Bank account of the world is a smartphone

If banks want to remain competitive in the face of neo-bank and fintech upstarts, they will have to fundamentally change the way they do business to be digital first. And if they are going to achieve that goal, then working with technology partners to ensure that they have the right infrastructure in place will be crucial.

That was the overriding message from the speakers at a media roundtable event hosted during the Huawei Intelligent Finance Summit for Africa 2023, recently held in Cape Town, South Africa. Through the course of the session, it also became apparent that if traditional banks are to survive in the changing financial landscape, they can’t just put technology on top of their traditional processes and expect to compete and thrive. That’s as true, if not more so, for Africa as it is for the rest of the world.

According to Jason Cao, CEO of Huawei Global Digital Finance, African banks have an opportunity to take advantage of the continent’s mobile penetration rates and increasing financial needs.

“Mobile is the core of everything,” he said, adding that there are similarities between mobile payments in China and in Africa. Futurist and author Brett King agrees that this mobile focus will be important, not just in Africa but around the globe.

“The bank account of the world is a smartphone,” he said. “In 2017, the number of transactions across the Chinese mobile wallet ecosystem passed all of the plastic card transactions in the world for the first time. Half of the world will use a mobile wallet by 2025, credit and debit card use will be down to 30% of global commerce, and cash around 10%.”

Safety is the primary reason, secondly, as all the speakers noted, is that a focus on mobile helps provide the best possible experience for the bank’s customers.

Improve customer experience

“The financial industry should pay close attention to users and their demands, embracing changes,” said Cao, “Huawei is dedicated to helping its African financial customers address challenges and accelerate changes across six fields: shifting from transaction to digital engagement, cloud-native and agile businesses, data usage democratization, secure and reliable infrastructure, hybrid multi-cloud and Lego-style modular services, and automated and predictable operation.”

“In this way, Huawei will facilitate financial digitalization and innovatively improve productivity in Africa. Revolving around stability, agility, and intelligence, Huawei aims to support customers to build ‘non-stop’ financial services, and achieve ‘non-stop’ development alongside ’non-stop’ innovation,” he added.

Someone who has firsthand experience of how taking a digital-first approach can help improve customer experience is Eric Muriuki Njagi, Group Director, Digital Business, at the NCBA Group, one of Africa’s largest financial services companies.

He pointed out that, for banks, making the choice to lead with technology is about deploying “money at the speed of trust.”

As Njagi pointed out, the global banking sector has come a long way from 20 years ago when making transactions, particularly those taking place across borders, required either making a SWIFT payment or writing out a physical cheque.

“We now have payments being made instantly or in a matter of seconds,” he said, adding that the same now applies to credit. “We’re now initiating and completing about 6 million loans a day, with an average of two seconds required to complete each one.”

But, the NCBA director noted, that kind of speed means very little without trust. In a world where just five percent of fiat currency is made up of hard cash and the rest is essentially algorithmic, that’s especially critical.

“How do we trust the algorithm,” he asked.

Finding stability in the cloud

The answer lies in a concept that Huawei calls “non-stop banking.”

The concept doesn’t just refer to the ability of customers to instantly make transactions but also of the bank to achieve non-stop development alongside ’non-stop’ innovation.

A good place to start on that front is with stability. As Zhentao Chen, CTO, of Digital Finance, Huawei Sub-Saharan Africa pointed out, that’s not something African banks have always been able to take for granted.

“For some of the banks, one year system availability here is around 99%,” he said. That might seem good, but it is as much as 50-60 hours of interruptions. That, in turn, can be incredibly frustrating for customers, especially when those interruptions run up against them trying to make a payment or transaction.

As Chen pointed out, banks need to ask themselves, “if our current systems are not so stable, how should we change that?”

Here, moving back-end systems to the cloud can be incredibly important.

“Cloud can help banks bring about zero-downtime financial services,” said Cao, adding that if they’re to get the most out of it, they must realise that, “cloud is not just a technology, but an enabler”

No time for delay

Ultimately, however, if traditional banks are to compete with fintechs, they can’t just bolt on these technologies. Instead, they must integrate them into a new approach which is entirely digital-first.

“The business of banking is, first and foremost, about being the best possible digital organisation,” said King.

“It’s a mindshift to becoming a technology company that operates a banking license,” Njagi concurred.

Fortunately, more and more players in the banking sector are coming around to that line of thinking.

“Nowadays more and more bankers need to go further when it comes to digital transformation,” said Chen. “We just want to help our customers in the banking industry achieve digital transformation.”

Echoing that sentiment, Cao concluded by saying that Huawei is, “committed to working with our African customers to focus on the challenges and accelerate digital transformation.”