By Vimal Kumar - Chief Executive: Retail and Business Banking, Digital and Customer Experience, Absa Regional Operations
The social re-order brought about by the COVID-19 pandemic have generated many learnings, but also still hold a great number of unknowns.
What is clear is that in terms of digital innovation and progress, we have had to compress several years of evolution into a very short space of time as everyone has been forced to adapt to managing businesses remotely and the deployment of new low contact transactional capabilities.
Austrian economist, Joseph Schumpeter, coined the phrase creative destruction, which speaks to the need to constantly destroy what you have created to build a new order– exactly what we are experiencing now.
Business models will begin to alter significantly and become smarter and leaner in order to survive and emerge stronger post-lockdown. For most institutions, this will entail the rethink of distribution structures with a focus on reskilling colleagues to support sales and advisory, while automating backend processes. There will be a fundamental shift to digitally delivered, remote and contactless banking.
What will a post-COVID landscape look like?
The banking and financial services ecosystem, of which Absa forms a major part, is demonstrably part of the solution during and post this pandemic.
During the last global crisis when international financial markets crashed, global financial institutions had been at the heart of the problem, but now banks are seen by regulators and governments as key to providing financial relief and driving economic recovery programmes.
On the transactional front, customers now expect a fully immersive experience and COVID-19 is driving everyone towards a low contact, low touch economy.
Banks that remain within the traditional domain will be pushed to the margins by other competitors, intermediaries and Fintechs who previously may not have had a strong appeal with customers , but who now offer convenient solutions, seamless efficiency and a service experience that is channel agnostic.
The African banking arena will see more non-traditional competitors in financial services such as global e-commerce and tech companies such as Facebook, Alibaba, Tencent etc who will expand their footprint on the continent by deploying their global capabilities and know-how. Mobile Network Operators (MNOs) such as MTN, Vodacom and Airtel are also increasing their appetite to participate in financial services and have the capability to quickly scale up, given their significantly larger customer bases and distribution muscle.
We are moving towards a marketplace environment where various players will be forced to bring their unique solutions to the market- while sourcing other capabilities from elsewhere on behalf of customers. At this point, ownership of the customer will not be the dominant consideration but rather building an ecosystem that puts the customer at the centre.
The ability to exploit big data and digitisation are mere enablers in the new economy; the real differentiator, increasingly, is the ability to hyper personalise the customer experience and provide convenience.
Enhanced customer experience is going to be imperative and the choice of bank for customers will be based purely on maximum convenience – the ability to bank when they want, where they want, and how they want.
How has Absa been able to respond to this fast-changing landscape?
The Separation Programme from Barclays presented Absa with the opportunity to re-examine its technology stacks and architecture. Investment, over the last two to three years, has largely been allocated to technology upgrades, front-end solutions and organisation-wide automation. Our investments, amongst others, include state-of-the art cards and payments platforms, front-end teller system and a new look Mobile Banking app with world class UI/UX built on the Xamarin framework.
Separation prepared Absa to be in a better space today than many others who may have been caught unaware by this global pandemic.
Absa boasts a heritage of global best practice risk management protocols and standards and is now focusing on aligning this with building stronger remote and video-banking capabilities.
Absa’s digital journey will fundamentally create a distinct position for the bank amongst African peers.
How is this achieved?
Absa's transition to digital came about as a result of the separation from Barclays which, in itself, held tremendous risks because what we managed to successfully complete in 36 months had never been done before, and the scale of it was unprecedented.
But, at the same time, it also created new opportunities for Absa, particularly around the use of big data to build our customer intelligence and ultimately our customer experience offering.
Simply put, utilising data to make informed decisions and do more for customers. Absa has, and will continue to invest heavily in its big data capabilities.
The bank’s digital C360 analytics platform has won significant praise internationally, including two recent awards for the Absa Regional Operations’ (ARO) Data Analytics team, for the 2019 Best Technology Initiative – Rest of the World award at the Financial Innovation Awards, and the 2020 Best use of Analytics in Financial Services at the Retail Banking International Awards.
These investments will allow Absa to hyper-personalise experiences for each customer, using data, so that each individual customer becomes unique and a segment of one for us as a bank.
Our direction of travel is very clear in a landscape with hundreds of competitors. We are building on our capabilities and solutions - even through partnerships and other service providers - and digitising journeys to deliver extraordinary customer experiences.
Ultimately, demanding loyalty is a thing of the past. In the future, banks that are customer service organisations first and foremost, will succeed.
So will that be the end of bank branches and people?
Moving to a leaner model means less back office and more focus on sales and advisory, and branches will transform but will not disappear entirely.
The future is not physical or digital, rather the future is bionic or 'Phygital' as the new catch word these days.
An ecosystem will emerge that will see digital experiences completely mimic what a customer would do in a branch. The ultimate aim? A single customer experience that is absolutely uniform and channel agnostic.
A large part of our success lies in taking our colleagues along with us on this journey. Most organisations fail on digital transformation because they do not include people as part of the process, so as we transitioned from Barclays into Absa, we started a cultural change where staff today are as much part of this as anybody else.