convergence, Fintrak CEO to banks: Embrace convergence now or die, Technology Times

Fintrak CEO to banks: Embrace convergence now or die

Fintrak CEO to banks: Embrace convergence now or die

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Mr. Bimbo Abioye, CEO of Fintrak Software Limited, says financial services industry players yet to embrace convergence risk business extinction.

According to the CEO of the Nigerian financial technology and business solutions provider, for “players that are still somewhat traditional in the financial services industry, and have not embraced convergence technologies to transform or die.”

This was a key highlight of his presentation titled “Financial Services and the Convergence Technologies” delivered at the West Africa Convergence Conference (WACC0 2016) held this week in Lagos.

Speaking to participants at the conference which brought together industry stakeholders, Abioye says that “technology, which has witnessed a paradigm shift in Financial Services Sector, has changed the dynamics of how customers experience these services.”

“CBN and NCC have been upbeat in their regulatory activities of the payment system and telecommunications respectively”, he says but he is quick to add that “there is need to do more. There is also the need to enable new possibilities such as empowering telecoms providers to leverage their network to drive financial inclusion in partnership with social media which has emerged as the platform that will decide many of the winners of tomorrow’s connected enterprise.”

convergence, Fintrak CEO to banks: Embrace convergence now or die, Technology Times
A man tries his luck to win a gift pack at the First Bank stand at Social Media Media Week Lagos

He says that “for enterprises to cater to today’s tech-savvy digital consumers, they will have to redesign their Information Technology (IT) delivery mechanism and leverage various disruptive technologies” and industry regulators also have roles to play in this regard.

“CBN and NCC have been upbeat in their regulatory activities of the payment system and telecommunications respectively”, he says but he is quick to add that “there is need to do more. There is also the need to enable new possibilities such as empowering telecoms providers to leverage their network to drive financial inclusion in partnership with social media which has emerged as the platform that will decide many of the winners of tomorrow’s connected enterprise.”

The Fintrak CEO says that “disruptive technological innovations are transforming the world around us in unpredictable ways. A new era of ‘Digital Consumerism’ is radically changing the way customers shop for products and services which is impacting the business-consumer ecosystem” and technology players have been fairly swift in responding to “these changing market dynamics but in most cases they have treated these trends in silos.”

He explained that mobility is now the preferred medium of purchase of goods and services – including financial services; social media is now the preferred communication channel; systems are now embedded for convenience and self-help services, cloud is believed to be agile, scalable, cost effective, and for faster delivery; and big data is believed to understand customer needs better and stay relevant in the marketplace.

Identifying data as a constituent of the major converging technologies, Abioye explains that the financial services industry is amongst the most data driven industries. “The regulatory environment that financial services firms operate within requires them to store and analyze several years of transaction data.

“Moreover, the increasing proliferation of social media is driving banks to keep track of their customers on these platforms to generate additional insights. This would require intensive analytics of volumes and velocity of data.

“In addition, as data driven as banks are, it is estimated that 80-90 percent of the data that they have is unstructured, i.e., in documents and in text form. But technologies like Hadoop, No SQL and distributed data store are responding to converge both the structured and unstructured data types for data mining and analytics”, he adds.

He also identified social media as a constituent of the major converging technologies saying that “social media has emerged as the platform that will decide many of the winners of tomorrow’s connected enterprise.

“In the area of financial services, initial initiatives saw banks seeking to understand customer opinions about bank products and service experiences and now account opening, cheque book request and some other transactional activities are finding their ways to social media. Today the needs and uses are clearly left to the imagination of the most fertile minds as banks world over work overtime to develop a connected customer strategy”, Abioye adds.

The Fintrak CEO further identified cloud computing as a constituent of the major converging technologies. “Initial use of the internet was essentially for information dissemination. It progressed to transactional whereby we have the internal on premise system, while we have internet based solutions like internet banking, e-Insurance products to interact with customers and drive online sales.”

According to him, “now everything, both internal processing applications and public facing transactional platforms are converging on the cloud. A financial services firm can benefit from cloud computing in numerous ways. Newer banks, unburdened by legacy costs have already started using cloud to support core banking applications.”

He underscores cloud computing benefits to include “perceived cost savings, ease of scaling-up and scaling-down, faster time-to-market for deploying systems, virtualization of enterprise-wide data-as-a-service, enterprise technology standardization, and the ability to access data and applications on the move are all critical factors that can drive financial services firms to adopt cloud computing.”

Another constituent of the major converging technologies identified by Abioye is electronic POS system which streamlines certain services by automating the transaction process and tracking important sales data.

He cited Kenya’s M-Pesa as an example saying “M-Pesa has transformed economic interaction in Kenya.  Its success reshaped Kenya’s banking and telecom sectors, extended financial inclusion for nearly 20 million Kenyans, and facilitated the creation of thousands of small businesses.

“M-Pesa has been especially successful in reaching low-income Kenyans: new data indicates that the percentage of people living on less than $1.25 a day who use M-Pesa rose from less than 20 percent in 2008 to 72 percent by 2011”, he said, attributing his source of information to Safaricom, Kenya.

Another constituent of the major converging technologies identified by Abioye is mobile phone. “Initially mobile phones were used for making and receiving voice calls. It progressed to sending and receiving text messages as well. And the Internet was made available on it and with increased processing and storage capacity everything changed. Mobile devices are doing more than our PCs and laptops are doing today.”

convergence, Fintrak CEO to banks: Embrace convergence now or die, Technology Times
People seen testing mobile phones at a launch event in Lagos, one of the biggest phone markets in Nigeria

Another constituent of the major converging technologies identified by Abioye is mobile phone. “Initially mobile phones were used for making and receiving voice calls. It progressed to sending and receiving text messages as well. And the Internet was made available on it and with increased processing and storage capacity everything changed. Mobile devices are doing more than our PCs and laptops are doing today.”

The Fintrak CEO says that “we now use mobile phones to transact banking transactions, insurance policies can be bought on mobile phones, so also are stock and shares. Mobile devices are being used to drive operational efficiencies – Mobile Transaction processing and mobile approval in sales, business support and back office activities. This help to reduce transaction TAT.”

In the area of financial inclusion, he says that “embracing correspondence and Agent banking to drive financial inclusion has become even more imperative as organizations/groups providing banking services are legally able to operate outside traditional banking regulation.

“Retailers of food and general merchandise have emerged as major suppliers of financial services; changes in law and regulation have enabled banks, savings and loan associations, and credit unions to broaden the mix of services they offer and enter markets previously closed to them. At the same time, firms whose financial service offerings are virtually unregulated leverage on technology and digital media to compete directly with traditional, regulated providers.”

Abioye further highlighted the global payment method trend from 2015 and its expected outcome by 2020 as follows:

-e-Wallet was estimated at 31% in 2015 and is expected to drop to 30% by 2020.
-Credit Card was estimated at 25% in 2015 and is expected to drop to 20% by 2020.
-Debit Card was estimated at 17% in 2015 and is estimated to drop to 16% by 2020.
-Bank Transfer was estimated at 10% in 2015 and is expected to rise to 13% by 2020.
-Cash on Delivery was estimated at 7% in 2015 and is expected to rise to 8% by 2020.
-Pre-Paid was estimated at 3% in 2015 and is expected to rise to 6% by 2020.
-Pre-Pay was estimated at 3% in 2015 and is expected to rise to 4% by 2020.
-Post-Pay was estimated at 2% in 2015 and is expected to drop to 1% by 2020.
-E-Invoices was estimated at 0% in 2015 and is expected to rise to 1% in 2020.
-Other Payment Methods were estimated at 2% in 2015 and are expected to drop to 1% by 2020
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Elizabeth Edozie Technology Journalist @Technology Times 08077671659 elizabeth.edozie@technologytimes.ng