Banks are embracing new digital technologies at breakneck speed, but such rapid innovation should always be centred on customers’ best interests Not too long ago, ‘banking’ was something of a dirty word. The 2008 financial crisis damaged trust in financial institutions the world over and, as a result, they became synonymous with greed and risky speculation. The fact that this stereotype is now being eroded is down to the hard work of the banks that have been keen to show off the important work they do empowering businesses and individuals. In fact, the 2019 Edelman Trust Barometer report for financial services found that trust in the sector is at its highest level since 2012.
There are a few organisations driving this improvement, one of which is Nigeria’s Guaranty Trust Bank (GTBank).
After commencing operations in 1991, the bank quickly became one of the most respected organisations in the country, winning the Nigerian Stock Exchange President’s Merit Award on no less than seven occasions during the first decade of the 21st century.
“If you look at our history, we have always put a premium on building trust and improving operational efficiency – not just to keep costs down, but to create processes that are scalable, and that add the most value to all of our stakeholders [see Fig 1],” said Segun Agbaje, Managing Director and CEO of GTBank. “We have always been at the forefront of leveraging new technologies to grow our retail base and, most importantly, to serve customers in the best possible way.”
Under Agbaje’s stewardship, GTBank has placed financial inclusion, digital technologies and good governance among its top priorities. Before each new policy or service is introduced, the bank is careful to consider the needs of its customers. It believes that innovation should not be for innovation’s sake – it must be delivered with a clear purpose and vision.
Self-disruption
There has been much talk of how digital technologies have caused disruption since they first appeared – particularly for industries that have been in existence for decades. Banking, of course, has lived a charmed life for most of its history; until recently, strict regulation and the sheer weight of capital required to enter the industry has protected it against new entrants.
Today, however, the industry is a much more welcoming place for new players. Established banks have found themselves challenged not only by up-and-coming firms in the financial services space, but also by technology platforms with little industry experience. In the face of this new challenge, banks are left with a stark choice – innovate, or risk being overtaken.
In the developed world in particular, physical bank branches are on the decline, with many individuals rejecting the inconvenience of having to organise their financial needs around the set opening hours of brick-and-mortar banks. With its many e-branches, GTBank has already pre-empted this trend by giving customers the flexibility they are craving – and that’s not the only way the bank is adapting.
“We have decided to disrupt ourselves and not live in denial,” Agbaje said. “At one time, when we did competitor analysis, we only used to look at other banks. Today, we look at fintech businesses, telecommunications firms, and even betting companies – essentially, anyone who offers any form of payment service. And one thing that we have learned is that although people will always need banking services, they may not always need banks.”
As Agbaje emphasised, fintech firms are one of the primary driving forces behind change in the finance sector. These businesses have embraced new developments, including blockchain and cloud-based solutions, to deliver services that are more agile and able to better meet customer expectations. Unsurprisingly, investors are getting excited about these new players: in 2018, fintech funding reached $111.8bn, according to KPMG. This was an increase of 120 percent compared with the previous year.
“We are responding to blurring industry lines by completely redefining ourselves,” Agbaje told World Finance. “We are becoming a single trusted, integrated digital platform, building and leveraging partnerships and collaborations to offer more essential products and services than a traditional bank can.”
Industry lines could become further blurred if recent rumours regarding the well-known technology giants turn out to be true: analysts have speculated that the likes of Amazon, Facebook and Google could one day offer fully fledged banking services. Many already provide peer-to-peer payment solutions and have a huge customer base to call upon. They are also viewed increasingly positively in terms of trust and reliability: a 2018 survey by MuleSoft found that 52 percent of all 18-to-34-year-olds would consider banking with one of today’s tech giants.
- Worldfinance
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