Markets & Finance

SAP Africa urges banks to go digital or brace for tough times

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Digital revolution represents a threat to the incumbent banks. PHOTO | FILE

Banks in the region have been advised to embrace digital technologies to counter the disruption from financial innovations. Failure to do so, warns a new research by SAP Africa, may expose them to a tough future marked by thin profits.

According to the research, upstart financial technology firms are introducing new customer-centric innovations at a pace unmatched by the formal traditional banking sector.

It notes while the digital revolution represents a threat to the incumbent banks, they should be wary of focusing on maintaining traditional advantages and rather think of utilising technology to create new opportunities across the entire value chain.

Digital transformation, says the study, can drive adoption of banking services by enabling banks to develop and deploy tailored, customer-focused products and solutions.

“The ability to embrace disruptive fintech products and services will allow banks to ride the wave of uncertainty and emerge strong and future fit,” said Darrel Orsmond industry head financial services at SAP Africa.

Despite the rapid pace of disruption and the evolution of the banking sector, the research assures lenders that most customer needs will be fundamentally the same five or even 10 years from now. For example, saving for retirement, buying a house and paying for education.

“What is likely to change, however, is the role of the banking sector in providing such services,” says the report. “Smart, forward-thinking banks will embrace digital transformation by adopting cloud technologies to reduce costs, analysing data to create more personalised services, and using customer-focused channels.”