Banks are overtaking the banking sector – Gadget

In the same way that the South African banking system has been the envy of the world for the past few decades, it is expected to once again become a model for even the most developed economies.

As the 2020s dawned, South Africa phased out paper checks, but many industrialized countries are expected to continue using them well beyond the middle of this decade.

Meanwhile, South Africa is advancing. BankServAfrica, which is responsible for processing transactions between banks, is set to launch a digital payments platform for South Africa’s Rapid Payments Program (RPP). Its main features are sending instant payments, making simplified payments and directly requesting payment through a “payment request” system.

“South Africa used to be a world leader, but I think we started to fall a bit behind on payments,” BankservAfrica CEO Jan Pilbauer said in early 2020, shortly after the permanent deletion of checks. “I want South Africa back on the pedestal. If you really want the economy to do well, you have to have something that brings less friction to the money transfer.

As the banked population eagerly awaits the dawn of this era of instant payment, several banks are taking dramatic steps in their own modernization. For example, Absa, often seen as a technology laggard, plans to reinvigorate innovation in its payment processes with the integration of the Syspro 8 enterprise resource planning (ERP) system.

Marius Wessels, head of professional services at Syspro Africa, says accounting and ERP systems will combine with banking systems to improve speed, efficiency and accuracy.

“A shift is underway in the way banks and financial firms are adopting and applying the new technologies of the future. The integration of accounting and ERP systems has become a major concern for these companies, and ease of integration has become a primary goal.

Last month, Investec launched Programmable Banking for corporate and private banking customers, giving them the ability to create one-to-one banking services. Aimed at IT professionals like software developers and programmers, it allows them to create code that, for example, defines rules for approving or denying specific transactions. They can also integrate the card with external platforms such as Sage and Xero accounting systems to optimize business processes.

Says Devina Maharaj, Program Manager Investec Business Online and API Banking: “It allows them to write these rules which can say, my card only has to work between eight and 10. Or it can only work at this merchant. Or, as soon as I swipe my card, instead of texting myself, I can have it go to my Slack channel, for example. The idea is how do you develop a proposition that makes software developers really comfortable, but also empowers them in the world of banking? »

Cumesh Moodliar, Head of Investec Private Bank SA, puts this capability in a business context: “Our digital capability needed to get the next injection and move forward in terms of where we need to go as a business. Having these coders work with us through the Programmable Banking Module helps us take advantage of that. »

So far, he says, more than 500 developers have joined the initiative.

“A key part of Investec’s strategic intent is to engage software engineers and IT professionals to help them grow their wealth and unlock new opportunities. We recognize their skills and see how IT professionals fundamentally improve the world and how we operate, engage and transact in it. By investing in this particular market segment, we believe we can have a significant impact on society and the economy in general.

Earlier this month, FNB unveiled the latest evolution of its mobile banking app, already considered one of the most advanced in the world. It has launched a range of lifestyle solutions, “designed to help its customers beyond financial services”. The expansion takes it into the areas of education, private security and gaming, with low-cost online courses from Udemy, a medical and military response service called GuardMe and an eBucks Games portal without advertising without monthly subscription.

It also expanded the FNB Connect service, which offers savings on mobile phone accounts and high-end smartphones, laptops and tablets, at a lower price than retail stores.

FNB CEO Jacques Celliers said the launch was a major shift in the bank’s efforts to be relevant to customers in all settings, beyond basic banking services.

“The lifestyle solutions we are integrating into our ecosystem will set new standards for value-added services in the financial services industry. Our extended insurance and investment value propositions are really gaining ground. We’ve built what we loosely call lifestyle offers as additional reasons why people choose our platform.

“Over the years, we have drawn a lot of attention to the possibility of having airtime, electricity or water, the daily needs of people in terms of their lifestyle and their subsistence. Over time we have expanded that, those expanded opportunities give us more traction, and from those interactions we create more stiffness.

“If we can retain more customers and have more regular interactions, we can create more business.”

Warwick Bam, head of research at Avior Capital Markets, agrees that the business case comes down to attracting and retaining customers.

“FNB is actively expanding its nonessential services to balance real and perceived value for money,” he says. “For example, FNB acquired Slow Lounges from Comair because customers use and appreciate this benefit. Adding service providers directly from the FNB app adds convenience and trust factor to e-commerce.

“Commercially, banks benefit from higher transactional revenue if goods and services are purchased directly from its banking application. In the same way that social media platforms leverage a captive audience of everyday users, banks are realizing that the banking app provides valuable visual space for selling third-party products and direct advertising.

In the process, data generated as part of a regular business becomes a strategic asset.

“Banks have access to more granular transactional data, enabling targeted offers and personalized credit solutions at the point of sale. Successful banking models in 2030 will monetize transactional data more efficiently. Data insights, available to banks with the appropriate software systems, create actionable leads in real time, benefiting merchants through higher sales and banks through transaction fees.

Craig Pheiffer, Sasfin Wealth’s chief investment strategist, says there are two main reasons for expanding bank offerings.

“A savings account is a savings account and banks need to try to differentiate their offering in some way so that these innovations can be part of it. The main reason though is to try to increase non-interest income The difference between interest paid on deposits and interest earned on loans is the bread and butter of banks, but they all want to diversify and grow their non-interest income.

He believes that while banks need to master the basics and prioritize basic banking services, they also cannot be left behind by their competitors.

“They may well focus on both ends of the spectrum simultaneously.”

Sergio Barbosa, CIO of enterprise software development firm, Global Kinetic, and CEO of its open banking platform, FutureBank, says the most nimble fintechs continue to capture a growing slice of the banking revenue pie, leaving the banks provide the technical support of the systems for the live customer.

“Fortunately, integrated finance running on banking platforms as a service (BaaS) makes it easy for banks to partner with companies that offer exciting new offerings, without having to tear down and replace their often legacy legacy systems. unstable,” he said.

By using BaaS, banks can partner with more fintechs to boost their digital products for their new customers. Deploying new digital products can happen in weeks instead of months or years, without risk or disruption to core banking systems.

* This feature first appeared in The Sunday Times Business Times.