By Micheal Jjingo
Before 1990, Working in the bank used be a nightmare! Even when they were opening at 9am and closing at 12pm, due to the manual processes, ledger cards, pass books and others, staff were going home at about 7pm. As I appreciate the inspiration I got from my aunt, Matilda Mbiro (RIP), who was then a teller at Uganda Commercial Bank, my prayer was to see some changes in the processes. That change is happening now, and will remodel tomorrow. The bankers of tomorrow will be very different from the bankers we see today, by way of different personalities, backgrounds and skill sets.
Let’s also appreciate the reshaped new trends arising from the covid19 lock down, and the social distancing requirement for all. It is now normal to do videoconference with your neighbor; working remotely at home has become the new normal. Digital solutions and innovations are coming to the fore, not only to improve the processes, but also to offer better solutions to the customers
Who are the fintechs? FinTech is the innovative use of technology in the design and delivery of financial services. It is transforming the banking world as we have known it. Things from artificial intelligence, peer to peer lending, big data, block chain, crowd funding, digital payments and robo-advisors, just to name a few.
Historically, when technologies evolved, the banking industry was reasonably good at adopting and integrating new technologies in order to better serve customers. However, the speed of churning out innovations has become faster for banks due to competing priorities.
At the same time, some of the most game changing technological innovations, that have transformed the way we live are becoming part of everyday life. The likes of IPhone by Steve Jobs, Airbnb, WhatsApp, Uber, booking.com, WeChat are reshaping the tide. This has created a gap, between what banks are offering and what customers expect, especially from a user experience and convenience perspective and that gap is what the FinTech industry is tackling right now. But that gap is so big!
Ugandan FinTech companies like Futurelink, Service cops, Pegasus, Neptune, Craft solutions among others have crafted several innovative products for banks that have not only improved the processes and tracking of business, but also availed big data availability to support further innovations and product development. Not only do the fintechs allow customers to seamlessly pay school fees, transfer funds, buy insurance products from smart phones, but are set to enable booking the next doctor appointment, order a taxi, donate to charity and even find a date without ever leaving the app.
The financial platforms of the future are going to be technology firms, or banks with tech partners. A new-born baby today may opt to open their first bank account with probably facebook or Apple. The traditional banks should worry about the technology firms because many of them have daily existing touchpoints with customers, and they are building trust and confidence. If users are comfortable enough to share photos of their kids on Facebook or buy daily essentials on Jumia or OLX/Jiji, would they not use them as well to transfer money?
True, there are now thousands of new dynamic FinTech startups offering products that used to be offered previously by the banks. Peer to peer lending platforms offering an alternative to loans, robo-advisory platforms offering asset management solutions that are not only more transparent in what they charge you, but also substantially cheaper. What should Interest banks is that fintechs, especially the new comers have the ability to pick and choose the parts of banking to get involved in.
Mostly, they are in the most profitable parts, and not the rigorous. They are very happy to control the consumer facing part and leave the boring back end to the traditional banks. Fintechs avoid things like settlements, reconciliation or regulatory reporting. This is set to create a new banking model of the future, where our traditional banks are handling the back end (becoming utility providers to these technology firms) and then, the FinTech start ups will control the front-end customer experience.
Accordingly, let’s appreciate that this FinTech revolution is also bringing a lot of other positive developments. One of the most important one is Financial Inclusion. Currently in the Uganda, there are more than 10 million people who are completely unbanked with no access to bank accounts, no way to borrow money for business, and for whom the only way to save money is to literally stash it under their mattress.
Today, Artificial intelligence powered chatbots that mimic human conversations and messaging apps are being tested to replace call centers, which everyone hates. Bio-metric data and voice recognition tools are being tested to replace not only passwords. Others are connecting FinTechs to the Internet of Things and wearable technologies; embedding banking in the day-to-day life so that in the future, consumers will not even need to worry about. Imagine the car insurance premiums automatically going down resulting from a good driving record.
From the consultancy firms to accounting firms, to hotels and restaurants, new jobs will be created in the FinTech industry, but in substantially smaller numbers and these are very different jobs with very different skill sets than those required from the traditional jobs today. These are jobs for creative designers and programmers.
The most important change is probably how we train the next generation of talent. Yes, we need to continue teaching core courses like economics, arts or sciences, but we need to embed in the curriculum on design thinking, coding technology and product development. The bankers of the future and those who are to shape the future of this industry are going to be the designers, programmers, and creative thinkers.
The writer is the General Manager Commercial Banking at Centenary Bank