Kathy Gibson is at Sibos to Africa 2019 in Midrand – The payments landscape has changed dramatically over the years and the African market, in particular, is due for more shake-ups in the future.
In fact, the entire world of banking is undergoing massive changes, says Chris Hamilton, CEO of BankservAfrica.
“The people that are doing well are conceptualising banking in a different way,” he says.
Traditional banking stands on four pillars of credit, safekeeping, investment and transactions. “We all walk around with this idea of a bank in our heads,” Hamilton says. “But it’s not a particularly helpful way to look at banking anymore.”
As fintechs gain more traction in the market, he believes banks should re-evaluate the benefits they offer their customers.
“The platform is the key to understanding this idea,” he adds.
Banks can think of themselves as providing the content that customers access, but the platform on which access to those products occurs is just as important.
A platform does this by connecting customers to the bank, one another and other financial institutions.
“We have been shown in no uncertain terms that the really big companies in the world now are all platform businesses,” Hamilton points out. “Platforms connect people and provide content – and the common thread is the platform.”
For banks, the role they play in the platform space is important, he believes.
Not every bank will be the platform provider, but they all need to be part of it, being close to customers and helping them access what they need.
Indeed, some banks now see themselves as financial services providers, but not traditional banks.
Although technology will play a key role in the future of banking and payments, Hamilton cautions that it needs to be used effectively.
“When we think about new trends, we often come up with technology, then look for problem to solve with it.
“This is a bad way to do things. A lot of the bitcoin/blockchain stuff was driven from there; people were looking for a problem to solve with the technology at hand.
“We need to rather find the problem and then the technology that can solve it.”
He also cautions against expecting the latest technology to be immediately effective in the African market.
“If we accept that financial inclusion is a key challenge for Africa, then the sexy new technology might not be the best way to address that.
“I don’t think there can be any doubt at all that the payment problems in Africa will be solved using platforms
The only question is how we get there.”
Hamilton recommends that the platforms and solutions employed on the continent should be compatible with the mobile devices and connectivity options that people on the ground have.
There is no hard-and-fast rule for which platform is used to reach customers, he adds. “The platform could be the telco that supplies the phone; it could be the social media platform people use; or it could be a bank that makes a business out of being a digital bank, living on a mobile app.”
Hamilton also issues a stark warning about arguably the biggest risk for platform banking in Africa.
“In countries where you end up with a dominant single platform provider, you hand a lot of socio-economic power to the provider. You need to manage that issue, and consider if there are better ways to do it.
“I think models that allow choice at every stage of the process should be preferred.”