Over the last two decades, digital technologies have been transforming the global financial services market. Even here in the Caribbean we have started to see new entrants seeking to slice their piece of the pie. Developing countries are uniquely poised to exploit the full potential of digital technologies such as federated data, structured intelligence, homogeneous and ubiquitous databases that lead to inclusive and sustainable growth, improved governance, and responsive service delivery. This is because most developing countries do not have legacy systems to migrate from, thus, they basically start from the ground up with the best technology available on the day. Given the magnitude of change in competitive advantage that digital technologies can confer on adopters, the risks of slow or poor adoption of these innovations can be dire for industries, governments, individuals, and nations.
From my experience in advising Caribbean and West African governments on National ICT development strategies, I have seen first-hand how information poverty in its many forms has led to poor policy planning and management, disconnected enterprises, inefficient markets, poor service delivery, disempowerment, corruption, and more. I have also seen how those willing to embrace change holistically and take the journey of discovery and development like Rwanda have made exponential gains. The ongoing ICT revolution has been long ignored in development thinking and practice. Development practitioners and ICT specialists remain disconnected and many territories in the Caribbean suffer from the legacy lethargy and analysis inertia.
Digital transformation is not a technological fix, a blueprint plan, a one-off event, or a one-size-fits-all strategy. Rather, it is a social learning process, sustained over time, involving diverse stakeholders. One good friend always emphasizes that several engineers miss the point that technology only has a value as a social service. Its ultimate objective is to harness the global digital revolution to meet a country’s specific socio-economic priorities. This process is a marathon, not a sprint. It is driven by vision, leadership, innovation, learning, and partnerships among government, business, and civil society.
With that, I was overwhelmed by a group of local fintech specialists and computer engineers who have created what essentially is the banking platform of the future. Being judged one of the best new products at the internationally acclaimed Finnovate Global Conference this year by attendees, this new locally crafted, but internationally certified application empowers banks and credit unions to accelerate their digital transformation and upgrade their outdated portals and banking apps into modern, digital experiences that are easy to use and result in more sales conversions and more satisfied customers.
Given the rationalization being taken by the larger Canadian banks that dominate the Latin America and Caribbean market place, it is time for indigenous credit unions to take the lead and evolve into digital platforms that offer services at a speed and efficacy that finally surpass that of the big banks. This application and the global experience and institutional knowledge of the engineers and the fintech specialist who built this product provide the perfect platform for delivering a truly home-grown world-class product to the people of the Caribbean.
People love digital services such as Netflix, Amazon, and Uber because they’re easy to use and deliver great customer experiences. They deliver ten times more convenience and better customer experiences than the status quo and are therefore winning the market. It’s only a matter of time before the ten times-better bank is founded, a thought that should be on the radar of every banker.
The European Financial Management Association (EFMA) conducts annual surveys in the retail banking sector and in 2015, 2016 and 2017, European bankers have said the greatest threat to their operations is technology. Enter capital transaction one; Bank Café – a complete digital bank offering all the services of traditional banks and because it has a digital user interface, it is significantly faster, more efficient and produces at a significantly lower transaction rate than regular commercial banks.
In order to re-imagine banking in today’s increasingly competitive environment, there needs to be a focus on disruptive technologies and innovations, as opposed to simply an iterative focus. The winners in the future will be defined by those organizations that can leverage digital technologies to deliver a customer experience that goes beyond the ordinary.
The ninth edition of the EFMA Infosys annual (2017) study on innovation in retail banking provides the following key takeaways:
• The percentage of institutions with a clearly defined innovation strategy dropped significantly from previous years. This is attributed to the inclusion of a greater diversity in the size of the organization this year.
• Organizations continue to increase investment in innovation strategies in all functional areas.
• Digitizing products and services, the customer journey and security were the top three areas of focus for digital transformation efforts.
• The top innovation challenge is systems integration and legacy technology.
• Organizations expect to see a measurable return from their investment in innovation in 1-3 years.
• Large tech companies, challenger banks and smaller fintech start-ups were considered to be the biggest threat to disruption.
• The greatest threat to banking products was expected to be in the areas of payments and mobile wallets.
• Technology investment is being made in ‘traditional’ technology as opposed to ‘disruptive’ technologies.
• Fewer than 50 per cent of organizations had plans to deploy RPA solutions, while 70 per cent of organizations planned to support a conversational AI solution.
• In terms of maturity of the financial institutions for using data driven insights, most of them are still at an early stage of using analytics for descriptive or diagnostic purposes.
• The quest for expertise in advanced technology and analytics is increasing industry-wide.
How do we in Barbados and the Caribbean master the digital transformation process?
Effective practices are emerging in progressive countries for transforming government, services, communities, cities, and businesses. The most effective approaches include: taking a holistic view of ICT and complementary investments; mobilizing demand for good governance and better services, and promoting public-private partnerships, among others. Promoting an inclusive information society would emphasize digital literacy, local content, social intermediaries, and grassroots innovation. Developing smart cities calls for adopting an ecosystem approach that nurtures shared visions, engages all stakeholders, and builds platforms and communities for innovation. Policy measures for business transformation would include affordable access to Internet and digital technologies; mobile finance; digitally enabled government to business transactions; platforms to facilitate trade and e-commerce; and Internet-based training and business services.
Mastering the digital transformation process demands solid managerial and technical skills, leadership institutions, policies and regulations for a digital economy, and a competitive communication infrastructure and ICT industry. It calls for strategies to strengthen educational institutions and reposition them for a digital economy. It calls on stakeholders to define clear roles for government, business, and development partners, and to build competent institutions to lead the transformation process. It addresses key policy issues such as privacy and cyber security. It promotes a local ICT services industry that supports a vibrant transformation ecosystem.
Barbados has the opportunity to learn from the experience of progressive countries while designing products like the one spoken to earlier and the attendant policies that meet its own needs and fit the local context. Newcomers like Korea and Singapore, for instance, have been able to leapfrog, learned fast, and have now become innovation hubs in their own right. It is time for us to embrace the genius that resides among our citizens.
George Connolly is a Finance and Technology professional.