How banks can be more financially inclusive in Africa
The symbiosis between the telecoms and finance industry is stronger than ever in Africa, and as technology evolves, many banks are being left behind.
One bank in the region that is staying ahead of the curve is Zambia National Commercial Bank (Zanaco), which in 2018, was on the cusp of an accelerated digital transformation set for completion in 2020. Sharing the bank's success since then is a Chief Digital Officer who understands the relationship between finance and telecommunications better than most, Wane Ng'ambi.
"I love a challenge!" exclaims Ng'ambi when asked what drew him to his current role. "I'm not a traditional banker. To me, one of the slowest-changing industries has been banking and financial services. With Zanaco, the whole agenda of taking a very mature, traditional industry and moulding it into a very tech-savvy future-focused one is a fantastic opportunity." When Ng'ambi joined Zanaco in 2018, he brought 15 years of experience in the telecommunications industry with him. Specialising in creating telecommunications and digital solutions from an IT engineering perspective, he previously looked after mobile financial services for MTN in Zambia.
"There's a big drive across Africa that is pivoting mobile telecommunication companies from predominantly providing voice and data services to providing financial services by using the existing technology infrastructure," he says. "Mobile money is a big phenomena in regions like Kenya, Tanzania and Uganda. Zambia is the latest country to embark on this journey."
"The heart of Zanaco’s strategy focuses around the use of technology in order to enable customer fulfillment for different products and services," he summarises. Over the years, banking has evolved considerably, but Ng'ambi reflects that telecommunications engineering has always remained embedded in the lives of customers. "This is the move banks need to make. They need to ask themselves: How do we migrate from the traditional branch servicing of customers and into the digital age?" He is cognizant that Africa comprises a largely young population that will pilot a remarkable technological shift in the continent in the next five to 20 years, and it is essential that banks like Zanaco keep the pace in order to remain relevant.
Zambia National Bank has met the challenges of this ever-shifting landscape head-on and has achieved an astonishing 115% growth across digital channels in the last 18 months, with defining weight placed on mobile channels. Other streams that have contributed to this exponential growth include QR Code, which has acted as a replacement channel to the original postal one & cost inhibitive POS channel, and the Express “Agent Banking” Channel.
"We're at almost 110% growth year-on-year, effectively doubling our traffic through our digital channels." This is the result of what Ng'ambi would describe as a very "aggressive" campaign: "Africa has a very interesting dynamic; the financial inclusion rate is relatively low, with the exception of some successful markets like Kenya, Tanzania and Uganda. Zambia sits at around 59% of the total financial inclusion. This inclusion includes regulated and non-regulated channels."
By non-regulated channels, Ng'ambi refers to the phenomena of 'Chilimbas' – village banking – where groups in rural communities invest collectively. This forms up to 20% of the total financial inclusion and often goes missed by banks. "Now, this is not regulated formally in Zambia, so it's unregulated financial inclusion, which is pretty much a conventional-type financial inclusion,” he explains. “But when you look at formal financial inclusion, through regulated entities such as Zanaco, we're somewhere around 38-39%. That's relatively low if you look at the population." This totals to around 6-9mn individuals who are currently excluded from regulated financial services. This makes Zanaco's growth all the more impressive, but it also creates a number of challenges to overcome.
"Things are looking very, very exciting for us in the future. We are continuing to drive toward mobile interoperability." Ng'ambi shares. "We're looking to build a whole ecosystem by adding everyone into one interoperable environment where everyone can play and trade with everyone.”
For more information on all topics for FinTech, please take a look at the latest edition of FinTech magazine.
TrueLayer launches new verification API
TrueLayer, the leading, London-based open banking solution fintech, has announced the launch of its new Open Banking API verification solution.
According to reports, the technology combines open banking with machine learning (ML) to make the onboarding process seamless and fast.
Fast processing in Open Banking
Results show its success rate is currently 20% higher than credit bureaus because it generates reports in seconds rather than the traditional manual, bank statement checks that can take days to complete.
TrueLayer also says the technology simplifies the payment setup and transactions by pre-verifying customer’s details.
Another advantage is that existing providers have access to raw data that requires businesses to build and maintain their own logic to verify that the customer’s name matches their name on file at the bank.
The verification logic sits on top of open banking rails and matches the name given via the onboarding, along with the name held at the bank. It, therefore, offers a single feed that provides an immediate and highly accurate response regarding whether their user’s account has been verified.
Open Banking in the UK
Open Banking has seen a surge in popularity since March 2020. Data shows that the technology is being used 12-fold more than it was two years ago. Banks in the UK are now handling more open banking payments volume in a single month than the amounts measured in the whole of 2019.
TrueLayer says many of its clients are using the Verification API, including Authologic, a Y Combinator-backed provider of identity verification solutions.
Ossama Soliman, Chief Product Officer at TrueLayer, said the verification breakthrough makes a huge difference to both businesses and customers because verification is the first step to onboarding a new user and yet it can often take days to verify an account owner using traditional methods.
He explained, “Their security is questionable, they’re prone to errors and they take forever. It doesn’t need to be that way. With the verification API, we’ve built on top of open banking to create a faster, more secure, and more accurate approach to verifying a user’s account. It serves businesses across multiple industries, including financial services, PSPs, wealth management and trading, marketplaces, property, and iGaming.”
Speaking about the new technology, Jarek Sygitowicz, co-founder of Authologic explained, “Whether you are a fintech, a marketplace, or an ecommerce platform you want to deliver the best possible onboarding experience.
He added; “We are aggregating different identity verification methods and we are big supporters of using open banking thanks to its ability to make the entire process more intuitive.”
The TrueLayer verification API delivers:
• A faster onboarding process, cutting time from three days to three clicks.
• The API coverage spans all major banks, resulting in a 22.5% higher success rate compared to other credit check methods.
• Prevents fraud through its embedded strong customer authentication (SCA) within the bank verification process.
• Offers a better user experience for customers using biometric technology to confirm identity and ownership.
• Lowers payment failures through its pre-verified account details.
• Lowers burden on compliance teams through automated verification via a single API call.
• Lowers maintenance issues because engineers can focus on solving core business problems, rather than building and maintaining name-check logic.
Image credit: TrueLayer offices from TrueLayer