Pocket Sized Banking: “The Digital Age”

Once upon a time but not too long ago the markets experienced 3,6,3 banking. Bankers borrowed money at 3%, lent it out at 6% and at 3pm executives were on the golf course doing 9 holes. Banking was seamlessly easy. Interest rates were low, commercial banks few and at this time the cheque book was sacred. Bouncing or dishonouring of cheques was unheard of. My Uncle was the Presidents personal pilot and was privileged to save with Barclays Bank. How is it that I can remember? Those days the Barclays logo was a distinct black eagle with 8 strong talons which had three (3) crowns, two (2) spaced on its wings and one (1) on its belly; used as a symbol of strength. That’s how I remember the Bank my father saved with. Clearly the brand has stood the test of time. There were no automated teller machines and the banking profession was for the elite. I recall being told explicitly that with a 12th grade certificate and a good testimonial I’d land myself a job as a bank clerk.

Evolution of traditional banking
I had always wanted to be a Mining Engineer, but then this was during the privatization transition era of the mines. Zambia Consolidated Copper Mines – ZCCM was being sold to Anglo America Plc. My uncle a software engineer at the time, told me the mines were closing and that I would never be employed if I went ahead and did a mining or metallurgical degree. In addition I grew up believing copper was a saying asset. A concept I learnt in my 7th grade. At the Copperbelt mining show I bumped into mining engineer of Indian origin that explained to me that there was more copper 900m deep and that the government didn’t have enough resources to drill deeper hence the decision to privatize the Mine to entities with the needed financial muscle.

So we Fast forward into the future and I find myself working with a whole spectrum of engineers ranging from computer to mechanical in a banking setting. I’m a living testimony of specialized banking. Who says you have be a social scientist to qualify as a banker? The banking profession has evolved, reincarnated and transformed into this hybrid and mezzanine type of corporate entity that’s awake to the eco-system of transactibility. Banking is more specialised in comparison to decades back when it revolved around cheques and balancing of cash positions.

Zambian commercial banking
The Zambian market is endowed with 18 commercial banks of either local or international parentage. Competition is ferocious and everyone wants a cake of market share through product offerings. Just a few weeks ago we unleashed the Zambian Commercial Banking IP Adress 18.10.64.2.1. It explains how competitive the commercial banking platform has become. Customers have shown price sensitivity through search for value in bank product offerings. We can safely say they are spoilt for choice. Some are laggards to good customer service, while others are cut throat attracted by lower unit costs. The world has digitized at a much faster pace than many did anticipate. Talk about android technology that allows you to do practically everything you can ever imagine; Who needs to buy a hard copy book when you can download on your mobile device? Who needs to queue up at your local travel agency for an air ticket when you can get one online at a discount? Who needs to send a telegram when you can email a counter party in seconds? The world has surely awakened to technological changes.

The Bank accommodated in customers pockets
Technology has slapped banks in the face, awakening them to a hard choice of remaining relevant in this market. The risk of extinction is quite high for those that will not step up to the challenge, suffice to say digitization is a curve that every commercial entity has to tap into. This is what will bring the entire banking infrastructure into a consumers pocket. The pocket is a haven for a mobile device like an android phone. Bringing the Bank into a consumers pocket is an analogy for the need to have every banking transaction done from ones mobile gadget. Who needs to be in a sweaty queue to draw money or do transfers at a physical branch when all this can happen in the comfort of your home on your device? Digitization is also communicating to the markets, optimal capital use. What does this mean? It means that banks may have to be smart about physical expansion and really focus on using technology to access remote areas thereby maximizing financial inclusion.

“How will the bank reach a poor man in Mporokoso?” Finance Minister Honorable Felix Mutati asked at a cocktail dinner organized by Barclays last week. This was a farewell to the outgoing Barclays CEO Mr. Savior Chibiya and simultaneous welcome to incoming CEO Mrs. Mizinga Melu.

My suggestion? Banks can partner with mobile service providers who are enablers as opposed to competitors to reach the furthest spots of the country. A lot of commercial banking strategic initiatives which are in the medium to long term projectiles speak to digitization.

The evils of digitization
Digitization is an audacious concept yet it has its own evils. The safety of internet platforms is very key for the success of the transition. The more sophisticated digitization becomes, the more vulnerable system permeability also becomes. Cyber criminals are on their feet to circumvent controls at all expenses and threaten security of these technological platforms, therefore this means that banks have a mammoth task. Not only to ensure that their customers feel safe but also to ensure maximum hedging of shareholder value, as cyber risk is the biggest threat to any banks strategic objectives in this day and age. With systems that are cloud based the world is awake to malware and hackings that can wipe an entire financial institutions data in an instant. Huge amounts of investment will need to be committed to ensuring the safety of trans-banking technology platforms.

More articles on digitization.

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