KBA CEO CHAT - Technology Trends and Drivers in Financial Services

CEO | Chege Thumbi, Credit Bank, Chief Executive Officer
MONTH | November 2015
Donald Kogai
Greetings,
Donald Kogai
I can see Newton and Morris online already
Donald Kogai
I am looking forward to a fruitful deliberation on Technology Trends and Drivers in Financial Services
Newton Kibiru
Hello Donald. I've been looking forward to this session since I first heard about it.
Morris Mwangi
Morning guys
Morris Mwangi
A lot of work on my desk but can't aford to miss this.
Chat Admin
Good morning everyone. We are glad to welcome you to this morning's My Chat with a Bank CEO session.
Chat Admin
Our topic this morning is Technology Trends and Drivers in Financial Services
Chat Admin
Our host this morning is Mr. Chege Thumbi the CEO of Credit Bank Limited
Chat Admin
As we await the official start of the chat at 10 am, please take some time to update your profile and update your profile picture. We would like to know more about you.
Chat Admin
Welcome Morris, we appreciate you taking time to join the chat this morning
Chat Admin
Newton Kibiru, karibu sana
Chat Admin
Ndung'u, Joel and Donald, welcome to the chat
Chat Admin
You are welcome to start posting your thoughts, comments and questions on today's topic, just so we start promptly at 10am.
Alex Mugo
Checking in.....
Chat Admin
Thanks for joining us Emma
Chat Admin
I see you Alex Mugo, karibu sana
nuru mugambi
Hi good morning all... looking to learn about how digial will shape banking
Alex Mugo
Thanks Admin
Chat Admin
Hi Nuru, welcome to the chat. Looking to learn and share on the same
nuru mugambi
Hi morris... hope you learn something that helps your job!
nuru mugambi
Kwani where are the ladies? Only guys online so far
Lauryn Maina
Here I am...Lady..:)
Chat Admin
Daniel, Joseph, glad you could join us
nuru mugambi
Hi Lauryn!
Chat Admin
Hello Lauryn
Daniel Rioba
I want to hear something of the future trends of technology on financial services
Chat Admin
The chat starts in 5 minutes, you may send in your questions and comments
Lauryn Maina
That is why i am now here.
Lauryn Maina
Actually i'm currently in China, attending a Global Banking Technology event
Chat Admin
Ladies and gentlemen, please welcome Mr. Chege Thumbi, CEO Credit Bank Limited. We look forward to his insights on Technology Trends and Drivers in Financial Services.
NDUNGU MUIGUA
ok
Lauryn Maina
Welcome Mr. Chege
Chege Thumbi
Good morning everyone, welcome to this online chat. We hope that we will have a good conversation and learn from one another.
NDUNGU MUIGUA
Hope the same too...welcome
Alex Mugo
Karibu Mr Chege
Maurice Abongo
karibu Mr.Chege, hope to gain new knowledge from this forum
Chege Thumbi
Lauryn and Daniel, welcome...Lauryn in China you are doing well and with the current technology at least you are able to communicate with us back here in Kenya.
Alex Mugo
Its clear new technology and innovations is key to bank growth, It has become a trend banks tend to ignore upcoming companies offering IT services not considering that they offer new ideas full innovations. What is your bank doing about this?
Joseph Njagi
I would like to know more on the scope of technology trends that are associated with Financial Services.
Daniel Rioba
Mr chege do you agree that even though the future of financial services especially banking is mole banking and channels driven technology but the conventional banking (branches ) is key for market penetration especially for retail banking ,Corporate banking cannot be done online in addition to customers will always feel the prestige of going to banking hall .S o my question is do you think it will be strategically okay for banks to do away with their expansion without the conventional branch way rather drive their business with technology focused expansion ?
Chege Thumbi
Thank you all. Allow me to share a few thoughts on today's topic. We are entering into an era of 'internet of me'...where everything is moving to digital and to real time. We also are seeing unprecedented growth in technology where new technologies are coming into the market almost every day. And the generation Z and millennials are dictating the things we do, the things we want, and the lives we should lead.
Maurice Abongo
whats your take on security issues related to financial technology Mr. Chege?
Emma Wacira
The older generation is very conservative and reluctant to adopt to the new technology. What can the bank do to enlighten them, reassure them and bridge this gap, not forgetting the main security concern we all have with hacking and fraud
Chege Thumbi
In the area of devices and smart tech. In the last 10 to 15 years, we have seen significant innovation around technology devices, where size, speed and smart technologies are the norm. With all this activity, we may be approaching a saturation point in terms of how much more smart devices can innovate.
Alex Mugo
Since introduction of mobile banking in Kenya and now the increased usage of the same, what are the major risks (current and foreseen)?
Lauryn Maina
How about combining the feeling of going to the bank and technology? The answer is Video Teller Machines (VTM) Mr. Chege what is your take on VTMs?
Chege Thumbi
I think in today's discussion, lets cover devices and the wireless technology that has been build around these devices...and therefore financial solutions and products that have been and can be built around these two
NDUNGU MUIGUA
MPESA sneaked in to the financial sector, and now banks cannot do without them. Equity is now playing in safaricoms space-telco almost replicating the mpesa model only now they are also the end bank. Are we goign to see ohter banks follow suit-enter into the MVNO space? Are banks in future also going tohave to partner with Equty (equitel)? What is your take Mr Chege?
Chege Thumbi
Thank you Alex for your point about IT companies. For me I see it as collaboration with IT companies to provide solutions that are relevant to the customer segments a bank plays in. There is a lot of potential, especially in the SME sector. I dont see it as a plug and play, its more about working with a bank to provide the solutions.
Newton Kibiru
The mobile phone in our pockets is a piece of infrastructure on which new banking products and services can be built on. Banks need to support innovations in Financial Technology that are relevant to their clients. There is a great need to meet your clients where they are ie on their mobile devices.
Kevin Orango
There has been some payment solutions built on NFC technology recently. We are yet to see wide adoption here at home. Do you think our market is ready to adop such technologies as Apple Pay and more recently Android Pay
Chege Thumbi
Joseph, the scope is around backend processing and front end processing of the various transactions. Front end is where you empower customers to be able to originate transactions and give them freedom to interact with the financial institution on a 24/7 basis. This enables customers to do everything they need to do without having to physically interact with human beings. Areas like mobile and internet banking are some examples that have enabled customers to do things (eg transfer of funds, payments) that traditionally would have taken days...we now are talking seconds.
Lauryn Maina
Having been in the banking technology domain for a while now, I see there is still alot of doubt about mobile technology, especially so in the rural areas. People still feel the need to visit the ATM or a bank branch. I feel banks then will need to be innovative while still accommodating this section of our society. How innovative can we get at this level?
Paul Mburu
mobile phones should upgraded so as to enhance time saving
Chege Thumbi
Daniel, I think you raise a good point about the future of bank branches. As you rightly point out, we still require branches, not for transaction processing but for customer acquisition, product delivery, as well as relationship management.
Paul Mburu
As the technology is upradind we must upgrade with it hence lets think of online baking like Paypal and other online banks
Paul Mburu
This is because we cannot avoid them since they are part of us
Chege Thumbi
Customers today because of mobile devices are now in control of their transactions. Therefore the branch of the future will be more geared to relationship management and product development.
Lauryn Maina
I am able to see this by the number of banks trying to grow their transactions from mobile banking(which is a revenue channel btw). meaning we're still going to work hard, as banks to grow this new tech. Since then bank branches are still needed, then we need to innovate around a branch. The only way i have seen working in other nations is through Video Teller Banking (VTMs)
Paul Mburu
Its true mr chege i can monitor my account regardless of my location
Chege Thumbi
Daniel, I do think corporate banking can be done online. Corporate banking today has been done through online banking but we can see an emerging trend where we have specialised portals to deal with specific client requests, like trade finance, bulk payments as well as structured finance products.
Chege Thumbi
Welcome Emma. I think the older generation has adopted technology quite fast if you are to look at the growth of the mobile payments in this market. I think what is critical is trust and confidence in the systems that they are using.
Paul Mburu
In my point of view since many have embraced the android phone we establish our bank application to be installed in such phones
Chege Thumbi
Lauryn, VTM is a good technology for remote solutions that need face to face interaction. However, I dont think people are keen on them. I think people are keen on online solutions.
Paul Mburu
VTM require very good internet connection but in Kenya we havent reached there our internet connection is still low
Paul Mburu
hence i may not work well coz much time will be spent to serve on customer
Chege Thumbi
Lauryn I agree with you to some degree, we do still have many unbanked who will require the traditional banking approaches. This segment will adopt technology in a gradual manner. Increase in ease of use and relevance of solutions via mobile banking will help.
Abu Salim
Good morning. Bw. Thumbi, Noted your comment about the need for branches. With all the technology and systems, why are not seeing more of agency banking / sharing of branches by banks? Would this not lower the costs of ops?
Paul Mburu
VTM will require experts to first eduacate people on how it is applied and geeting experts it is quite expensive
Daniel Rioba
We are operating in emerging markets where regulation is not at its best ,The banks are coming up with innovations everyday which is a good thing but they don't take Risks into considerations ,As innovations develop also risk increases and the level of sophistication , e.g cyber security is a real threat ,My question is what level of technological advancement risk are financial services willing to take in the interest of shareholders ? A good example of the risk are the online card payments ,99% of banks in Kenyan market have not 3D compliant for online transactions ,EMV was a good innovation but with time the skimmers are coming up up the solution to counter it ,How constantly should we build on existing technological innovations to counter this threats considering the level of capital investments and maintenance of same ?
Newton Kibiru
Lauryn you have a valid point. Rural areas still lag behind in embracing mobile banking. In just a couple of years this will change as more of the younger generation will pick it up and it will become the norm. I feel there's always a saturation point beyond which everyone knows someone (within the family/network) who can help them learn how to use mobile banking.
Paul Mburu
Bw Abu i agree with agency banking will do
Newton Kibiru
Mr Thumbi, do you have an in-house team looking at problems your customers face and coming up with how to address those problems using technology?
Maurice Abongo
@Daniel Rioba, thats a good eloboration for what i asked before.
Monica Chege
Mr. Chege, what is your take on virtual banking? such as video kiosks with interactive touch screens, etc. In the US it has gradully gained momentum. Do you foresee us getting there? I mean the Kenyan Market?in this case i mean
Nicholas Engoke
Thank you Mr. Chege. As technology continues to accelerate the rate of change in the banking industry and banking on gadgets becoming the norm,do you envisage a future situation whereby the industry will be majorly virtual and the current office banking diminishing to very minimal levels?
Chege Thumbi
Ndungu thank you for your point about MVNOs. The MVNOs have worked well in some countries and we are just seeing them here in kenya for the first time. My view is that the mobile payments by telcos came to fill in a gap that existed in our payments system; however, the current gaps are not necessarily in the payments space and the banks of the future will need to look at what the customer needs are today and in the future. So banks should not necessarily focus on what telcos have done, but on what are the gaps in our financial system.
Paul Mburu
Good Point Daniel cyber security may be a threat hence we opt to get good measures
Paul Mburu
Virtual banking is one of the best form of banking in this universe
Lauryn Maina
I also agree with you Mr.Chege and Paul. However, the high speed internet is only required when doing a visual with a customer, and most banks opt not to activate that if the internet is not reliable. The beauty about the VTM is the ability to accpet Account applications( where you can print, scan and deposit documents at the same time and receive your ATM card right there!) You can do a loan application right there with all the documents needed, you can deposit a cheque right there and the best of it all is that you can dial a landline right there that will conenct you to a teller immediately! That is what i would want my bank to enable me to do.
Paul Mburu
in kenya the moment where our internet connectivity will upgrade virtual banking will be wekk implemented
Kunal Mehta
Technology is great as it reduces human costs. In the next 5-10 years banks may be forced to push through transactions via technology while staff may be pushed for advisory and supervisory roles. Mr Thumbi, do you think banks should already start thinking along these lines?
Michael Luchivya Mukeya
How do we deal with the current increase of cyber crime now that all banks are going digital?
Paul Mburu
Lauryn do you mean VTM dont use internet
Chege Thumbi
In my view, as we get into newer generation technologies like 4G, 5G and the rest, the MVNOs are unlikely to be used for disrupting the financial services space. With the adoption of smart phones, we are moving towards more internet based solutions, which is why you see everyone adopting App based solutions. We expect the devices of the future will therefore be independent of mobile operators and also SIM-less. The world is likely to be one large Wi-Fi network.
Daniel Rioba
@Lauryn maina VTM is a good innovation but its not for mass market , you could segment it you know e.g Diaspora customers
Chege Thumbi
Newton, thank you...this is the direction banks are pursuing in collaboration with various service providers. You are right that banks need to engage customers more to make sure they are developing relevant products and services
Alex Mugo
I agree with Mr Chege, world is going mobile, so mobile apps solutions is the way to go
Paul Mburu
We should establish measuring before accessing your account where you imput your pin, you are sent a security code via your phone hence even if your account is leaked no transaction can take place
moses Muthungu
Mobile money: do you agree it is the cause declining credit/debit card update.
Chege Thumbi
Hi Kevin, thank you for raising the issue of NFC / near field communications. This has worked well in other markets but for low value payments. In Kenya the matatu sector is testing the tap and go model, and we expect that gradually contactless payments will increase as acceptance grows.
Paul Mburu
as i said earlier only mobile application can help banks thrive like fire during druoght
Joel Gatama
@Paul That is a good idea and it is the standard practice in most online platforms
Chege Thumbi
Paul, thanks for sharing your views. I think the solutions should always be around customers and not specific devices or technologies.
Paul Mburu
we must get ways in which we will implement banking services via technology for a better gain not to exploit ourselves
BRIGHT INDECHE
Congratulations on your first 6 months,how would you describe the journey so far?
Paul Mburu
Technology if observed well it will help us make our services better
Chege Thumbi
Abu thank you, I think today we see everyone moving in their own direction which is not sustainable for the banking industry, but we expect that in the days ahead we will see more collaboration and support for the sharing of agents and infrastructure. A good example is the KBA project to interconnect bank to bank payments and hopefully agents.
Lauryn Maina
@Paul VTM only need internet when you need the virtual interaction from the screen with the bank. Otherwise, banks located in areas with low connectivity opt to operate the VTM like a normal touchscreen ATM (Only with many more functionalities) and give access to the telephone for telebanking.
moses Muthungu
Mobile money: do you agree it is the cause of declining credit/debit card uptake.
Lauryn Maina
Atleast that is what i am learning while here in China
Chege Thumbi
Daniel you raise an important point about safety and security, I also see the same point raised by Maurice and Alex earlier.
Paul Mburu
Mr chege i agree with coz in other countries with a master card you can withdraw money at any bank at no extra fee unlike in kenya
Paul Mburu
@Lauryn i know understand
Alex Mugo
I also always wonder why do we have a POS for each bank in a supermarket and we can have only one which is able to do the switching
Newton Kibiru
Mr Thumbi, the firm I work for, Grant Thornton, is very keen on playing a role shaping Kenya's Technology Industry as business advisers. We work with Tech accelerators/incubators such as Nest and Ampion and would be interested in working with you in product development.
Paul Mburu
yea it is since transaction can be done by mobile phones where you can even withdraw money or get loan from a bank with your mobile phone
Chege Thumbi
Banks take the issue of security as a top priority and before launching new services or products they all look at security and ensure that the system risks have been catered for and appropriate controls are put in place. Today, banks have invested heavily in back end systems that monitor transactions on a real time basis and this is the reason we are able to send alerts as and when transactions happen. Banks also have invested in vigorous change processes that entail vulnerability assessments by both internal and external specialists.
Paul Mburu
its true chege security is the most important
Chege Thumbi
I can add that as new technologies emerge, we continue to upgrade our systems in order to cater for new and emerging risks. Banks did transition to EMV, chip and pin technology to stem card fraud, and we will continue to enhance our systems, including 3D compliance.
Lauryn Maina
Mr Chege i second you on that point of the world becoming one large WiFi network. So true.
Daniel Rioba
Thank you Mr Chege for you answers to my questions ,Our time is up and i wish you the very best in the journey you have embarked in the last six months or so .
Nathan Kamau
Hello all. Mr
Mohamed Mbaruk
Good stuff
Paul Mburu
when am out in Moi am thinking of desgining a banking software which will cater for the security bit
Maurice Abongo
thanks Mr.Thumbi on the issue of secirity
Chege Thumbi
Monica, thank you. Bank kiosks may be overtaken by the smart devices that we see in the market today. So like the phone booth was replaced by the cell phone, bank kiosks with video links will likely be replaced by smart devices.
William Njoroge
EMV sorts out the security issues when a physical card is required. However, online transactions remain vulnurable. It is a tight balance between convenience for the customer and verification
William Njoroge
we recently saw one of the banks institute a measure of requiring clients to call before and after making online transactions - I don't know how successful this will be
Paul Mburu
online transaction are safer than using physical card
Paul Mburu
those banks need to upgrade that service
Chege Thumbi
Moses I see your question about mobile money replacing credit/debit cards. I dont think this is the case. Mobile money is filling a gap by making payments faster and easier. Mobile creates convenience to move low value funds and especially to the unbanked. As we get more people banked, we expect that payments using cards (debit and credit) will increase as this channel has no limitation on value and settlement risks.
moses Muthungu
Thanks for the response.
Chege Thumbi
Paul , I wish you the very best and we look forward to collaborating with you on solutions that you may come up with at Moi
Chege Thumbi
Thank you Bright
William Njoroge
Email communication is frowned upon in the banking sector - e.g issuing instructions or signing up for services. I find the excuse that "clients will claim their emails were hacked" as not one that should be acceptable in this day and age
Chege Thumbi
Newton, yes we do have a customer service team that addresses all customer inquiries, issues and feedback. And this department responds to all customers with a view of improving our products, services and processes.
Nathan Rotich
Mr. Chege, you've dealt with security mostly. Could an online software for loan originations (individuals and SMEs) be useful to credit bank.
moses Muthungu
We have seen more banks develop mobile apps; Equity, KCB, Stanbic, DTB... Do you think apps will have a significant impact over internet banking?
Omar Mohammed
Newton Kibiru i am interested in working with you in the product development-seemingly your firm among the few going out lloking for local ideas to nurture.Amazing stuff!
Monica Chege
Great discussions Mr. Chege, very enlightening... I guess with technology things can only get better. Both for the banks and the Customers.
Omar Mohammed
With banks going hi-tech the need for continuous training of their personel is imperative.Introduction of new developments like training our customers will go along mile in not only retaining our customers but attracting more!
Chege Thumbi
As I wrap up, I think the next big thing that we can expect in technology and trends in the financial services space is how we use data to provide solutions and services to customers. I also expect in the retail banking space, that the social 'world' will evolve fairly fast into a virtual world. So retail banks need be aware of and respond to these trends. They need to also listen to the younger generation and build solutions that are relevant today and in the future. What is key in both retail and corporate banking is customer experience.
Charles Kibara
The Technology driven banking is the future of banking in Kenya. To deal with security concerns, legal and regulatory framework should be strengthened to deal with possible abuse of the outlets.
Omar Mohammed
Listening and welcoming of ideas is one step towards achieving this.
Chege Thumbi
Thank you all....Your questions and interaction has been great. We look forward to implementing your suggestions and engaging with each other through our technology platforms as well as our other channels, including branches.
Chege Thumbi
Thank you Omar.
Newton Kibiru
Omar Mohammed, we are proud to be associated with innovators. Part of what Grant Thornton has done so far is help Tech entrepreneurs in articulating their ideas to potential partners and investors. We're interested in doing more. Get in touch, here's my email newton.kibiru@ke.gt.com
Newton Kibiru
Thank you Mr Thumbi.
Alex Mugo
Thank you Mr. Chege, we look forward to doing our part to help banks move to the next level in terms of technology
Chege Thumbi
Karibu Newton
NDUNGU MUIGUA
Thank you Mr Chege for the insightfull dicsussion
Chege Thumbi
Thank you Monica
Omar Mohammed
Thank you Mr. Newton. I definitely will get in touch.Thank you once again.
Chege Thumbi
Thank you all, have a good weekend...and spend less time on your mobile devices :)
Omar Mohammed
:)
benjamin muli
thanks alot Chege
Lauryn Maina
It was great having this chat with you Mr.Chege, quite insightful.Hope to interact with you one day on the banking technology circles.
Chat Admin
Ladies and gentlemen, allow me to thank Mr. Chege Thumbi for his insights on Technology Trends and Drivers in Financial Services
Chat Admin
We would like to thank you all for your questions and reflections on this topic. They truly made this session a success.
Chat Admin
We look forward to hosting you on the next session, which takes place next week on Wednesday -11th November at 2pm. The topic will be on the Rise of Customer-Driven Banking.
Chat Admin
Be sure to tell your friends and colleagues to join us for the chat.
Chat Admin
You can find past transcripts and podcasts of past chat sessions on the chat archive available on this site.
Paul Mburu
thanks alot MR chege I WOULD BE GLAD TO COLLABORATE AND WORK WITH YOU
Chat Admin
We look forward to another exciting session next Wednesday at 2pm. Have a wonderful day.
Paul Mburu
OK THANKS
Chat Admin
We are going to close the chat room in about 5 minutes. Wishing you a lovely day.
Elijah Murangiri
Good wisdom to spend less time with gadgets....and perhaps spend more time with families and friends.
Alex Mugo
Happy weekend to all, God bless you.
FRANKLIN ASIEMA
Thank you for the insights.