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Powering Banking With Technology

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  • Powering Banking With Technology

Technology is redefining and simplifying banking. It has also brought banking to the doorsteps of almost every household. For instance, the opening and operating of accounts can now be done without visiting a bank or physically interacting with human beings and from the comfort of one’s office, bedroom or even while in transit. Technology has practically revolutionised banking and every individual now has the capacity to have their banks with them everywhere and in their pockets.

The Head, Information Technology, Wema Bank Plc, Adewale Saka, disclosed that banks are now empowered to reach customers and potential customers even in areas where they do not have physical presence. He explained that the ease of creating banking products and services as well as making them available to customers is quite amazing, and this is made possible through technology.

“Bank customers now have access to almost all banking services 24/7, including access to cash at odd hours through the Automated Teller Machines (ATMs), airtime recharge, bills payments, funds transfer, service subscriptions, online and offline shopping, lifestyle management and a host of others. Banks in Nigeria have leveraged technology to reposition banking in the minds of their customers.

“All these have been achieved through technology-powered delivery channels such as mobile banking apps, online banking platforms, robust payment and collection platforms, among others. In my own view, most banks have become technology service providers,”he said.

He believes that banks have effectively harnessed technology to improve banking services even though there is still room for improvement. ”Everything in banking today is powered by technology to the extent that when there is a technology failure in any bank, it can cripple the entire operations of such bank with attendant financial losses and negative brand perception. Banks in Nigeria have over the last few years embarked on automation of backend processes to drive efficiency, improve productivity, innovate effortlessly and optimise risks,” he added.

Saka said that Wema Bank is the bank to beat when it comes to innovation using technology. “As it stands today, Wema has made a bold statement with ALAT being the first truly digital bank in the country. What is also unique about this is the fact that our digital bank and all other digital channels provided for customers’ comfort are fully owned by Wema,” he said.

He explained that WemaMobile platform can be switched to SMS banking if you run out of data right from within the app. This is an amazing experience that is unique to Wema. “Card Control integration to all our service points (ALAT, USSD Banking, WemaMobile, WemaOnline, among others) and giving customers of the bank absolute control over when, where and how their debit and credit cards are used without recourse to the bank is the first of its kind in the Nigerian banking industry. We have also consistently provided very stable and reliable banking services through our digital channels,” he said.

Speaking further, he said banks have also developed and deployed innovative products and services for customer acquisition, risk management, transaction processing and ultimately improve the bottom-line. Cash-lite policy of the Central Bank of Nigeria (CBN) has been hinged on technology and so also is the Bank Verification Number (BVN) project.

“Unlike before, customers can get instant value for both intra-bank and inter-bank transfers without having to fill forms, join a long queue or visit a bank branch. Customers are now able to have value on cheques deposited in their accounts within 24 hours and in some cases, customers do not need to visit a branch to present their cheques for clearing, since all banks started participating in the automated clearing house using Cheque Truncation Systems,” Saka disclosed.

Significant successes have also been recorded around taking banking to the unbanked through the use of technology in driving Agency Banking processes. More and more in-branch banking services are getting digitised and made available to customers across multiple alternative channels to make customers less dependent on bank workers but rather serve themselves.

“However, improvement is still required around data analytics for determining specific needs of customers and various segments of the markets to develop products and services to meet those needs. Another area requiring more attention is eliminating the need for customers to come to the bank at all. Wema Bank is leading the rest of the industry in this area through the creation of our Digital Bank, ALAT. This is the next level of effective use of technology in Banking,” he said.

He admitted that technology has undoubtedly brought positive transformation to the Nigerian banking industry but surely it hasn’t been without a couple of challenges. In the days of pure traditional manual or semi-manual banking, operational downtime was minimal and most times limited to the specific business unit or branch while a downtime on a centralised Core Banking Application or infrastructure can bring the entire operations of a bank to a halt.

“Banking industry has been experiencing new types of risks associated with the use of technology for banking services. These risks could be due to human error, systems failure, fraud and cybercrimes. Banks in Nigeria have lost a lot of money to various fraudulent practices perpetrated through electronic channels. Fraud attempts, successful frauds, hacks and scams have steadily increased as banking takes centre-stage in the digital world,” he stated.

He warned that outsourcing or cloud computing or sharing a public infrastructure is less secured than on-premise deployment of infrastructure. “All that is required for an organisation is to go through a stringent process in selecting a cloud service provider and ensure a water-tight agreement is put in place to protect their businesses. The type of service to be hosted on a public cloud should be determined by the cloud strategy of various institutions and all conditions required to effectively protect information asset on-premise should be considered when outsourcing or migrating to the cloud,” he said.

Saka described technology as a great enabler, making banking more accessible and reducing costs for consumers. I don’t think bank branches are going away because people still need human contact.

“However, it is expected that banks will shift competition to the digital space and de-emphasise competing based on number or size of branches. Rate of branch expansion will go down paving way for channels and digital penetration. A lot more of digitally-powered unmanned service centres where customers can drive in and perform banking services (including seeking financial advice or solutions) on a self-service basis will take centre-stage. This has started already but it’s going to continue and increase in the coming years,” he said.

Continuing, he said: “More and more banking processes will get digitised and a lot more services currently handled within banking halls or head offices of banks will become available via digital platforms. Banks like ours (Wema) have invested in the bank of the future, ALAT and I believe that banks that fail to invest and take advantage of new technologies to reengineer their products and services may be losing customers to the better-quality or lower-cost products of smarter ones,” he stated.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Fintech

Global Investments into Fintech Companies Plunged by Almost 40% amid Pandemic

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The year 2020 was a challenging year for many fintechs. The global slowdown in funding caused by the COVID-19 led to a significant drop in the number of venture capital deals and brought uncertainty for many companies operating in this market.

According to data presented by AksjeBloggen.com, global investments into fintech companies hit $105.3bn in 2020, almost a 40% plunge amid pandemic.

US Fintechs Raised 75% of Total Investments

Fintech companies apply modern tech solutions in the financial services industry to offer digitally enhanced products and allow widespread access to financial products at a lower cost than traditional players. Over the years, these innovative startups transformed how people and businesses spend, invest, save, or borrow money.

Even before the pandemic, many fintechs found it difficult to access funding, as investors focused on established companies instead of early-stage businesses. Nevertheless, the total value of investments into fintech companies increased dramatically in the last decade.

In 2010, fintechs raised $9bn in funding, revealed the KPMG’s 2020 Pulse of Fintech report. By 2015, this figure grew more than seven times to $67.1bn. In 2018, the total investment value jumped to $145.9bn and continued rising to $168bn in 2019, as the record year for fintech investments.

After the COVID-19 pandemic brought many deals to a halt in the first half of 2020, H2’20 reversed the trend as investors and fintechs learned to do business in a new normal. Nevertheless, statistics show that last year witnessed 2,861 deals worth $105.3bn, almost $63bn less than before the pandemic.

The Americas were the region attracting the most investments in the sector, accounting for 75% of the total, or $79.2bn. Fintechs from the EMEA region raised $14.4bn last year. Asian fintechs followed with $11.2bn worth of investments.

The Number of Fintech Startups Doubled Since 2019

Although the COVID-19 affected the investment activity in the fintech sector, it also triggered a surge in the use of fintech solutions, creating a huge space for new companies.

The BCG data revealed the number of fintech startups worldwide more than doubled since the pandemic struck, rising from over 12,200 in 2019 to almost 26,500 this month.

As of April 2021, there were 10,738 fintech startups in North America as the leading region, up from 5,800 in 2019.

However, statistics show Europe, the Middle East, and Africa have witnessed even more impressive growth in the number of fintechs. In 2019, almost 3,600 companies were operating in this sector. Since then, the number of fintech startups in the EMEA region surged by 160% to more than 9,300.

Asia and the Pacific ranked third with nearly 6,200 fintech startups as of April, up from 2,850 in 2019.

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Social Media

WeChat Brand Worth $68B, More than Three Major Chinese Banks

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As the leading social networking app in China and the fifth most widely used globally, WeChat saw impressive growth amid the COVID-19 pandemic, both in revenue and the number of users. The brand value of Tencent Holding’s mobile messaging app also surged in the last year, launching WeChat among the strongest brands globally.

According to data presented by StockApps.com, WeChat brand value hit almost $68bn in 2021, more than three major Chinese banks.

The World’s Strongest Brand

WeChat or also called China’s “app for everything,” offers services from messaging and banking to taxi services and online shopping. During the pandemic, the app also helped keep track of those traveling or in quarantine, providing access to real-time data on COVID-19, online consultations, and self-diagnosis services powered by artificial intelligence to more than 300 million users.

This diversity of services offered to its users, especially amid the pandemic, helped the WeChat brand value surge by 25% YoY, revealed the 2021 Brand Finance’s Global 500 survey. With a valuation of $67.8bn, WeChat jumped nine spots on the ranking to enter the top 10 for the first time, behind giants like Apple, Amazon, Google, Walmart, or Facebook.

Also, the popular app ranked higher than the three major banks in China. In comparison, China Construction Bank hit a $59.6bn brand value this year, $8.3bn less than WeChat. Agricultural Bank of China and Bank of China also ranked below the popular messaging app, with $53.1bn and $48.6bn value, respectively.

The Brand Finance survey also revealed WeChat overtook Ferrari to become the world’s strongest brand with a top score of 95.4 out of 100 and an AAA+ brand strength rating. The relative strength of brands is measured through a balanced scorecard of metrics evaluating marketing investment, stakeholder equity and business performance.

Statistics show the Chinese mobile app is one of merely 11 brands in the ranking to have been awarded the elite AAA+ brand strength rating.

More than Hit 1.2 Billion Active Monthly Users

WeChat has lots of popular messaging app features, including Moments. A majority of WeChat users access WeChat Moments every time they open the app. Voice and text messaging, group messaging, payment and games are other examples of WeChat services.

Tencent’s 2020 financial results revealed the number of WeChat active accounts has been multiplying over the past years.

Between 2011 and 2015, the number of monthly active accounts surged from 2.8 million to nearly 700 million. In the first quarter of 2018, WeChat`s user base hit the one-billion benchmark, and the number just kept rising.

Statistics show the popular social networking app had over 1.2 billion monthly active users in the last quarter of 2020, ranking as the fifth most widely used social networking app globally.

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Technology

Migration to IPv6 Will Enhance Digital Economy, Says Pantami

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The Minister of Communications and Digital Economy, Dr. Isa Ibrahim Pantami, has stressed the need for Nigerians to migrate from the use of Internet Protocol version four (IPv4) address system to Internet Protocol version six (IPv6), in order to diversify Nigeria’s economy and prepare it for a digital economy transformation.

The Minister who spoke as a special guest of honour at a recent webinar on the state of IPv6 deployment in Nigeria, organised by the IPv6 Council Nigeria, in collaboration with the Association of Telecoms Companies of Nigeria (ATCON), said there was need for migration from IPv4 to IPv6, saying IPv4 was fast depleting in numbers, while the population of internet users in Nigeria is on the rise.

Internet Protocol (IP) addresses are assigned numbers on the internet, which are part of the underlying infrastructure of the internet. The former IP version four, which Nigerians are connected to, is fast depleting and the world is fast migrating to a newer version known as version six (IPv6).

The Minister who was represented by the Managing Director of Galaxy Backbone, Prof. Muhammed Abubakar, said the conference on IPv6 came at a right time, when the federal government was focusing on economic diversification to drive the country’s national digital economy policy for a digital Nigeria and the Nigerian National Broadband Plan (NNBP 2020-2025).

“IPv6 is an important ingredient of our National Digital Economy Policy and the Nigerian National Broadband Plan.

“The current Internet Protocol that Nigeria has, which is driving the use of internet, is the IPv4, which has a combined capacity of about four billion addresses, and it is already reaching its capacity limit, which calls for the need to migrate to IPv6, with larger capacities.

“The increase in the adoption rate of IPv6 will require the creation of policies and regulatory instrument that will encourage and drive its adoption.

“So the federal government is putting regulatory instrument in place in line with the developmental regulation pillar of the National Digital Economy Policy. This will serve as a guide for both the public and private sectors to drive adoption of IPv6,” Pantami said.

One of the keynote speakers, CEO, MainOne Broadband Company, Ms. Funke Opeke, said Nigeria’s presence on the internet had been low even in the days of IPv4, adding that it calls for growth and increased access to the internet, being a critical foundation of Nigeria’s broadband plan.

“One of the key ways to achieve Nigeria’s broadband target is to leverage IPv6. It is not possible to connect Nigeria ‘s large population of over 206 million people without IPv6 adoption. With IPv6, we can connect people, networks and devices.,” Opeke said.

President of ATCON, Ikechukwu Nnamani, in his welcome speech, said with the projection that by 2030, more than125 billion devices would be connected using Internet of Things (IoTs), which would put about 15 connected devices into the hands of each consumer, all the devices would therefore need a unique IP address to function efficiently.

“The world has run out of IPV4, the initial IP addressing system. AFRINIC the only regional body in Africa that still has some IPV4 for allocation, recently indicated it has less than 1.8 million IPV4 available. The migration to IPV6 is therefore not optional at this point.

“ATCON being a very proactive Association saw the need to train network engineers in Nigeria in order to be able to migrate from IPV4 to IPV6 several years ago and this led ATCON hosting international training on IPv6 with the support of some of its members. This training was done in conjunction with AFRINIC,” Nnamani said.

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