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Strands and CBA’s ambitious digital breakthrough into the African market has placed CBA firmly in pole position in the region’s financial sector, doing more in 6 months to digitalize their banking efforts, than in the bank’s considerable history. Shortlisted for London’s “Banking Technology Awards 2017” as the best Bank/Fintech partnership, the bar has been set high for the future.
Driving Digital Transformation
As an institution we’ve recognized that the world is becoming digital. The customer journey has to be digital; the user doesn’t want to take more than three or four steps to be able to conclude a transaction. Any process that involves paper and people is inefficient.
In Africa, we are starting to see much more high gel competition, both local and internationally, and not the traditional type of competition that we had been accustomed to. We are also undergoing massive change in interest rate controls which is forcing us to look at the way we meet our customers’ expectations especially relating to digitalizing the overall banking experience for the customer.
These two things prompted us to look at partnership with Strands, and so far we are well aligned on our digital journey.
Catering to the Customer
Our customers are responding reasonably well to the changes, though perhaps not as well as we would have expected; the whole process of transformation has been an important learning curve for us. We are more aware of customers’ needs, in particular we now know they prioritize speed and efficiency when it comes to financial transactions.
As a consequence of these lessons learned from discussions with our customers, we believe that our new system upgrade will improve customer relations considerably and will put us on track to achieving the ambitious objectives we set out for ourselves at the onset. We have acquired some 18,000 customers in less than 6 months with relatively no additional effort, which compared to the CBA of the past, which took almost 53 years to achieve 75,000 customers, this is a huge achievement. But we now believe we can accelerate it.
Change From the Inside Out
Change within an organization is tough because you have to change individual mindsets. There’s always a fear that when you are digitizing it that it is equivalent to loss of jobs, so we’ve had to dedicate a lot of time to communicating to our employees that our interest is far from pushing people out of employment. Quite the opposite: we want to do things which make it exciting for our employees to serve customers and to grow with the company. We’ve demonstrated very clearly how technology should be used to drive customer acquisition, especially using our mobile loans and savings solutions. So we’re confident that our staff understand that this is really about the need to change their skills. We will make that investment to ensure that their skill base directly linked to the opportunities in the market. This not only provides an opportunity to grow exponentially, but also acquire a different kind of customer who embraces technology much more effectively.
SMEs: Central to Strategy?
We see the future of any economy, especially African economies, as very dependent on the success of SMEs. SMEs are a very very critical part of our core banking offering, simplifying the solutions we have for them and ensuring that they are able to access the market much more efficiently.
The key here, is to ensure that we build sufficient information, so that we better understand their needs and can work with them in a much more productive way. We have been able to replicate what we’ve been doing until now with the millennial segment to some extent for our SME customers, and it has meant we are significantly nearer to to meeting our targets.
We have completed the segmentation process and are developing revenue targets and market access solutions. We are starting off at a considerable advantage, with 5,000 existing SME customers.
All about Africa
We are a very difficult market, but for us one of the key considerations is the fact that from a regulatory point of view, there is a Africa-wide legislatory platform, which means that once you have approval for one market you can access at least 12 markets.
This is the case at least in French West Africa, and then there’s the central side of French Central Africa which also has a similar arrangement, so what this opportunity gives us is an ability to enter a lot more markets in the future. Our objective is to drive a digital transformation across every market we are going into, so this presents us with an opportunity to make lasting change.
We have had to reinvent ourselves; we learnt the hard way that in a competitive market such as ours, that the only way to survive is to go beyond what is expected of you. There are very few places elsewhere in the world where you have close to 50 banks operating in such a small marketplace. In Tanzania there are close to 68 banks, Uganda has about 24 banks and Rwanda has about 15 banks, so it’s hugely difficult to stand out from the rest.
Strands On Our Side
I think it’s been an extremely exciting journey for us; meeting Strands was a very chance opportunity, because we were in the middle of looking at ways in which we could meet our customers’ needs from an information management perspective and I don’t think we were really sure how to do it.
The conversations we had with Strands from day one gave us a clear indication that we needed to start from scratch, rethinking each stage of the process. The journey, since we began working together in 2015, until we launched in 2017, has been nothing short of tremendous. We are doing some work now to tweak our solutions for the better, but client feedback has been very positive.
Reaping the Rewards: Return on Investment
In Kenya, return on investment – closely linked to the return on equity – is typically expected to fall between 25 and 30 percent the global average for retirement investments. For the financial services industry it is somewhere between 7.5 and 12 percent in the rest of sub-Saharan Africa. South Africa is sitting at about 15 to 20 percent. So if you are achieving an investment return between 25 and 35 percent you are actually sitting very pretty. Our digital transformation is achieving an investment return in excess of 100 percent.
Our aim is to ensure that we stay ahead of the market. We believe that you can never have more than a 2-year advantage. After 2 years, other people catch up with you and can surpass you. We try to project our actions between 2 and 5 years in the future, and this is something that has helped us maintain a strong position as leaders in this region for so long. We are unified in this mission as a team, and our shareholders understand that constant reinvention is paramount to our success.
We want to replicate what we have been doing in our existing four markets, with a view to moving into 20 markets eventually.