Ellen Kumwenda Mtine, Head Cash Management, Transactional Banking, Africa (ex. S.A.) at Absa CIB explains how Covid has driven digital adoption in banking products.
It has been said that 2020 was a year of survival and 2021 will arguably be the inflection point that presents pathways out of the pandemic. Distinct patterns & relationships have emerged and will continue to shift – across organisations, businesses, regulators, consumers, and society. Green shoots have already presented themselves and the future players have not only capitalised on this but have already organised themselves to capture post-pandemic opportunities, and some are already seeing a clear step-change in growth.
Following the pandemic, distinct trends dominated and will very likely continue to embed themselves into consumer transactional preferences and key client needs.
Efficient liquidity management is (still) a core priority
Maintaining strong liquidity positions, whilst seeking optimisation remains foremost in Treasurer’s minds. In addition, the quest to shorten accounts receivable whilst extending accounts payable through dynamic liquidity tools that provide the ability to produce forecasting, predictability, and previously unmodelled stress tests have been important but not at the expense of unsettling already unstable supply chain predictability.
Banks have seen an increase in client willingness to test new technologies that provide control and enable deeper understanding of business risks. Human-in-the-loop approaches with machine learning to build solutions that, for example, improve cash flow forecasting ability have been key for corporates, as well as spending time improving internal knowledge management systems for better visibility.
The lasting effect of Digitisation has been embraced
Payments, specifically, have continued to evolve. Payments experiences across Africa are varied, innovative and seamless at best, clunky and slow at worst. The sector sits at various stages of digitisation, disruption, demonetisation, dematerialisation and democratisation. Creating meaningful client experiences requires striking the right balance between what is possible, innovative and solves a real problem.
Alternative payment solutions enabled by banks, technology companies, payments aggregators and mobile network operators delivered through a combination of existing and new solutions and prototypes (some conceived, built, tested, and deployed quite rapidly during the pandemic) have monumentally accelerated digital adoption, in some instances upending long entrenched transactional behaviour altogether.
Regulation has also been a key catalyst to this. For example, Statutory bodies across Africa have demanded e-commerce alternatives as well as API based verified payments solutions to improve tax compliance and broaden the range of payment options. During the pandemic specifically, regulators across Africa increased mobile money transacting limits and removed or capped transaction fees, lowering the cost to serve, and facilitating the progress towards frictionless payments in several countries.
In addition, Cryptocurrencies can no longer be ignored – Central Banks are already pursuing Central Bank Digital Currency (CBDC) initiatives. Fiat to crypto (& vice-versa) products will become more topical and will continue to enjoy more mainstream discussions.
Partnerships are still important
All payments providers and partners need to work towards achieving relevant and scalable interoperability as far as possible whilst leveraging existing channels that work.
This will continue to lead all players (banks, technology companies, payments aggregators, mobile network operators) to find relevant partners with meaningful connections across mobile money, collections, statutory payment, merchant acquiring and cross border payment propositions. A wave of solution providers is sweeping through the continent with very real and scalable ideas at an infinitely faster rate of change than previously experienced, and end to end digital solutions, which facilitate enriched multi-client category and multi-sector ecosystems, will be possible by those that successfully leverage different infrastructure resources.
Risks, specifically Cyber risks, are on the up
With a surge in digital transactions, trust and security have moved to the fore. Increased visibility and scrutiny of transactions coupled with the ever-growing need for real-time transactions will be key.
Given the pivotal role of the financial sector in economic stability, banks as trusted custodians of depositor’s funds must continue to invest in infrastructure that provides security, including closer scrutiny of potential risks that may be introduced by partners. While technology that enables transaction speed and visibility is important, security is paramount and a single security breach can destroy confidence in new innovations, and cost much more in financial losses.