How digital banking can impact Africa

Mobile money can serve as a gateway to financial inclusion, it
enhances the impact of international remittances on development. Digital
platforms enable a significantly lower cost to serve and increased
cross-selling of products in emerging markets while smartphone adoption
and internet penetration are fuelling the expansion of e-commerce.

According to GSMA,
mobile money has become the leading payment platform for a digital
economy in emerging markets. In Africa, the spread of mobile money
beyond is happening within Sub-Saharan Africa. In 2017, Western and
Middle Africa were the fastest growing areas of Sub-Saharan Africa, led
by tremendous growth in registered accounts in countries like Ghana,
Côte d’Ivoire and Cameroon.

Earlier this year, Standard Chartered Bank launched a digital bank in
Côte d’Ivoire. The bank plans to duplicate this strategy in other
African markets

1. What is the potential of online banking in delivering seamless services?

We have already seen the banking landscape evolve due to more and
more users adopting online and mobile banking into their daily financial
activities. In fact, according to a report by fintech analysts, Jupiter
Research, this year digital banking users worldwide are expected to hit
the 2 billion mark, with no signs of slowing down. It is set to
continue this growth at an estimated rate of ten percent per year.

This is indicative of how digital is becoming the new norm: the way
we transact with each other and with brands is becoming more digital,
and our industry is no exception. Offering an exceptional digital
experience is undoubtedly a key differentiator in our market where
customer satisfaction experience is critical. We are all striving to
meet customer expectations and to exceed them.

A great example of this is the Bank’s recently launched digital
retail bank in Côte d’Ivoire. For the first time in the market,
customers can now execute all their banking activities right from their
mobile device, starting with opening their bank account in less than 15
minutes.

Through seamless, online and mobile platforms like this, we aim to
provide as much freedom and accessibility to our services, and above
all, we want to ensure our customers’ banking journey is a memorable
one.

2. How can digital banking impact Africa’s reliance on cash?

Digital banking has the ability to have a huge impact on Africa’s
reliance on cash. Despite significant strides in financial technology in
the Sub-Saharan continent, a large majority of Africans still rely
heavily on cash transactions. A good example of this is remittances –
over one million Africans visit a physical location every month to make a
cash-to-cash transfer and pay an expensive transaction fee in the
process. In fact, the cost of sending money in Africa is so high that if
senders opted for digital services instead, they could easily save over
US$125 million a year in total fees. This is according to a new report
from the government-funded non-profit Financial Sector Deepening Africa
(FSDA).

Digital remittances can help resolve these issues by significantly
reducing the costs associated with moving money around through
traditional channels. The widespread use of e-wallets and tie-ups with
telecommunication companies are beginning to pave the way to less
reliance on cash in Africa. Along with less reliance, comes increased
security as digital banking and e-wallets avoid the need to carry large
amounts of cash.

3. How does digital banking benefit emerging markets?

Globally, the World Bank data suggests over 2 billion individuals do
not have access to basic financial services like a debit or savings
account. The on spur of digital financial services is one way we can
bring the unbanked into the formal financial system.

Digital banking can help developing countries unlock their economic
potential and accelerate their social development by increasing
financial inclusion and access to credit facilities – not least for
small and medium-sized enterprises, which are the backbone of most
emerging markets. A recent report by McKinsey Global Institute reported
that the widespread use of digital financial services can increase the
GDPs of emerging economies by US$3.7 trillion by 2025 and create over 95
million jobs in the process.

4. What are the potential security threats of an online banking platform?

The more we move our everyday activities online, the more exposed we
are to a new array of threats, and the more sophisticated these threats
are becoming. This is true for online banking, as well as any other
online activity. Having said this, online security measures have come a
long way in the last few years and digital banks now offer the same
level of protection as their traditional brick-and-mortar counterparts.

Criminal use of cyber tools and channels is on the increase.
Phishing, which is the act of sending fake e-mails from reputable
companies in an attempt to get user information, is one of the most
common threats. This is closely followed by Vishing, Trojan Horses, Mule
Operations, and many other threats which we must take into
consideration when operating online.

At Standard Chartered, as we continue to develop and evolve our
digital offering, cybersecurity continues to be a top priority. Our
banking systems are managed by skilled experts and protected by multiple
security lines of defense, including firewalls and encryption. We also
constantly monitor threats and online activities round the clock to
detect any fraud and take preventive measures to ensure accounts are
kept safe.

5. How does Africa differ from other global regions when it comes to digital banking?

While digital banking in developed markets like North America and
Europe is well-established, we have not seen the Sub-Saharan’s full
potential yet. The opportunity in Africa is unique because it has the
potential to remedy some of the continent’s greatest economic challenges
while simultaneously presenting some of the largest opportunities for
digital and online banking.

Côte d’Ivoire has the 5th highest rate of mobile money accounts in
the world, the main reason why we launched our first digital bank in the
market. However, this mobile money rate is closely followed by Kenya,
Somalia, Uganda, and Tanzania – and that is just the tip of the iceberg.
Cell towers are giving more and more Africans accessibility, bringing
new choices and opportunities to the financially un-serviced. We have
plans to roll out our digital retail bank across other countries in
Africa, and we are excited at what these services can do for the
markets.

6. What are some of the challenges of a digital bank in Africa?

While digital platforms have changed the face of financial inclusion
on the Sub-Saharan continent, it is not without challenge. Some markets
have infrastructure issues, with poor connectivity and low internet
penetration being significant obstacles that need to be resolved.
Ecosystem development is another critical component where a lot of work
needs to happen. With few notable exceptions, regulators need to play a
proactive role in supporting the development of a digital environment.
Trust is another challenge: given that the continent still relies
heavily on cash, we want our customers to feel safe and secure when
using an online bank.

7. What is SCB’s strategy for success?

At Standard Chartered Bank, our aspiration is to be the digital bank
with a human touch. That said, becoming a truly digital business is not
just about being forward-looking: it is about pushing towards a
strategic transformation that will allow us to create new and exciting
services for our customers, thus enabling them to interact with us
seamlessly.

Our digital transformation has been fortified by our drive to deliver
superior value, as well as a user-friendly experience for clients,
equipping our frontline agents with digital insights and incorporating
cutting-edge technology into our processes.

Banking is fast approaching a bright new digital world, and
technology will be at the forefront of our customer-centred vision for
the future.