Financial technology (Fintech) to receive increased investments in 2018 and beyond as banking sector dives deeper in the space states Mr. Joshua Oigara, Kenya Commercial Bank (KCB) Group CEO and MD.
In a statement, “Reimagining Banking in 2018 and Beyond”, Mr. Oigara outlines East Africa’s financial industry outlook, “The future lies in leveraging technology to drive efficiencies in our operations in order to serve our customers better with relevant products that meet their expectations.”
His statement aligns with Gartner’s research that shows the global banking industry will spend $519 billion on IT in 2018, up 4.1 percent year over year from $499 billion in 2017.
“As the business environment evolves, it is important for us to expand its revenue streams to remain competitive. This aggressive focus on digital channels leveraged on our Fintech strategy is paying off,” he added.
Deloitte’s 2018 Banking Industry Outlook reaffirmed the growing perception of Fintechs. Fintechs continue to lead innovation in the banking industry by sharpening their focus on customer experience. Banks face a number of choices: replicate what fintechs are doing, respond with equally innovative solutions, become more symbiotic and less competitive, or pursue a mix of these strategies that fit their unique capabilities and market positions.
“Banks need to manage for the long term game, through the cycles, even as they adapt in the short term through test-and-learn experimentation. Given the technological and market changes roiling the industry, the coming 2-3 years may well bring even greater disruption to banking. To play the longterm game, each organisation needs to determine which developments to prepare for and how, based on its particular assets, profit pool, business model and operating model.”
Deloitte’s 2018 Banking Industry Outlook portrayed that in 2018, they expect a “modest step to a big leap” in the way technology units within banks begin to transform themselves and redefine both their role and value within the organization. Breaking institutional barriers to such change may prove to be a big challenge.
“Learning from fintechs and technology firms could also help banks rethink their competitive benchmarking. As fintechs and other nonbank players encroach on various business lines (e.g., lending, payments, trading, wealth management), it may behoove incumbents to compare with those they consider best-in-class in terms of the capabilities and solutions. This expansive view of competition can make them less vulnerable to future threats,” the Outlook added.
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