The Covid-19 pandemic has undoubtedly speeded up the process of bank digitisation. It has forced both banks and customers to switch more of their banking activities online, allowing both sides to enjoy the benefits of greater flexibility, lower costs and easier access.
In the long term, digital services should encourage greater inclusion by making it easier for potential customers to access bank services wherever they live, yet it is vital that less digitally-savvy potential customers are not excluded.
When bank branches were closed during the early months of the pandemic, many customers without any experience of mobile or online banking discovered how easy such platforms are to use and may not want to revert to visiting their local branch.
Jim Yong Kim, the President of the World Bank, says: “Universal access to financial services is within reach – thanks to new technologies, transformative business models and ambitious reforms.”
Yet how do banks ensure that no-one is left behind? South Africa’s TymeBank has set up kiosks inside retail stores to provide bank services to those who do not use digital services and it estimates that the kiosks cost only 4% as much as bank branches to put up and operate.
Apps need to be as simple as possible to allow access for those with limited formal education. TymeBank, which is directly targeting excluded groups, has designed its products for those less likely to use digital banking and as a result has a high proportion of less educated users and an equal split between male and female customers.
Banks need to market the simplicity and security of digital banking. Bringing people into the financial services system reduces the risk of theft and loss of money kept as cash.
Digital platforms usually reduce bank costs, so banks can pass some of the savings on to users, allowing customers to transact in very small sums of local currency, helping them to manage what may be very irregular income and expenses.
The option of face-to-face contact should also be retained for other customers when it is really needed, perhaps for those launching a business for the first time. Some physical branches or kiosks could be retained for such purposes but video calls may provide an equally reassuring but more cost effective alternative.
The key challenge is integrating physical and digital banking services, with customers encouraged to utilise digital platforms for as many transactions as possible. There is no need to cajole customers online because digital banking is simply easier for most transactions, so the technology will sell itself.
While many banks have recognised the financial benefits of digital banking, some have still to accept the need to focus on relationship building within such channels. This can be achieved by having a named contact within the bank, possibly just for those accessing a wider range of services.
Loyalty schemes play a role, as does having an attractive app design and providing apps in a customer’s own language, both to encourage use and to help build a relationship through a feeling of familiarity.
At Backbase, we help financial institutions turn their banking services into modern digital experiences, which boosts engagement and encourages a lasting relationship between bank and client.
To make this digital relationship last, it’s vital that customers get an experience tailored to their demographic. Organisations that do this well are able to increase loyalty and better up- and cross-sell and Backbase has seen banks increase the product size by up to 4x as a result.
Sometimes we get too focused on technology and forget the business users. For them, ease of use is key and we see the need for them to be empowered with Page and App editors. These can be used to configure web and mobile apps without coding to localise for different countries, languages or demographics.
Bank and fintech providers are not the only factors in banking provision. The cost of mobile phones and internet access plays a role but the signs here are positive. Smartphone connections have grown by 28% a year in sub-Saharan Africa since 2015, with smartphones now accounting for almost half of total connections.
Yet even non-smartphone users do not have to be excluded. Banks such as Equity in Kenya allow customers to access digital services using only a thin sim card overlaid on to an existing mobile sim card.
What’s clear is that the world, and our industry, is changing. Above all Africa has the potential to not just follow but to lead. The saying goes: a rising tide has the potential to raise all ships. Let’s make sure we succeed in this mission and not leave people behind.
Cornel Dixon is Head of Africa at Backbase.