable communication tools for companies that rely on remote workers.
Given that the so-called gig economy has grown exponentially in recent years, the expectation is that the evolving workforce will contain a higher percentage of employees, or contractors who do not work in a central office.
5G has the potential to change the world the way the internet did a few decades ago. The fifth generation of wireless technology will take internet connectivity to a new level as the internet of things (IoT), will bring about the potential for everything to be connected to everything.
However, 5G is not just about faster internet speeds. It will create new possibilities in numerous sectors, including medicine, transportation and manufacturing.
A smarter world through IoT and AI isn’t possible without 5G’s speed and capacity as the system is able to carry large numbers of connections simultaneously, and is therefore crucial to the development of smart cities, autonomous cars and smart homes.
Life-enriching smart technology
Much like technological innovations, consumer habits and preferences are changing drastically when it comes to home appliances and particularly, home entertainment.
Most consumers believe that advancements in home entertainment tech is life-enriching and that their life is better with the latest tech at their fingertips as it allows them to stay indoors and enjoy quality time with friends and family.
The value of home entertainment tech lies in how it allows loved ones to share experiences, thereby bringing them closer together, particularly during big events such as major sporting events and holiday celebrations.
The potential of flexible viewing surfaces will not only change home entertainment, but also marketing techniques in shopping malls, city centres and shop fronts. With the ability to curve around any environment, this technology creates the perfect platform for signage and consumer engagement that stands out from the crowd.
LG Electronics is an established market leader in innovation and has already started to incorporate these futuristic technologies into its products, which are designed to make consumers lives more convenient. We will continue to release amazing products that utilise smart tech to connect with consumers while staying ahead of the evolutionary curve.
AI will power IoT
A simple gesture. A world built from accessible assets that drive human convenience and interaction. This is the future that’s powered by the Internet of Things (IoT) and artificial intelligence (AI), two of the planet’s hottest topic trends right now for a very good reason. They work, says PHATHIZWE MALINGA, managing director of SqwidNet.
They are also the fuel driving digital transformation in 2019. These are the technologies revolutionising performance, process and productivity. They are also transforming industry challenges across agriculture, retail, health and the public sector and are set to continue on this path well into 2019.
IoT has become the central nervous system of technology, allowing users to make intelligent decisions without feeling overwhelmed by choice or technology. Its ability to make life easier on every level – business, consumer, public sector – is the next step of the IoT evolution as it improves quality of life using AI and machine learning to analyse past behaviour and the insights it gleans to change the future.
This is the vision of the perfect IoT and AI future. The two technologies so intertwined and connected that they are influencing one another’s growth, development and adoption. IoT provides the ability to generate data from the changing circumstances of an asset and the infrastructure required to transport that data to where it can be accessed and analysed. Considering the sheer volume of data generated, it is impossible for a human being to analyse it at the speed required for real-time decision making. And this is why AI has become so important.
Today, it is possible to write code that can read the data generated by IoT and identify meaningful patterns at the right speed. This code can also be written in such a way that it can learn from the results it found the last time it ran. It is code that can learn, an algorithm that can self-educate. In this way, AI requires the power of IoT to generate the data it needs to learn and IoT needs AI to ensure that this data can be made meaningful, in time.
Over the next six to 12 months, it is very likely that the potential of IoT will see numerous small players emerge across all industries. They will be focused on servicing those who have yet to experience the full benefits of IoT and they will use technology to deliver solutions that are just ‘good enough’. This could potentially see the more established players being disrupted but most will likely be using the same technology to innovate and to create solutions that don’t just meet customer expectations but transcend them. Of course, there will be some companies that will remain complacent and they will be the ones battling for customer attention out on the IoT playing field with the small, fresh players.
While on the topic of the customer, the next year is likely to introduce a lot more variety and scalability. The consistent drop in the cost of technology will allow for more choice in solution and capability and this will have a knock-on effect with regards to quality of life and the choices customers make when it comes to solution and service provider.
On the business frontier, the growth of IoT and AI offer an interesting bouquet of choices and opportunities. They allow for investment into solutions that generate better insights that, in turn, generate better products and services. Organisations that ignore this potential or think they can sidle on past what IoT and AI bring to the business are likely to be the ones that are left behind. It’s a cliché for a reason. A single look back at the companies that have emerged as big players in industries previously perceived as impenetrable proves the point. Innovation isn’t optional, it’s an essential part of business DNA and both IoT and AI are critical parts of the ability to innovate at speed, with relevance, and on time.