Oracle forum opens up vast tech horizon

The 2nd Oracle Financial Services Summit was held in Mauritius in March. African Banker Editor, Anver Versi was invited to attend this important conference. Here is his report.

This two-day summit organised by Oracle in Mauritius was an excellent opportunity for me to acquaint myself with the technology that lies behind virtually all modern banking in Africa.

This is the invisible technology that has made possible the vast expansion of banking the world over and also enabled banks to carry out ever more sophisticated activities and engage in far greater degrees of interaction with customers than was even imaginable perhaps a decade ago.

When we access our accounts on the internet, withdraw money from ATMs, make payments or transfer money or carry out any of the dozens of routine functions involving banks, we are generally completely unaware of the chain of interlocking electronic interactions that are triggered off and completed in nanoseconds.

The engineering involved is simply awesome and borrows from a bewildering array of scientific disciplines and some of the most advanced computer technologies to ensure that you can carry out your banking activities safely, securely, conveniently and quickly. It is the deployment of this technology that has enabled the astounding growth of the banking sector in Africa.

Banking also has the most modernised business processes on the continent. As more banks adopt newer, more streamlined and efficient technologies on which to run their systems, their profitability rises both as a result of higher revenues and lower costs.

Oracle, headquartered in Redwood City, California, develops and markets both hardware and software systems and is the second-largest software maker, by revenue, after Microsoft. It is one of the largest providers of banking technology systems in Africa.

It is in short, a ‘technology enabler’ that has allowed institutions such as Kenya’s Equity Bank and Safaricom to make such rapid strides in such a short period of time.

Even to a technology dunce like myself, it became obvious as the summit unfolded, that the winners in the fiercely competitive African market will be those who pick the right technologies from the right providers.

There was, therefore, considerable interest from African bankers keen to learn more about the technologies now available and what these can do for their operations. This made for an intense two-day meeting during which both technology providers as well as their customers and potential customers analysed the continent’s current banking landscape and its scope for improvement and expansion.

It was an inspired choice to make South African Peter Redelinghuys the master of ceremonies for the two days. A man of many talents, Redilinghuys immediately involved the audience by getting us to make choices and play various games.

On the second day, he gave a fascinating talk on ‘What really drives human behaviour’, forcing us to contemplate our own decision-making processes. At first this seemed an odd intervention in a forum based largely on discussions over the latest development of banking technology.

But, as the forum unfolded, it became clear that the focus was on what technology could do in terms of improving life in general rather than the ‘anorak’ attitude of technology for technologies sake.

It was also a reference that modernisation did not begin and end with the application of modern technology but, much more importantly, required readjusting one’s mental landscape to more modern streams of thought and decision making.

This is a particularly important distinction, especially in the developing world where there is a mistaken belief that the acquisition of modern technology equates to being modern, even if the mental equipment is old and rusty.

Alex Kwiatkowski, head, Financial Insights, EMEA, laid the foundation for the subsequent discussions with his analysis on how to succeed in Africa’s banking sector. He said the rise of the

African financial sector has been nothing short of remarkable and attributed much of this to demand for services from the continent’s growing middle classes. Private equity, he said, was enjoying a boom as perceived investment risks in Africa decline and global liquidities seek new opportunities away from mature markets.

However, the insurance industry remained underdeveloped, mainly because policies are not yet affordable across a broader cross-section of society in most African countries.

As the financial sector in Africa expands and becomes more complex, so will the raft of regulation and the need to be able to comply with it. He said the success of banking depended on how one handled four pillars: two of them – regulatory compliance and risk management – mandatory, and two – customer experience and performance management – being discretionary.

Looking to future trends, Kwiatkowski believes that investment budgets for IT will increase, that mature institutions will overhaul legacy IT infrastructure and replace the existing systems with more modern versions, and that the use of private cloud will also show an increase.

However, while institutions are aware of the concept of Big Data, it will be a while yet before there is substantial implementation.

The keynote address was made by Jayafar Moidu, the CEO of JMR Infotech, one of the key sponsors of the event. JMRi sells, implements and offers end-to-end support for the entire stack of transactional banking solutions from the Oracle financial services stable.

He said that Africa was a treasure house of natural resources and that the continent’s growth threw up vast opportunities in all spheres but these also came with challenges. These included an increase in mandatory regulation, growing pressure on margins, the need to manage risk more effectively, operational challenges that came with scale, the lack of automation in key business operations, problems associated with legacy systems and so on.

He then went on to demonstrate that specific systems had been developed to overcome these challenges and also to capitalise on new channels such as social media. JMRi has offices in Egypt, Ghana, Nigeria, Kenya, Mauritius and South Africa and expects to open an office in Angola this year.

Generation Y
Tushar Chitra, senior director product marketing at Oracle, gave an intriguing presentation on the influence of Generation Y on the mobile youth market. (Generation Y (Gen Y) refers to those aged between 18-34). He said this generation was “large in number, are affluent and have a growing financial appetite”.

Globally, the Gen Y population is estimated at around 2.56bn, of whom 15% are in Africa. Annual spending by this group is expected to be $3.4 trillion by 2018; they have aggressive financial targets and want to get rich quickly; 42% of them have a credit card; 57% of them spend half their income on social purchases like holidays and technology; and 31% of banks have a dedicated Gen Y strategy.

Other interesting observations of Gen Y include the fact that 90% of them check their smartphones as part of their morning routine, 87% of them have a presence on a social network, 59% are mobile bankers well versed in mobile, tablet and internet devices and 75% of them are in college, plan to go to college or are graduates.

Africa, with the highest growth of working-age population and the lowest dependency ratio, is poised for accelerated growth thanks to its own Gen Y. “Gen Y are the most demanding but also the most rewarding of banking customers,” said Chitra.

They prefer mobile devices to access information, want everything instantly, want online account opening, on-demand assistance and real-time payments. They demand clarity on costs and will switch banks if they have any unpleasant experience from one, Chitra warns. Personalisation and individualisation are important to this generation.

But, Chitra said, a tenth of African banks do not have online banking and a quarter do not have mobile banking facilities. Of those that have online banking, 74% do not have online account opening facilities and 44% do not run campaigns online. Only 14% of African banks have ‘click to chat’ facilities and 40% are not active on the social media.

Clearly, these banks are poorly placed to attract the affluent Gen Y. To do so, he suggests, banks should provide a complete and seamless multichannel experience, provide multiple touch points – mobile, internet and social media, engage in ‘anywhere anytime access’ on all three modes and build brand loyalty through product and service differentiation.

These above were only some of the presentations picked at random from a packed agenda, which included a discussion on Islamic banking in Africa, how to manage risk, anti-money laundering and fraud reduction, how to build the modern data centre and other more technical presentations.

My own contribution was to pay homage to some of Africa’s banking greats, who were all also major technology pioneers in African banking.

The Oracle African Banking Summit in Mauritius opened up a vast and hitherto unsuspected field for me, and from my discussions with many other delegates, for several people in the banking industry itself. Events of this type are essential so that our bankers and all business people are made aware a of all the technological solutions available to them. ■