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Banks eye fresh digital plan for service delivery in post-coronavirus era

Covid-19 pandemic has disrupted the traditional
Covid-19 pandemic has disrupted the traditional business models and the banking industry plans to use the lessons learnt in a new digital strategy going forward. PHOTO | SHUTTERSTOCK 
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Financial institutions are striving to adopt omnichannel capabilities post-pandemic as part of their digital strategy plans, a new report has stated.

Omnichannel banking entails making the same set of services available to customers across all the channels, both digital and offline.

Therefore, clients can perform the same banking operations, whether they use a website, a mobile app, a call centre, a brick-and-mortar branch, or any other available channels.

The technology builds on Big Data allowing clients to transact or shop with the bank through multiple channels including desktop or mobile device, telephone or in a brick-and-mortar store.

A survey conducted by NETinfo, an innovative technology company, has shown that about 93 percent of the institutions plan to adopt the omnichannel technologies after their experience with coronavirus crisis.

“Omnichannel makes sense on so many levels and it is true to say that financial institutions that do not embrace this motion will be left behind. Digital onboarding is joint second and this technology has shown just how important it is to obtain new customers without having them visit a branch,” the report stated.

“Open banking is the other second-place technology and further proves how forward-thinking African banks are.”

The banking industry and customers’ interaction with financial organizations have been shaken to the core as a result of Covid-19.

The pandemic has made people visit bank branches less frequently and hence shift on apps, reducing traffic, especially in April and May.

But even as Kenya lead in the use of mobile phone technology at 91 percent penetration and in turn resulting in mobile banking spike, there is still a huge gap between tier-one banks and other financial institutions.

Globally, Kenya is also placed with the highest share of internet usage with mobile phones compared to desktops.

OPEN BANKING

NETinfo business development manager Thomas Yieke said in the past two months, their absence in the digital space had affected most of these financial institutions.

“However, most tier-one institutions and banks have adopted the online and open banking and therefore have been advantaged because they were able to offer same banking services to their customers,” he says.

The Cyprus-based company is already reporting an influx of interest in online banking and the need for transfer of services to digital platforms by governmental agencies.

The survey on embracing change and banks’ digital transformation released early in June has shown that only 54 percent of financial institutions in Africa had been able to adopt the omnichannel solution in the past, providing 360 degrees customer visibility.

About 46 percent were still using silos, with separate systems for internet banking and mobile banking.

“This shows us that from our participant banks while many have embraced the omnichannel motion there are still those running silos.

“We believe omnichannel will become a necessity going forward and it seems some African banks must re-think their current silo approach,” the report stated.

The poll has shown that most banks have set out different digital channels as part of their omnichannel strategy plans following their recent experience with the coronavirus crisis.

Mobile banking channel app forms the largest channel out in the plans at 92 percent.

Internet and open banking (open APIs) followed at 77 percent and 69 percent respectively.

About the other 54 percent, 38 percent, 23 percent and 15 percent of the institutions plan to add automated teller machines (ATMs), agency banking, kiosk and wearables technology channels respectively.

The pandemic has also seen most employees’ engagements, training and information sharing conducted through virtual meetings on apps like Zoom, GoToWebinar and Google Hangouts, among others.

As a result, about 54 percent of the institutions in the poll set to include chat or video conferencing in their plans.

“As expected, financial institutions in Africa are planning to embrace the full set of digital channels going forward.

“In a world where the mobile phone is king it is not surprising that most banks plan to have mobile as part of their strategy going forward with Internet banking a close second,” the report stated.

“Forward-thinking banks in Africa are also trying to replicate the success of open banking in other parts of the world and see the motion as an opportunity to be grasped early, without the need for legislation to impose this.”

Evidently, over the past few years, banking consumers have already become accustomed to the changes that have been put in place by some of transforming banks.

COST REDUCTION

Equity Group’s investor briefing for the financial year ended December 2019, for instance, shows 97 percent of all transactions happen outside the branch while 93 percent of all loan transactions are via the mobile channel.

The bank’s business model has continued to leverage on cost reduction measures principally through the use of mobile, Internet, agency and merchant banking infrastructure.

On the other hand, KCB Group reported 97 percent digital transactions up from 88 percent registered in 2018.

The bank that recently acquired National Bank of Kenya, a former tier-two lender, said it is revamping the subsidiary’s digital banking proposition in line with the lender’s strategic objective of becoming a digital leader.

“This is aimed at delivering competitive financial solutions as well as meeting the changing needs of customers who are increasingly using the digital platform,” reads KCB Group’s 2019 financial statement.

“In this regard, a renewed focus is being laid on mobile banking, Internet banking, and agency banking channels.

“This is in addition to optimising the branch network bolstered by the opening of four new branches post-acquisition, as guided by an ongoing mapping and audit exercise.”

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