Technology transforming finance: the state of play in Africa
James Scott, Chief Digital Officer at Absa CIB, discusses how technology is transforming finance in Africa.
The past few years have seen Africa emerge as a hotspot for innovation in financial ecosystems. For anybody, anywhere, interested in the potential of technology to transform economic infrastructure globally, Africa is where they will find the future today. In certain locations, the application of modern telecommunications, digital and mobile technologies to everyday life and commerce is exceeding that which can be found in the developed world.
Some of this change is being forged by uniquely African factors, opportunities and challenges. We are seeing this play out in a number of different ways, from diaspora flows back onto the continent, the proliferation of mobile money and the role that corporates are playing to leveraging digital technologies to improve supply chains and connect with their customers.
So these are exciting times for Africa indeed, but the transformation is still very much a work in progress – so what are we currently seeing in terms of activity and focus?
Getting the user experience right
We are seeing good growth in smart phone penetration and with that a big focus on getting the customer experience right. Building and deploying products and services into consumer’s hands with the right kind of experience is a big driver for many of the various players on the continent. The underlying payment rails have evolved rapidly with mobile money and banks modernising some of their payment capabilities, that the consumers are starting to enjoy new and innovative ways of moving funds across the continent. There are a number of fintech’s entering this space, finding parts of the value chain where there are underserved client needs and are building and deploying innovative solutions into these areas. African startups are providing great solutions to real problems and this is a trend we believe will continue to scale.
Another important trend on the continent is the role aggregators are playing given the fragmentation of services across the continent. There are market nuances, regulatory environments as well as a diverse range of market participants in African markets. Given this diversity we have seen the emergence of some very strong aggregators to start joining up the pieces, particularly in the cross-border space. With mobile money becoming so pervasive, but individual networks being different in complex ways, this aggregation factor is key to making the whole landscape work seamlessly. We’re also starting to see these aggregation mechanisms drive stronger connectivity between the continent itself and the wider global markets.
Digitisation and technical innovation
While the UI layer is the focus of a lot of activity, this is partly due to it representing the lower-hanging fruit. Big shifts in the underlying mechanisms to move money has been much slower, but the promise and maturing of Blockchain technology as well as the continents natural drive to leverage new and modern technologies like mobile, cloud, data and artificial intelligence will mean that this is the next trend to watch.
We will likely see this play out in a number of areas at it relates to financial services, everything from processing mechanisms, speed of innovation, lower cost infrastructure as well as new ways of moving money and managing identity.. The latter will be a crucial ingredient as Africa’s digital ecosystem matures. A lot of the issues that organisations face moving funds into and around Africa relate to transparency, the difficulty of tracking money and ensuring funds are received by the appropriate beneficiary and used accordingly and the benefits of many of these digital solutions will start to address this.
Each of the emerging technologies provide the continent with unique opportunities and we are seeing great momentum from some regulators in different markets. Blockchain and the successful pilot of this technology in South Africa, as well as the recent announcement of a regulatory sandbox for Fintech collaboration in South Africa are good examples of many of the participants in the market looking to experiment and support growth of this sector. Big data and the opportunity this provides banks, corporates as well as fintech’s is another area we are seeing great prospects for innovation.
All hands on deck
All of these moving parts amount to the creation of a whole new ecosystem – no one single provider or part of the market can square the whole circle. Collaboration and network-forming is the order of the day. While there is understandably a lot of focus on the smaller fintech disruptors, incumbents such as traditional bank and regulator’s are also very keen to get involved. Some of the regulatory shifts in Europe have accelerated open banking and while this is not regulatory driven in Africa, we are seeing many players start to look at opening up API’s which will become a big catalyst for innovation and new business model development.
Big foreign institutions are also eager to be involved, and not just financial ones – given the centrality of online and mobile to these new systems, big tech companies can also see opportunity. This is an exciting time for the continent and as always Africa has the potential to accelerate its development in this space.
5 minutes with... Janthana Kaenprakhamroy, CEO, Tapoly
Founder and CEO of award-winning insurtech firm Tapoly, Janthana Kaenprakhamroy heads up Europe’s first on-demand insurance platform for the gig economy, winning industry awards, innovating in the digital insurance space, and leading with inclusivity.
Here, Business Chief talks to Janthana about her leadership style and skills.
What do you do, in a nutshell?
I’m founder and CEO of Tapoly, a digital MGA providing a full stack of commercial lines insurance specifically for SMEs and freelancers, as well as a SaaS solution to connect insurers with their distribution partners. We build bespoke, end-to-end platforms encompassing the whole customer journey, but can also integrate our APIs within existing systems. We were proud to win Insurance Provider of the Year at the British Small Business Awards 2018 and receive silver in the Insurtech category at the Efma & Accenture Innovation in Insurance Awards 2019.
How would you describe your leadership style?
I try to be as inclusive a leader as possible. I’m committed to creating space for everyone to shine. Many of the roles at Tapoly are performed by women and I speak at industry events to encourage more people to get involved in insurance/insurtech. Similarly, I always try to maintain a growth mindset. I think it’s important to retain values to support learning and development, like reliability, working hard and punctuality.
What’s the best leadership advice you’ve received?
Build your network and seek advice. As a leader, you need smart people around you to help you grow your business. It’s not about personally being the best, but being able to find resources and get help where needed.
How do you see leadership changing in a COVID world?
I think the pandemic has proven the importance of inclusive leadership so that everyone feels supported and valued. It’s also shown the importance of being flexible as a leader. We’ve had to remain adaptable to continue delivering high levels of customer service. This flexibility has also been important when supporting employees as everyone has had individual pressures to deal with during this time. Leaders should continue to embed this flexibility within their organisations moving forward.
They say ‘from every crisis comes opportunity’, what opportunities do you see?
The past year has been challenging, but it has also proven the importance of digital transformation in insurance. When working from home was required, it was much harder for insurers to adjust who had not embedded technology within their operating processes because they did not have data stored in the cloud and it caused communication delays with concerned customers at a time when this communication should have been a priority, which ultimately impacts the level of customer satisfaction. This demonstrates the importance of what we are trying to achieve at Tapoly in driving digitalisation in insurance and making communication between insurers and distribution partners seamless.
What advice would you give to your younger self just starting out in the industry?
Start sooner, don’t be afraid to take (calculated) risks and make sure you raise enough money to get you through the initial seed stage.