South Africa's First National Bank (FNB) has published a "White paper on Digital Disruption and the SA Banking Industry" in collaboration with the Gordon Institute of Business Science (GIBS). The banking industry has experienced what some have described as a "digital disruptive tornado" and FNB along with GIBS believe this presents opportunities for financial institutions in South Africa.
The white paper recommends some strategic imperatives to ensure that banks are prepared for this wave of digital disruption.
“The trend of disruption is on the increase, with big and small companies trying to innovate and disrupt to stay ahead. Disrupting innovation is nothing new, but we find that smaller fintech companies are disrupting more. This puts huge pressure on industries to come up with solutions that will contribute to the economy,” said Peter Alkema, CIO at FNB Business.
According to the white paper, the blockchain is probably one of the most impactful breakthrough disruptions in recent years. Blockchain technology will become a new and necessary norm just like the internet and will completely change the way we store and exchange value using digital currencies like Bitcoin. Bitcoin is already accepted at 30,000 online websites through PayFast, one of South Africa’s payment providers that also enable money to be sent from other countries to an account holder in South Africa.
“Banks should be more agile and anticipate ways to improve customers lives through the use of innovative technologies,” said Alkema.
The research further states that, younger customers in most countries continue to make use of mobile services more frequently for their banking transactions than any other form of banking. Most banks are addressing their customers' mobile access requirements and demands for frictionless processes through apps with user-focused design.
Customers have become increasingly savvy and look for efficient and simple access to banking services. Customer expectations are being driven by exponential growth models that are disrupting industries from accommodation to transport; micro-service start-ups are using technology to challenge the asset-heavy incumbents.
“Looking ahead we need to ensure that we continue looking at new and innovative ways of approaching banking. Ongoing partnerships with accelerator programmes will ensure that new talent and skills is ingrained in the industry. This is needed to ensure that the innovation momentum doesn’t die down,” concluded Alkema.