How banking innovations can empower NamibiansThere is a concern that financial institutions, in general, are forcing innovation on customers and are not being mindful of the needs of all Namibians. This discourse attempts to demystify common misconceptions regarding banking innovation.
Myths of digital transformation in Namibia
Some believe that innovation is an exclusionary process that leaves many behind. In the past, the global banking sector has been at fault for digitising analogue processes and specific tasks and calling it innovation. This approach did not sufficiently harness the power of innovation to put the customer first. Thus, it is understandable that people forced to change their banking habits felt excluded.
A report by Deloitte Digital, “Digital banking redefined in 2021”, found that digital innovation represents an avenue to create opportunities that build trust through intimacy, relevance, and perceptiveness. This means that the main objective of financial institutions to replace the processes and services customers use and enjoy is not just to save costs. Instead, there is a drive to create new and innovative ways that enhance the banking user experience and, in turn, put the customer first no matter where they live.
Leaving rural customers behind
In February this year, Michael Carter from the University of California, Davis, and Elinor Benami of Virginia Tech published a study addressing the role of digital technology in the future of rural microfinance. The study asserts that emerging digital technology such as mobile money can transform rural financial markets, especially in developing countries.
In 2017 M-Pesa launched a mobile money service in Kenya. Shortly after, the business extended its services to reach remote rural areas underserved by traditional banking institutions. Through fundamental technological innovation and modern problem solving, M-Pesa increased financial access throughout east Africa by creating customer-centric experiences.
Digital channels have the power to include more people in the financial system than ever before. It allows people to access their money and bank and complete specific tasks anytime. As we transform digitally, Bank Windhoek also recognises the importance of its physical footprint, namely ATMs and branches, and the fact that these need to be repurposed.
We want our branches to transition into a place for value-adding interactions, like advising customers on the right product, investment education or structuring the appropriate loan structure for clients. We will digitally enable our branches with innovative and data-driven solutions to make the branch journeys as seamless and intuitive as possible. ATM functionality is constantly being enhanced to expand banking services such as installing contactless-enabled features across cash-accepting ATMs.
Digital transformation is not for Namibia
In 2016 the World Bank introduced the Digital Adoption Index (DAI), which measures countries' digital and technological maturity. On a scale of 0-1, Namibia recorded 0.38. The Central African Republic has the lowest score of 0.15; South Africa, 0.63; and Botswana has 0.47. The DAI is measured across three areas; people, government, and business. Namibia's sub-index score for business is 0.50, for people is 0.33 and for Government is 0.31. This index was compiled long before the Covid-19 pandemic. These figures show Namibian businesses outpacing the country’s people regarding digital adoption. There is a high need for Namibian businesses to educate the public on the importance of digitalisation and its positive impact on customer service.
In the World Bank's World Development Report 2016: Digital Dividends, the DAI highlighted the difference in adoption rates between countries. The report aims to help people understand how digital innovation can increase growth, jobs, and services. It illustrates how digital technology drives innovation and efficiency, puts the customer first and enables banks to better interact with customers.
Namibia is a unique country, and innovation may differ from anywhere else. We must keep this in mind as we champion a customer-centric approach to banking innovations that improve Namibian lives. These changes may happen through Internet Banking, Mobile App features or less modern technology like USSD banking.
As Connectors of Positive Change, we believe innovation and digital transformation provide a unique opportunity to enhance customer relationships. It can include more Namibians in the financial system and empower them to reach economic prosperity as we journey towards a brighter future for all.
* Ryan Geyser is Bank Windhoek’s Head of Digital, Data and Customer Transformation.