Digitalisation was already a key theme in the growth strategies of financial services providers before the global COVID-19 pandemic struck. The need to innovate in response to shifting customer demands around engagement and experience, rising industry disruption from digital-native challenger banks or pivots from major digital-native businesses, and the need to respond to a dynamic regulatory environment has spurred digital transformation and entrenched an innovation agenda across the industry.
However, the pace and scale of digital transformation have varied between institutions. While some viewed technology merely as an enabler, others embraced digital-led innovation as a strategic imperative. When the pandemic hit, it forced financial services providers to accelerate aspects of their digital transformation roadmap. While catalysing remote working and omnichannel client engagement solutions to circumvent lockdown regulations and social distancing requirements, the pandemic exposed the digital adoption laggards.
With industry players at different points on their transformation journey, the early adopters and innovators that were unencumbered by legacy technology quickly pivoted operations in response to the crisis. The rest have scrambled to develop solutions that can address the unique and unprecedented challenges posed.
Modernisation through technology has been a key strategic focus for the past five years at Investec, and one in four employees is a now tech specialist. The groundwork in addressing client experience through digital channel enablement and workforce collaboration across our global footprint, enabling a seamless transition has been done. The technology modernisation agenda will continue as banks look to capitalise on the rapid acceleration of technological advancement, capture emerging opportunities and effectively operate in a digital-first era.
Digitalising, an organisation’s DNA requires a multi-faceted approach that blends industry best practices with cultural and operational realignment and strong product management practices. Many institutions are also accelerating their digital enablement by brining innovation partners into their ecosystems in the form of fintech providers or other peer group partners.
In this regard, we have taken a multidimensional partnership approach, either through strategic collaborative agreements, providing seed funding to early-stage, high growth companies, or acquiring relevant fintech companies. These fintech partnerships help drive digital transformation and address many of the challenges posed by digitalisation.
For example, our programmable banking project aims to capitalise on an emerging fintech trend. In collaboration with OfferZen, private bank accounts have been made programmable so clients can code their own bank experience. With software development a growing profession of the future, Investec and OfferZen are working together to enable developers to access the world of banking according to their preferences. This functionality allows clients to personalise and craft their preferred user experience, such as setting up custom budgeting and notifications, and implementing bespoke rules around card usage and spending limits, as examples. The project also builds on the open banking trend, which is transforming the industry globally by creating an open innovation ecosystem.
The EU has already launched its payment services direct two (PSD2) regulation for electronic payment services. This triggered the first big wave of open banking innovation, where banks make customer data and payments infrastructure available to clients.
While South Africa lags this trend in terms of regulations, there’s an obvious path emerging based on global trends that will increasingly influence the local financial services sector to publish open APIs. Taking the first steps to creating an open ecosystem in South Africa will catalyse new product and service innovation as the industry builds new functionality on top of it. Publishing open APIs will create a new industry of fintech’s as it unleashes creativity to deliver previously unimagined solutions.
The other fintech frontiers likely to…
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Read the full article by Lyndon Subroyen, Global Head: Digital & Technology, Investec, as well as a host of other topical management articles written by professionals, consultants and academics in the October/November 2020 edition of BusinessBrief.
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