Innovation Starts with the Problem

Banks and fintechs have a complex relationship. In some respects, we’re competitors operating in the same industry and servicing the same client base. But from Absa’s perspective, we prefer to see fintechs as partners in co-creating solutions for our respective client bases. Of course, “co-creation” does not mean to imply that the fintech is part of the bank. Rather, it means that we each play to our unique strengths. For example, we might find that by combining a fintech’s innovation with a bank’s proposition, we are able to deliver a more complete solution to our clients – or to theirs.

As Absa, we are customer-led. We start by understanding our client’s problem, and then creating – or co-creating – a tailored solution for them. This approach has enabled us to create solutions at scale for clients, especially in the risk, payments and reconciliation spaces.

There are use cases across any number of sectors – and with each one, we started with the client’s specific need or challenge, and then developed a bespoke solution based on that rather than showing them a set of solutions and then asking if any of those matched their problem.

That’s how we approach our relationships with the various fintechs in Absa’s broader ecosystem. We don’t identify the fintech and try to see what problems they can help us solve. Fintechs don’t need banks to help them sell their products; and banks don’t need fintechs to help us innovate. There’s a perception that fintechs deliver speed, agility and innovation, whereas banks bring size and scale. That’s true to an extent, but it ignores the tremendous technological innovations that Absa’s digital teams are developing in-house.

For example, we have worked directly with several clients across various sectors to optimise their real-time payment propositions through our API capabilities. Absa also owns a considerable share of the PayShap market, which further enhances our position in the cutting-edge, real-time payments space.

Having said that, we have also delivered positive results by working with our fintech partners to provide solutions for clients in the complex world of Enterprise Resource Planning (ERP). Here, we recently co-created a solution for one of Africa’s biggest ERP service providers and then adapted that as a model for our other ERP clients.

One of the most exciting spaces in which banks and fintechs are currently collaborating is artificial intelligence (AI). Several fintechs are looking at ways to use the technology to streamline business processes. Within the bank, we’re doing the same: exploring ways in which AI can help us streamline our integration, onboarding and know-your-client (KYC) processes.

Across Africa, the biggest fintech play right now is around growing the instant payments proposition. In East Africa, we’re exploring ways to facilitate mobile disbursement, while also enabling the unbanked population to transact at a bigger scale. Fintechs drove a lot of the growth of remittances in East Africa, especially with mobile money users in the retail and personal banking spaces.

We’re looking to expand that into the corporate sphere, enabling corporate treasurers to monitor and manage their company’s payments landscape in real time. The problem statement we’re tackling with our fintech partners is: how do we provide corporate treasurers with a snapshot of their business at any given moment so that they can make informed decisions based on current information in real time?

We’ll need AI technology to make that possible – and we’ll need strategic partnerships with the right fintechs to help us develop the best solutions for our clients. As always, though, we’ll start with each client’s unique problem and work with them and our fintech partners to co-create a solution that works for their specific needs.