Technology and innovation in East African banks

Posted on September 13, 2014 12:00 am

Since the beginning of this year,it  looks like a topsy turvy affair for the financial services industry across East Africa.In a business environment strongly tied to compliancy and regulatory changes, increased customer turnover, and the ever present need for increased efficiency at lower cost,the most successful financial institutions this year will be those that can navigate all these challenges and still deliver an innovative,multi-channel experience to customers.Crucial to this will be the use and adoption of technology to out innovate each other.To improve service levels, increase data visibility and create value, the financial service sector has to embrace technology trends sweeping the market.In East Africa just like other regions in Africa,mobility remains regions ’s “biggest tech disruptor” for the financial services industry.Consumers are minimising their face to face traditional interactions in favour of purpose and customised built applications that provide immediate and focused value . Recently,researchers claimed that financial organisations in East African region will have to move from ad hoc infrastructure projects towards managed services as mobile initiatives mature.That is expected to allow banks and other financial institutions to leverage on cost effectiveness and also the scalability paradigm. Through transitioning to a realtime processing platform,banks in Uganda, Rwanda, Kenya and Tanzania could realise tremendous gains in scalability, increased performance of mission-critical systems,and long-term cost savings.At the moment,areas of focus for East African banks is the core banking system improvements as they seek to upgrade core transactional engines and improve the way they engage with their customers as well as create opportunities for banks to out-innovate their peers.

Innovations in mobile platforms, video supported banking, social integration and customer relationship management are already taking precedence to connect with the customers on a virtual level.Time has come for East African banks to focus on their technology efforts on customers.Mobile payments have long been adopted as the biggest revolution in payments in the region. Convenience and ease of use are important factors in encouraging East African consumers to adopt mobile based solutions to pay.Here are some of the interesting figures I obtained two days ago from a research company focusing on the East African region. Close to 48% of smartphone owners in the Kenya have used them to pay using mobile money while 26% of smartphone owners in Uganda and Tanzania have used them for mobile banking. In addition to that, 27% of tablet owners in the Kenya, Uganda and Tanzania have used them to shop via mobile and 11% of tablet owners have used them for mobile banking.There are strong motivators for the financial sector to continue pushing  for core transformation and innovative products this year. For example regional experts expect that innovation spending in the financial services sector to grow at a very healthy pace,especially in Uganda,Tanzania and Rwanda.Question industry watchers in East African region are asking is whether banks are equipped with enough knowledge and choice to ensure they continue to innovate fast enough to address market opportunities. Failure means mobile money sector will continue to eat into banking market.Because of such trends, there are huge opportunities for banks to innovate on their core banking projects, in particular channels, compliance, and integrated data management.

Contador Harrison