Financial institutions around the world are facing the most disruption. With the growing adoption and penetration of mobile phones, people are becoming more self-banked than ever before. In order for financial institutions to survive they are focussing on providing the best customer experience. New, faster and more trusted ways to bank need to be found in order to cater to the needs of today's most demanding clients. Customer experience should be the focus of all business initiatives, especially given the many challenges that the African Continent faces in meeting customer expectations.
ITWeb events caught up with Raivis Joksts, retail payments professional at Tieto, to find out more about these challenges and opportunities for financial institutions in Africa.
ITWeb: Can you tell our readers how industry developments and customer expectations are fuelling significant disruption within the financial services industry?
Joksts: In the African context, I think the major underlying driver for change in customer expectations lies in growing penetration of mobile phones - both feature phones and smartphones. Those have grown in numbers significantly faster than networks of POSes and ATMs, and also faster than wired home Internet that would contribute to Internet-banking popularity. As a result the mobile phone has become a preferred channel to receive financial services. African financial institutions and other financial product and service providers have been innovative in utilising limited capabilities of feature phones. Now increasingly more, they will also need to innovate on a much more capable smartphone platform, and with it also think about modernising legacy infrastructure solutions that can no longer support products and services needed for today's business cases.
ITWeb: What are the barriers to national and regional payment infrastructures currently?
Joksts: To create a national or regional payments infrastructure means to create something that will be used by most, if not all participants in the payments ecosystem. This inevitably means having to agree on technical, business, process and legal matters. Quite often the hardest obstacle is just getting together, sitting at one table and agreeing on all of those things, as different participants have different market positions, business goals, financial means, etc. In such cases it helps if there is a strong regulator or representative participant association that can take the lead in these initiatives and either motivate the participants to sit and talk, or even force them to do so by issuing mandates. As Tieto we contribute by facilitating discussion workshops and innovation hubs locally to share ideas and help develop business cases.
ITWeb: What major developments have there been that will overcome these challenges?
Joksts: So called instant or real-time payments are on everyone's minds right now. Currently there are about 30 countries in the world where such solutions are already available, including a pan-European instant payments scheme. We see that more and more central banks and other national regulators start re-evaluating their roles and "pick up the torch" of leadership in creating modern, reliable, open and inclusive payments infrastructure. The maturity of these initiatives varies - some have only just begun to define their vision, others are already operating national payment schemes (some of them developed by Tieto), but the trend is clear.
ITWeb: What key points would you like to leave with the delegates who
Joksts:
- Instant payments and instant funds availability is becoming the new normal;
- Any national or regional payments initiative should have an "ecosystem" thinking to incorporate as many value chain participants as possible; and
- Competition should be left in the area of products and services towards end customers, while collaborating on the infrastructure.
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