Nume Ekeghe writes on the new digital banking experience championed by Wema Bank and how it would transform banking
In its continuous strive for digital transformation, Wema Bank Plc recently launched a full digital banking platform â€˜ALAT.â€™ It is a platform targeted at youths, which the bank believes would increase its earnings by $200 million by year 2020.
The Managing Director/Chief Executive Officer, Wema Bank Mr. Segun Oloketuyi disclosed this recently at the launch of the digital banking solution.
This he explained, would reduce operating cost to the barest minimum and would give customers the best deals on savings. This form of account, he also explained is fully digitalised as the account opening is always done online without going to the bank. It also goes with free ATM cards, better savings deals and maximum security.
The cost of running banks in Nigeria is higher than what is obtainable in most countries considering that most banks have to generate power, among other expenses. To this end, banks have come up with various products to encourage digital banking.
In February, global professional services firm, PwC released its Nigeria FinTech Survey 2017 report, with a striking message: â€œNigerian retail banking and payment sectors will be the most disrupted by a group of new companies building financial technology (FinTech) solutions.â€
This has long been coming, and forward-thinking financial institutions have prepared for this by partnering start-ups earlier seen as competitors.
It is true that banks have the advantage of legacy and wide customer bases over FinTech start-ups, but many lack speed and the capacity to understand and quickly build a very good user experience to improve efficiency and decrease costs. Such adaptability is what characterises the typical FinTech start-ups today.
Advisory Partner and Chief Economist, PwC Nigeria, Dr. Andrew S. Nevin, in his comment on the Nigeria FinTech Survey 2017 report, noted: â€œFinTechs are empowering customers by providing services that are delivered via technology applications on customerâ€™s mobile devices. This allows consumers conveniently initiate and complete transactions, connect to third party entities and access information without restrictions.
â€œAll over the world, the increasing momentum of FinTechs and their success is challenging financial services players to devise a spectrum of strategic responses.â€
While some collaboration has started, banks remain worried about the threats posed by the sheer determination and guerrilla strategies of these start-ups.
At PayThink last September, major organisations in the payments industry gathered to discuss innovations and trends in the payment space. A line of thought that emerged at the conference was that the existing relationship with FinTech startups wonâ€™t advance innovation in banking, and fear might stymie it. What then can banks do?
But Nevin is convinced that not all FinTechs pose the same threats or opportunities.
â€œIn some cases, FinTechs will be viewed as enablers to traditional innovation and continuous improvement. In others, it presents a series of disruptions and threats as they continue to make inroads into banksâ€™ traditional territory by offering a competitive service or product.â€ The question remains: what then can banks do?
Innovate or Die
The popular saying is the stark message for banks in the era of marauding FinTech start-ups. The message of collaboration and adoption of an ecosystem approach where banks grant start-ups access to their API endpoints, large sales and agent networks, is gaining traction but it is a lazy way out for banks. Microsoft and Google do not remain relevant by giving in to threats posed by start-ups. They have remained relevant by constantly innovating and getting into the trenches with the start-ups. Big companies, sometimes due to the fear of risk-taking, often find it difficult to innovate. This, however, is not so with the likes of Google, Microsoft and Facebook. When they canâ€™t beat you in innovation, they buy you, rather than â€˜collaborateâ€™ and leave the future of a part of their business at a start-upâ€™s mercy.
Collaboration is the short-term answer to the threat posed by FinTechs but for a bank that has been around since 1945, short-term is never good enough.
The Wema Bank had survived enough crises owing to global headwinds as well as in the Nigerian banking industry in the past, to leave its fate in the hands of FinTech start-ups. Wema Bank will innovate. Wema Bank will compete.
But the current struggle is not the end. In the UK, app-only banks are becoming an increasing threat to traditional banks. It goes beyond a traditional bank having a robust e-banking offering; because letâ€™s face it, who has time to go to a bank branch for the initial documentations of new account holders and documentations for some services? British app-only bank Atom has raised Â£135 million since it was founded in 2014.
At the launch of ALAT, Oloketuyi said: â€œWe have a target that by 2020 on ALAT platform to have three million customers and you can say that is audacious but it is achievable. Wema bank has 1.75 million customers and we have a history of 72 years behind us. ALAT in 2020 would be hitting 3million customers. I would say Wema blazes the trail and sets example for other banks leveraging its investment in digital and so on. For Wema in 2020 would be phenomenal and what we are seeing is over 3 million customers on the ALAT platform and over $200 million in revenue and best in class in cost to income ratio.â€
Furthermore, speaking on steps to ensure the platform is secure; he said the bank has taken extreme measures to ensure customers’ funds safety.
He added: â€œOur platform is very secure and we have been able to demonstrate to the satisfactory of central bank that we have a very well secured platform. Wema bank is offering its services on a platform called ALAT. The reason we have done that is because the way ALAT would offer service is different from the way we offer services in the traditional bank.â€
The difference with us and other platforms is that they are limited in scope while here the whole array of banking services is what is possible and that is our claim to be the first of its kind.
With ALAT, account opening/sign-up can be done in 5 minutes from a mobile phone or personal computer. Holders of the account can also enjoy a simple automated savings plan that will see them earn 10% annual interest â€“ about three times the standard bank rate. Debit cards are delivered to an account holderâ€™s address in two business days, anywhere in Nigeria, at no cost. Also, after activating a debit card, an account holder can lock it, unlock it and choose where it works. All these can be done from a mobile phone.