18 September 2018
Fintech to change the future of banking
Dr Johan Coetzee, senior lecturer: Department of Economics and Finance at UFS, believes that developments in artificial intelligence, amongst others, will become the norm in the banking industry.

Have you noticed that bank branches look completely different from what they were five years ago? Nowadays when you visit a branch, you receive a ticket, wait on a comfortable couch, and are directed to a specific area which addresses your specific needs. No more hassles and being sent from pillar to post. Quite simply, banking is becoming more efficient and the main driver of this is advances in technology, or Fintech as it is commonly referred to in the industry. 

Dr Johan Coetzee, senior lecturer in the Department of Economics and Finance at the University of the Free State (UFS) is currently engaged in research on the strategic implications of FinTech on South African retail banks. He asserts that: “We need bankers who can solve problems using data analysis because the world of science and technology is changing the banking landscape.”

Streamlining branches
 
Technology is creating innovative ways to simplify the banking experience. According to Dr Coetzee, some financial institutions are in the process of actively reducing the number of branches. Nedbank is reportedly planning to decrease the number of branches in 2020 to 82% of 2017 levels.

Absa is another example of how banking is gradually changing. Its branch in the Rosebank Mall is called the ‘Research and Development’ branch and has at most three consultants at any time. The branch has a big screen, coffee machine, a fridge with beverages and a stage for live events. “Branches will in all likelihood in the future not be a place where they acquire new clients. Rather they will be used to channel people to electronic banking facilities. The nature of the relationship will be defined along technology-driven channels,” says Dr Coetzee, explaining the implications of the FinTech revolution.

Banking meets technology

The African NXT Banking Summit which was recently held in Johannesburg, assembled banking leaders from banks across Africa to identify solutions around transforming the continent’s banking roadmap. Dr Coetzee chaired the summit and facilitated the conversation around how banks can capitalise on adopting new technologies and collaborating with FinTech companies. 

The challenge, according to Dr Coetzee, is how banks will use data analytics put forward by these FinTechs to capitalise on the wealth of information they have at their disposal. Regulators will also be challenged to stay abreast of these ever-changing technological developments to specifically ensure that they are not intrusive of the rights of clients. This is especially the case with regards to developments in artificial intelligence and client identification through for example biometric technologies.