The BusinessDay CEO Magazine August 2017

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The BusinessDay CEO, Aug 2017 | 38 The Fintech challenge and the new face of banking By Austin Okere Should Banks be changing? After centuries of conservatism in receiving deposits and making loans, should banks be changing? There are two main issues stirring the yearning for
The BusinessDay CEO, Aug 2017 | 39 change: The first being that it is a very difficult Club to join, and hence the large population of unbanked adults. Secondly, even for the members of this elite club, the relationship is acutely skewed in favour of the banks; naturally so, as they have carried on as protected monopolies with no serious challenge or competition, resulting in no significant innovation over the decades. The biggest threat to the banks has been precisely their seeming success. Centuries of relatively significant higher returns, even in the midst of economic downturns that adversely affect the real sectors has engendered an attitude of invincibility and pomposity, characterized by a loss of touch with their customers. Considered too big to fail, they take it for granted that they will be bailed out with taxpayers' money in the event of any missteps – a perfect prey for disruption. Fintech – the new kid on the block Today, there has emerged a powerful force of challenge from Financial Technology companies or FINTECHs, as they are more popularly referred to. The promise of Fintech is great. It is shaking up a stodgy banking system and helping to build a more efficient one, especially for consumers and small businesses. Emerging Markets showing the way in Fintech For years, emerging economies have looked up to developed countries for ideas about how to manage their financial systems. When it comes to Fintech though, the rest of the world will be studying the experience of the emerging markets, embodied by the widely successful MPESA mobile money system, championed by Safaricom in Kenya. MPESA has made it possible for a large swathe of the population to gain financial inclusion by providing the opportunity to transact financial services vide your mobile phone, on a continent where typically 70% of the population is unbanked. MPESA today has more than 60% of Kenya's 33 million mobile users; not bad for a service which was only launched in 2007. Similar applications have metamorphosed across Africa. Fintechs in the UK
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Page 47: Metamorphosis by Ghizlane Sahli (Mo

The BusinessDay CEO Magazine August 2017

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