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KAGECHE: Why banks have to play catch-up with fintechs

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Why banks have to play catch-up with fintechs as services go digital

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Banks must re-think their potential. FILE PHOTO | NMG 

“The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.” – Microsoft founder Bill Gates

Banks are starkly and culturally different from the challenger banks (or fintechs), giving them a run for their money. And this could be their biggest undoing. In a time when customer intimacy is not a public relations exercise but a necessity for business survival, banks still epitomise the rallying call of the entrenched: “But we’ve always done it (treated the customer) this way.”

This article follows last week’s entitled, ‘Being digital does not make banks tech-savvy’. Unlike the mushrooming fintechs globally (for example Safaricom or corporate on-line lender Lending Club), going digital for banks is driven more by the desire to “evict” the customer from the banking hall than to simplify his life. That is why their customer interaction processes remain analogue (detached) even as the bank goes digital; much like a retailer going online, but still operating from 8am to 5pm.

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Borrowing from last week’s analogy, a “digitised” parent knows that he must throw out the parenting rule book he grew up on and embrace a new one on the go, if he is to raise a socially adjusted child. He dared not ask his parents, “What is sex?” for instance, but knowing his son has options (read, the Internet), he tries to address the question when asked. It is scary but he knows it must be done. And so weaning himself off hubris, he humbly reinvents himself and therefore his relationship with his son.

As for banks, they struggle to accept that they are no longer in control of the banking environment. Unlike fintechs, humility, adaptability and transparency are vague values for the profit-making banks; they are more familiar with control, rigidity and obfuscation. For instance, they had to be dictated to by Central Bank to display the cost of every transaction.

But we are no longer “refugees”, meekly waiting for banks to dole out conveniences like an ATM or longer opening hours. We now demand it. More than ever before, the future is being driven by the consumer, “Spoilt” by what other industries are building expectations of, (for instance), Amazon, Apple, Google, (Safaricom) and Facebook, the consumer is looking at transactions today and saying: “Why can’t your bank apps be as easy to use as for tech firms?”

And that is the point—banks are not competing against banks; they are competing against technology. This change in competitor landscape means banks must re-think their potential.

But their response to this is, “Banking is complex and regulated.” So was media before social media.

Successful bank digitisation is not just automating existing services and making them available on self-service platforms. Digitisation should involve a cultural change in the mind-set of bank staff.

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World Bank pushes G-20 to extend debt relief to 2021

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World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.

“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.

He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.

The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.

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People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.

For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.

Debt burdens, already unsustainable for many countries, are rising to crisis levels.

“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.

ALSO READ:Global Economy Plunges into Worst Recession – World Bank

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Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans

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The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.

“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”

According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.

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Tighter Reins on Platforms for Mobile Loans

The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.

Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.

Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.

SEE ALSO: Central Bank Unveils Measures to Tame Unregulated Digital Lenders

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Scope Markets Kenya customers to have instant access to global financial markets

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NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options. 

This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.

The Scope Markets app offers clients over 500 investment opportunities across global financial markets.

The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.

The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).

The platform also offers an enhanced client interface including catering for those who trade at night.

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The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour;  Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).

The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.

Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”

He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.

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