With downtime and unavailability significantly impacting on the reputation of a bank, fintechs are in a prime position to embrace hyper-availability and gain the competitive advantage over the incumbents. We explore the impact it is making in the local banking sector.
Anybody still questioning how downtime can influence a bank, should take a lesson from what is happening at Capitec. Once the darling of the local banking sector, sporadic downtime experienced on its digital banking platforms has seen the bank lose the top spot as the best digital bank in the country. Customer satisfaction levels are directly linked to the availability of services. Those financial institutions unable to meet those demands will become increasingly irrelevant in the world of always-on hyper-available access to digital banking.
Locally, the banking industry is a fast-paced environment with new banks launching soon. The message is clear, if your services are not available to serve customers on the platforms and times they want, you will see satisfaction levels drop and customers migrate to the newcomers.
The 2018 Budget Speech highlighted the support government is giving to expand competitive, affordable banking services to those who previously did not have access to it. This is where digital banking services delivered on mobile platforms become vital.
Already, three banking licences were granted last year for institutions that will have significant digital capabilities and bring more competition and innovation to the sector. I am excited about these new digital banks, their offerings, and how they are going to present it to potential customers such as myself. According to PWC’s report The future of banking: A South African perspective, non-traditional players in the South African market are increasingly exploring new opportunities, enabling them to challenge incumbents and continually change the state of financial services in the country.
And this is reflected in how consumers use banking services. Not being limited to visiting branches, they can bank from their mobile devices wherever they are, irrespective of the time of day. However, if services are disrupted (as was the case with Capitec), the reputational damage is significant. And while Capitec has born a lot of the brunt when it comes to accessibility of digital services, the reality is that most of the big banks in the country have experienced system outages and problems at one time or another.
Becoming more intelligent
The newly arriving digital banks will soon realise that trust is earned by being always-on and available. They have only one time to launch and cannot afford downtime. Imagine the financial implications, not to mention the loss of customer confidence and the damage to brand integrity they will experience if their customers are unable to access services. Downtime is no longer acceptable, especially if your brand is built on being digital first.
This is where intelligent data management becomes a fundamental principle as a more effective way of managing uptime. In so far as availability has been ‘limited’ to backup, recovery, and business continuity, intelligent data management adds a critical component to the mix – that of data accessibility and how it is delivered to stakeholders.
It is this approach that is driving forward-thinking institutions to prepare themselves for a more connected business environment that fulfils all customer requirements.
Take BankservAfrica as an example. To maintain the reliability and robustness of the South African National Payment System (NPS), it invested in state-of-the-art data centres and disaster recovery strategies. Moreover, it modernised the way it protected its data by taking an integrated approach to its systems and services. For BankservAfrica, it is all about delivering continuous services and having round the clock availability.
This should be a valuable lesson for other financial institutions in the country. Hyper-availability requires the continuation of services in the event of a disaster as well as having the capabilities to more intelligently manage the data at one’s disposal.
When it comes to intelligent data management, banks can use the information at their disposal to better understand customers and their preferences, optimise sales channel strategies to fit their current needs, provide improved service, and retain customers. Looking at business growth prospects, this data can be used to find ways to cross-sell to customers and deliver new digital services and experiences.
Of course, this is not without its challenges as banks need to not only manage and mine the data they produce themselves, but also ensure there is an always-on digital experience for customers. The EY annual FinTech Adoption Index Report 2017 forecasts a 71% growth in fintech adoption for South Africa, with the country ranking third in future growth behind only China and India.
Globally, fintech adoption is predicted to reach 52%. And according to the EY report, this adoption by digitally active consumers in emerging markets (that include Brazil, China, India, Mexico, and South Africa) average 46%, considerably higher than the global average of 33%.
Looking ahead, fintechs and banks alike will need to examine how they are prepared for an always-on environment using a hyper-availability strategy that is reflective of the competitive environment in South Africa. The new digital banks need to design their systems from availability down instead of from the platform up. Availability should no longer be seen as part of the last mile, but rather the starting point. Hyper-availability has become the norm and everything else is unacceptable.
By Kate Mollett, regional manager for Africa South at Veeam