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What’s left to innovate?

Craig Leppan, Business Development Director of Synthesis, was interviewed by Business Day about fintech innovation and what new ideas banking might come up with this year. 

South Africa has led the world in financial technology, but does the world really need another payment gateway or mobile wallet? We spoke to experts from companies that specialise in the development of banking technology to find out which areas are ripe.

1. Disruption by Digital Banks

Non-banking platforms, branchless banks and fully digital banks, such as Tyme, Discovery and Bank Zero, have disrupted banking systems and one cannot ignore the sudden entry and activation of these new players in 2019, says Craig Leppan, Business Development Director at Synthesis Software Technologies, a company specialising in the banking and financial services industry. “The once-secure landscape of transactional banking shared by five or six players is suddenly a lot bigger and consumers and banks are rigorously testing the new offerings,” Leppan says.

Another trend underway in China and India, he adds, is happening at large peer-to-peer payment platforms and e-commerce solutions such as WeChat Wallet and AliPay. These have begun offering banking services due to their large digital customer base with unmet needs in the area.

Richard Firth is the CEO of MIP Holdings, a software and app development company in the finance sector. He believes that peer-to-peer lending, which is still in its adolescence, will begin to impact bank loan schemes , and will drive down interest rates and open the market.

2. A new customer experience

Both Leppan and Firth believe that banks will have to step up their customer experience in the form of engagement. “The banking sector is aiming to put the customer at the centre of its marketing and engagement channels, and also looking to unify the experience across its product offerings,” says Leppan.

“As banks work hard to retain existing customers and attract new ones, the race to compete with new banking players is also heating up, with existing and new players having to react in real time with distinctive solutions for consumers who are looking for credit or transactional banking services,” he says.

Firth adds that gamification and automation will drive the total self-service of accounts, allowing clients to pick and choose services such as health, insurance, travel and group risk that were not traditionally offered by banks. “This will lead to banks looking after the total financial wellbeing of a consumer.”

3. The rise in Mobile Payments 

Payment card use will decline over the next three years, reckons Firth, as the contactless payment services are more widely adopted. Although these work with cards, it’s the use of IoT devices and smartphones , along with apps like Zapper, FitBit Pay or Samsung Pay that will start to rise. This will also help to reduce fraud, says Firth. “Cards also increase administration, delivery and management fees.”

Leppan adds that while history shows legacy systems take a lot longer to be displaced, it is exciting that more systems are accepting card tokens. “Card issuers will issue a virtual card versus a physical card, but the underlying systems and card rails will likely still be in place.”

4. AI and ML to speed things up

Artificial Intelligence (AI) and big data aggregation will supplement automated add-on services, such as robotic services recommending additional services based on activity across the consumer’s bank account, says Firth.

“The current world of batch-driven customer engagement reports and insights are failing most marketing departments,” says Leppan. “AI and machine learning (ML) are promising to automate manual, routine tasks like processing incoming email requests for service, account opening and payments.”