Digitization of Banking and Financial services in Kenya

Did you know that only 31 percent of consumers think financial institutions know their needs well? Global digitization combined with unprecedented changes to the financial services business model is mandating transformation in the banking sector.

Today technology is increasingly inside everything; data volumes are rising, and connectivity has become pervasive, used by cloud services that fuel intelligent action. The opportunity to think and operate like a digital company is disrupting markets, shaping growth, and providing the catalyst for new business models, products, and services.

In this era, banks and financial institutions must look to deliver more value to customers through useful insights and relevant offers by engaging them in natural, highly personalized, social and innovative ways throughout their journey.

Kenya is said to be an overbanked economy with more banks per head than any African country. The good thing is, Kenya is a world leader in mobile money solutions through M-PESA. The competitive nature of the banking industry in Kenya means that for one to succeed, it must turn into use of new technologies with more personalized experiences.

The innovation in the sector has come from various dimensions that include E-Ticketing replacing the long and tiresome queues previously experienced in banks, the partnerships with M-Pesa to offer M-Banking services, Internet banking, tailored products and the now famous App Banking innovation. All this have been incorporated by majority of the banks and with majority having the products similar.

Although this has generally improved the banking sector as attributed by the Central Bank of Kenya Governor Dr.Patrick Njoroge, there is no uniqueness in most of the products and majority lack a personalized customer experience. “If banks want to remain relevant in the digital age, it is time for them to change the way they serve their customers.”

“Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening and maybe soon we will have a virtual bank with no branches.”

The rise of technology termed as the 3rd world revolution has presented enormous opportunities to the banking sector and a company that realizes that banking is not being but is unbundled will attract and retain customers. The rise in the consumption of digital platforms in Africa has presented viable opportunities for banks to reach customers with ease and convenience.  Even though all the banks in Kenya have social media pages to engage with their customers there is still more room for growth and expansion.

During a forum dubbed Digital Transformation in Finance organized by Microsoft East Africa at Dusit D2 Hotel, Nairobi, it was noted by many that customers need banking and not banks. The increased consumption of digital platforms has disrupted the banking sector with each player striving to reach its customers through the platforms. Microsoft has placed itself as a strategic partner with any financial institutions with a focus on empowering them to achieve more through use of technology.” Our new era of personal computing will help banks deliver digital experiences to its customers and harness productivity.” With its cloud technologies, Microsoft is presenting banks with an opportunity to rethink their technology profiles and move much more quickly in terms of meeting customer needs.

Microsoft cloud technology enables banks and financial service providers the ability to customize the cloud to their needs while adhering to the regulatory frameworks, security, convenience and privacy compliance.

There is need for banks to see a bank whenever they see a phone based on the fact that majority of the citizens have mobile devices. Through Microsoft Dynamics CRM, the product helps develop meaningful and enduring relationships while helping increase profitability and operational efficiency through outstanding customer experience.

Microsoft therefore remains a key and integral partner for financial institutions open for technological expertise and partnerships in helping the banking sector deliver services with convenience, speed and safety.

For many financial institutions and banks, as William Gibson put it “The future is here, it’s just not evenly distributed.’ Some institutions are already ahead in provision of personalized banking services to customers for example Standard Chartered has moved to replace pin numbers and passwords with biometric authentication thus allowing customers to access their accounts and services via mobile devices.

The move benefits customers without having them required to remember complex passwords while also reducing the risk of fraud for the bank. This is just but one in the many technological products in the offing by various institutions so as to remain competitive.

If Kenyan banks want to remain relevant and successfully drive for growth in this digital world, they must be ready to innovate in the way they engage with their customers, collaborate and partner with colleagues and digital providers and engage their customers with compelling experiences across all channels. Embracing new technologies and incorporating cloud computing will enable banks to disrupt their own business models by turning data into insight, transforming ideas into action and creating more opportunities by embracing change.

For more about Microsoft’s vision for a digitally transformed banking industry, download Microsoft’s perspectives on the digital bank.

Article by Martin Kuelekho.