Tech impact on future banking
Cape Town - Disruption is not something new, but what is new today is that everything is connected, tech writer Arthur Goldstuck, founder of World Wide Worx, said at a banking seminar of the Actuarial Society of SA in Cape Town.
"In any given year there will be a wide range of disruptions and there is a shift in how humans communicate," he said.
In 2015, for instance, about 4.8 million South Africans used smartphones. By the end of 2016 this is expected to be 29 million - more than half of the population.
"The idea of #datamustfall simply means many with smartphones in the country cannot afford the data cost," he said.
He pointed out that the so-called digital participation curve shows that people have to be online for about 5.5 years before they become active in that sphere.
"So, the real digital economy in SA is about 8.5 million people, but that will rise dramatically as those who have been online for a while catch up and the number of active users increase rapidly," said Goldstuck.
"In 2016 we saw the beginning of a massive acceleration of experienced users, ready to engage and transact digitally. In my view banking online is close to this digital participation curve - the propensity is there, especially in the mobile financial services sector."
He emphasised, however, that every market segment will experience the future differently. As people rise out of the digital participation curve, they will interact with different sectors.
"There is no homogenous, monolithic market. It is a variable future. Marketers must understand that. Millennials are often named as the new market, but a 16 year old does not think and act like a 35 year old," said Goldstuck.
He cautioned that one must remember that not every innovation meets a real need. One must, therefore, think carefully of why you are introduction a new innovation and if it meets a real need.
Even massive global companies have had failures.
"Just because you are a massive brand and world leader in one area does not mean you can own another area. That is good news for the financial services sector. These massive companies cannot just decide they will start a bank, for instance," said Goldstuck.
In his view, the next big trend in banking will be augmented virtual reality banking. Machine learning and artificial intelligence will also be built into every device used.
Another trend is that major banks are experimenting with Blockchain - the technology underlying the Bitcoin concept. This would mean authentication systems will be transparent, private and with the potential to revolutionise the world of banking.
By 2020 he foresees the rise of the so-called cobots as becoming key - collaborative robots interfacing with human beings.
Another trend he mentioned is a car becoming a type of "wallet" by 2021. This interface is already being built into certain cars, allowing for the payment for petrol and other commodities via the car's system.
"In the future of the Blockchain environment each car might be its own financial services provider using artificial intelligence and augmented and virtual reality. The future of the car is, therefore, completely revolutionised," said Goldstuck.
When a car has an accident, for instance, it could immediately report data to the manufacturer and insurer, take photos of the scene and more.
"Also prepare for the financial services industry probably wanting to move away from the use of physical money," cautioned Goldstuck.
Data the new oil
Data can be regarded as the new oil in the banking industry, according to Peter Schlebusch, CEO: Personal & Business Banking at Standard Bank.
"Personalisation is critical and relies heavily on data. That makes analytics key, something we at Standard Bank have spent a lot of time redoing at the back end, he said at a banking seminar of the Actuarial Society of SA.
"Banks still have a great role to play in the future and will adapt to become more like fintech businesses. We are trying to make ourselves digital businesses – to be more lean and have the customer in mind."
He said customers are much easier to engage with than ever. They are digitally connected, socially networked and better informed. Mobile has a massive role to play in his view.
"We think mobile is the future, especially as millennials become a bigger and bigger part of our customer base and digital becomes more and more prevalent. Currently about 75% of internet traffic in Africa is on mobile devices," said Schlebusch.
"The bank of tomorrow will not be a place people go to, instead the bank will go with them wherever they go. We think the banking of the future will be click-click-done, therefore seamless."