BANKING TECHNOLOGY EAST AFRICA: Global financial meltdown: Can Africa be a role model for next generation banking and financial practices?

Current global financial meltdown will force banks and financial institutions world-wide to re-evaluate technology strategy, capture non-traditional financial market opportunities, explore operational cost-cutting potentials, and strengthen risk mitigation capabilities. For many years, several major financial institutions around the globe have been locked into spending a significant portion of their technology budgets to mere lights-on maintenance of traditional financial applications and technology infrastructure, while struggling with innovation to improve efficiency. In contrast, banks and financial institutions adapting innovative approaches have achieved remarkable results - Japan’s e-Bank, for example, is already managing about 3 Million customers and $8 Billion in assets with just about 200 support staff and expanding their operations internationally.

We have seen several award-winning innovative approaches focused on non-traditional financial market opportunities emerging from East Africa. Award-winning Safaricom’s M-PESA grew from about 20,000 subscribers in 2007 to about 2.7 Million in mid-2008. However, there are several questions being raised in terms of its vulnerability to fraud and readiness for money transfers that meet international guidelines and standards. Equity Bank won the best Microfinance Bank award with a record profit of 116% that is attributed to its strategic development approaches.

These award-winning non-traditional financial market opportunities with innovative technology approaches can be further strengthened with appropriate technology infrastructure that improves risk mitigation capabilities and meets the international banking standards with appropriate AML/CFT controls. Innovative Banking Technology solutions that further strengthen and transform these award-winning early successes can set the stage for the next generation banking and financial practices world-wide. These innovative approaches will require synchronized efforts by technology solution providers, regulators, banking and financial institutions and Telco operators. Can Africa rise up to this challenge and be a role model for the next generation banking and financial practices?

It is because we want to stimulate the region’s banking sector to adopt leading-edge banking systems as a positive response to the world financial crisis that SBA has decided to support the next African Banking Technology Conference in Nairobi over 17-19 February as a gold sponsor. This event has a crucial role to play in enabling East Africa’s banking sector to respond strategically and positively to the challenges of an entirely new era in the international financial system.