No ad to show here.

Banks, fintechs should collaborate to drive financial inclusion

Fintechs: South Africa and other African markets are likely to see greater collaboration between banks and fintechs to offer new digital banking services to overcome friction and address financial inclusion challenges. Photo: Supplied/Ventureburn
South Africa and other African markets are likely to see greater collaboration between banks and fintechs to offer new digital banking services to overcome friction and address financial inclusion challenges. Photo: Supplied/Ventureburn

Retail banking in South Africa is increasingly competitive, with fintechs, neobanks and digital players disrupting the banking value chain with new and emerging technologies.

For banks to keep up with the rapid pace of change and be loved by their customers in the future, they must reimagine customer service and leverage data to personalise engagement and better predict and exceed customer needs, according to a new article by Boston Consulting Group (BCG).

No ad to show here.

The article, “I love my bank – how the digital revolution in banking is transforming the customer experience”, shows that South African customer preferences and the ways they want to interact with their bank are changing.

It follows a recent report by Discovery Bank in partnership with BCG, the Future of Retail Banking, which found that over 80% of consumers prefer to conduct their day-to-day banking digitally, while about 60% say they would be comfortable with a completely digital full-spectrum banking offering. The majority believe there may be no need for banks to have physical branches in just five years.

“Retail banks are in a competitive starting position but will need to adapt. They benefit from high levels of customer trust, strong brand awareness, and skilled staff. This can play an important role in an omni-channel customer relationship,” says Tijsbert Creemers, managing director and partner at Boston Consulting Group, Johannesburg and co-author of the article. “But without change, incumbents face separation from customer touchpoints, losing access to customers and valuable data in the process.”

Fintechs transforming the way people interact with money

Digital channels hold the key to the transformation incumbent banks need to undergo: they are more than just avenues to reach and serve customers; rather, they are transforming the way people interact with money and financial services. Customers in South Africa and other African countries are young and digitally savvy and digital adoption is growing rapidly across the continent. However, customers experience friction with the financial system and financial inclusion remains limited.

South Africa and other African markets are likely to see greater collaboration between banks and fintechs to offer new digital banking services to overcome friction and address financial inclusion challenges.

“There is a space for both incumbents and challengers. Incumbents are able to leverage data from a vast, stable customer base to better understand and meet customer needs. Challengers are agile and able to develop tailored digital propositions for specific customer journeys,” says Frederic Boutet, managing director and partner at BCG, Johannesburg and co-author of the article.

Incumbent banks need to respond to the growing pressure from challengers. They need to redefine their approach and decide on a business model that best suits their customers’ expectations if they are to retain their position as the primary hub for customers’ financial needs and journeys.

For both incumbents and challengers, data lies at the heart of the ability to meet and exceed customer needs. “The banking industry in South Africa is more advanced than other industries in the use of data analytics, and this must now be scaled and expanded to include other solutions such as identifying unusual spending behaviour, identifying ‘red flags’ for loan applicants, and customer segmentation for marketing campaigns,” says Boutet.

Banks will also have to leverage customer data and create a new way of working to deliver personalised customer interactions. “Combining this withhigh-quality digital channels and customer-centric business and interaction models will enable South African retail banks to successfully transform for a digital future and regain their customers’ love,” says Creemers.

READ NEXT: Private equity firm raises $296m to drive digital inclusion

No ad to show here.

More

News

Sign up to our newsletter to get the latest in digital insights. sign up

Welcome to Ventureburn

Sign up to our newsletter to get the latest in digital insights.

Exit mobile version