Digital services picking up the pace
THE PACE of change in South Africa’s financial services sector will accelerate rapidly next year, as at least one new fully-fledged bank gears up for its forthcoming launch, and other players start releasing new digital services to serve unmet customer needs.
The three biggest areas of disruption are likely to be retail banking, payments and insurance. For start-ups and incumbents alike the name of the game will be “true digitisation”.
No longer will firms survive by merely paying lip service to digital – spinning off ineffective digital outposts, launching isolated incubator programmes, or creating surface-level brand campaigns.
Next year will be the year the proverbial rubber hits the road. The winners will be those that deeply integrate digital principles into their organisations, demonstrate bold new thinking and move towards intelligent operational processes.
Banks will increasingly look to pervasive customer engagement strategies – extending the concept of triple-play into the realm of “quad-play”: where transactions are bundled together with connectivity, communication and content services. By broadening their suite of services, banks will play a more engaged role in customers’ lives, facilitating point-in-time transactions and adding increasing levels of convenience.
Convenience
Look out for new embedded payments features within popular messaging apps and broadcast services. Look for new “on-demand” insurance offerings, such as temporary life cover for holidays abroad, or temporary third-party car insurance for a weekend away. Perhaps even “shared insurance” services where multiple parties are underwritten for the same asset.
Innovative digital payments services using apps, QR codes, online payment gateways and social media platforms will continue to gather steam next year. They’re forcing banks to start abandoning decades-old revenue models such as the “four-party model” and bundled monthly accounts. In their place will emerge new opportunities in different market segments, microservices, digital-only offerings and new joint ventures.
It will also be a year where financial services companies start actively challenging any regulation that impedes customer convenience or the inclusion of new participants into the formal economy. Perhaps the biggest learning from Uber’s success is that regulatory compliance should not always be the starting point when launching something new. In fact, if Uber had taken a conservative approach to the established regulations of taxi licenses, medallions, demarcated territories and corporate tax, they would not have revolutionised the metered taxi industry.
Perhaps the biggest shift will be a focus on customer experience. While it’s true terms like “customer centricity” have been bandied around by banks for years, their Big Data programmes will soon start delivering value – understanding customers at a richer level, personalising services and providing useful recommendations about how we should manage our financial worlds.
Next year we’ll see competition continuing to heat up, as global digital firms continue to encroach on the incumbents’ turf. FinTech firms and traditional financial companies will require a concerted focus on digital technology to gain ground.