Digitizing Banking

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According to research by McKinsey, 46% of bank customers expect to increase their use of digital or mobile services in the post-pandemic world. As adoption and access to smartphones continues to grow across Africa, a seamless experience must become the norm for new and existing customers. To facilitate this, Layer is assisting the United Bank for Africa (UBA) to provide an enhanced digital offering, revolutionizing consumers’ relationship with their money and changing the nature of retail banking across Africa.
Layer is a leading innovator in financial technology that helps banks digitalize their offering, retaining core systems while delivering an enhanced experience for customers and employees alike, and was founded by a serial entrepreneur in Roy Zakka who serves the firm as CEO.
Roy is a serial entrepreneur with many successful ventures, including double-digit valuation exits. He worked for SLAC and SRI in Silicon Valley. Furthermore, Roy has spent 25 years in the wireless and mobile sectors, and the last 10 years in financial services. Capital linked up with Roy to better understand the evolution of banking from his perspective and on his firm’s partnership with the United Bank for Africa to evolve traditional banking and introduce modernized financial services across the continent. Excerpts;

Capital: What is your take on the evolution of mobile banking in recent years?

Roy Zakka: I think we have seen, particularly in Africa, that you don’t need 100 years of banking infrastructure to deliver financial products and services. A basic mobile phone and some sort of network connection are all you need. The current generation of mobile smartphones has set the stage to become the universal computing platform for the world. In the hands of billions of people and accessible anywhere and anytime, mobile phones has become an appendage of human beings and an essential tool for modern life. This is as true for financial services as it is for distributed information and communication. And it is only going to get more ingrained in the lives of Africans. Access to financial services, at the touch of a button. This will accelerate economic growth in Africa as we have never seen before.

Capital: How do you think the new era of digital money further highlights the urgency of diversifying Africa’s banking systems?

Roy Zakka: Well, to have 100% digital money, you need the infrastructure to allow it to work. So if we are to remove cash entirely, everyone needs to have a mobile device to be able to participate. Unfortunately, this may make it even more difficult for the unbanked to access financial services. So a massive push is needed to ensure anyone who wants a bank account, can have one.
Currently, Africa has more than 300 types of digital payment methods that don’t speak to each other, making it difficult to pay nationally and cross borders. This is another huge challenge to overcome. How can we standardise all these payment protocols to make it easy for someone in Ethiopia to send money to someone in Nigeria with a swipe of a phone. It will take time, but all participants will work together to be able to make it work. That might not be so easy when you now have telcos competing with banks at an unprecedented rate.

Capital: How do you think fintech partnerships will allow for easier management of payment problems through innovative solutions and lower back-office costs?

Roy Zakka: Fintechs partnerships allow each business to expand its digital reach without building expensive new in-house technology to ultimately generate more business for all.
The Layer Marketplace does exactly that. We have already teamed up with a wide range of fintechs that offer services that we don’t. And that is the key. You can’t build everything. There is nearly an unlimited variety of companies offering great products and services that we can simply plugin into our platform and offer them to our clients seamlessly.
We are also about to announce a huge partnership with one of the biggest payments companies in the world later this month. We’ll be working with them on a few different projects over the next few months.
So, there is room for everyone to deliver exceptional banking service to the end customer. With platforms like ours, integrations via API are very simple and this allows us to really deliver next-generation banking and non-banking services to all our clients.
We have moved away from the traditional banks versus fintechs narrative. We are now firmly in the partnership phase. And this is great because fintechs can bring innovation. The banks can bring the regulatory expertise as well as the large customer base.

Capital: Can you share with us the details of the partnership with United Bank of Africa?

Roy Zakka: We partnered with United Bank for Africa (UBA) to fuel its digital transformation aimed at providing greater access to a wide range of financial services for all of its African customers.
We provided UBA with a market-ready, future-proofed, scalable digital banking platform that successfully launched in over 20 markets, in 4 languages, in 6 months.
UBA has implemented all of the capabilities available on the Layer platform to provide end-to-end digitalisation of their banking services, delivered through a new mobile app and website to 20 million users.
One of the main areas in which UBA wanted to focus, was in Lifestyle Banking. What could they deliver that goes above and beyond traditional banking services. This is one of the main reasons why they choose us over a lot of our competitors.
Banking has become ubiquitous across every aspect of our lives. So they needed a platform that could really make them stand out from their competitors. Two examples of lifestyle banking that UBA have already launched are (i) ordering food from inside the banking app and (ii) arranging an appointment with your doctor.
These are some of the really cool things you can do with an innovative digital platform.
So, after using 20+ different systems and databases, UBA now offers best-in-class banking products and services across the African continent, all from one innovative platform.

Capital: What can be made to deepen financial services in Africa and expand on those to build the fintech sector there?

Roy Zakka: When people can participate in financial systems, they are better able to start and expand businesses, invest in their children’s education, and absorb financial shocks etc. However, the banking sector still leaves out lots of people, and this means missed opportunities for development.
Financial services firms like Layer are uniquely positioned to use their existing infrastructure and leverage to create access and usage of digital financial services. Growing evidence suggests that there is a trend that the journey of using innovative technology and financial inclusion in Africa is picking up and even showing a rather promising outlook for the future. It just needs the governments in each country to promote and motivate new businesses to simply start. Don’t slow everything down with red tape and regulations. Let the entrepreneurs build. Help them. Fund them. Mentor them. A buzzing fintech scene can really be a catalyst for unprecedented future growth. We’ve seen this work in Ireland, the UK, and The Netherlands. This would help kick-start the fintech boom in Africa.

Capital: How do you assess the mobile money business in Africa and particularly in Ethiopia or East Africa?

Roy Zakka: Africa is making giant strides with mobile money account penetration. Today the digital disruptions in the financial, telecommunication, and economic arena are having their impacts. Many African countries have an adult population with more mobile accounts than they have from a formal traditional financial institution. This means that an ordinary person on the street is more likely to have, use, trust, and save in a mobile money account or wallet than saving with a traditional formal bank account. This comes with enormous opportunities and breakthroughs. The Layer platform has a specific solution for this and we are currently talking to many banks across Africa to launch our Mobile Wallet solution which makes digital payments easier, faster, and less expensive than physical cash payments.
As we have seen just recently, over 1 million cellphone subscribers in Ethiopia registered for a new mobile money service called Telebirr less than a week after its launch by state-controlled Ethio Telecom. This shows that the appetite for mobile is very strong in Ethiopia. We are actively looking to enter the Ethiopian market to offer a wider range of digital financial services, such as deposit accounts, savings accounts, loans, loyalty etc. This will open up opportunities for partnership with banks and other financial services companies also. As we’ve mentioned before, partnering with local businesses in each country is a necessary first step for us. Without local knowledge and expertise, entering new markets becomes very difficult. Ethiopia is one of our main target markets and we see a lot of potential in working here. We’ll keep you posted.