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Retail Banks in MEA are Prioritizing Digitalization to Drive Financial Inclusion – Temenos

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A study by the Economist Intelligence Unit found 6 in 10 banking executives in the Middle East and Africa (MEA) think cash will dip below 5% of retail transactions in the next five years, compared to 48% globally.

The global Coronavirus pandemic is likely to reinforce this trend; MEA retail banks believe delaying digitalization poses genuine threats to their business models; Changing customer demands are cited as the highest-impact trend in the near term (35% by 2020), with new technologies predicted to be the most impactful development in the medium term (43% by 2025); Building a mobile-first greenfield bank is ranked as the top innovation strategy by 37% of MEA banking executives.

Banks in the Middle East and Africa (MEA) are the strongest believers in a cashless society, according to a global retail banking survey released by Temenos (SIX: TEMN), the banking software company.

The in-depth survey conducted in 2019 by the Economist Intelligence Unit (EIU) on behalf of Temenos reveals that 6 in 10 Middle East and African banking executives think cash will dip below 5% of retail transactions in the next five years, compared to a global average of 48% who think the same.

The lockdown measures imposed by governments worldwide in light of the evolving Coronavirus pandemic are also expected to increase the need for and use of digital banking and payment solutions globally.

The EIU report entitled “A Whole New World: How technology is driving the evolution of intelligent banking in the Middle East and Africa” indicates that MEA retail banks are highly conscious of the threats financial exclusion and delaying digitalization pose to their business models.

Respondents acknowledge consumer demands for accessible, hyper-personalized digital banking experiences, ranking changing customer demands as the highest-impact trend by 2020 (35%).

A plurality of MEA banking executives – 43% of respondents – identify new technologies, including AI, as the most impactful trend on their sector by 2025.

In order to capitalize on these trends, MEA retail banks recognize the need to sharpen digital marketing skills to bring excluded customers into the banking sphere. As such, mastering digital marketing and engagement is considered the top strategic priority for retail banks in the near term (35% by 2020), and in the medium term (35% by 2025).

Notably, higher numbers of MEA respondents believe digital marketing is also the most valuable use for new technologies (23% versus 13% globally). These findings indicate that MEA retail banks believe investing in digital technologies to target and attract the un- and underbanked is crucial.

The survey reveals that the Middle East, in particular, is poised to encourage digital financial inclusion, with young populations and smartphone use predicted to hit 74% by 2025.

Governments across the entire MEA region are increasingly embracing digital agendas to encourage financial inclusion and accelerate digital banking and a cashless economy.

The affordability of smartphones is a key driver in the new development of building mobile-only and mobile-first greenfield banks, the top innovation strategy chosen by 37% of MEA-based respondents alongside investing in fintech start-ups (37%).

Nearly one in three respondents (29%) is innovating by building a greenfield fintech firm, also a top five pick among global respondents (25%).

Jean-Paul Mergeai, Managing Director – Middle-East & Africa, Temenos, commented: “Even in the most uncertain times, the power and opportunities of digital banking remain the same.

“This retail banking report outlines the opportunity for MEA banks who adopt modern technology to accelerate financial inclusion and digital banking, to support economic and social development.

“At Temenos, we believe in investing in technology and innovation and have the privilege of helping banks and their customers to prosper by using this technology every day.

“We continue to relentlessly invest 20% of our revenues into R&D, the highest in the industry, and provide to banks the winning combination of the most advanced cloud and AI technology with the richest, broadest banking functionality.”

Katya Kocourek, Managing Editor – Financial Services, The Economist Intelligence Unit, said: “The significant impact of the ongoing Coronavirus pandemic is likely to accelerate the cultural and institutional shift towards digital banking that is already taking place in the MEA region.”


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Nigerian Manufacturing Sector Contracts for 5th Consecutive Month – CBN

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The Manufacturing Purchasing Managers’ Index (PMI) in September stood at 46.9 index points, indicating a contraction in the Nigerian manufacturing sector for the fifth month.

This was disclosed by the Central Bank of Nigeria (CBN) in its September PMI report released last week.

According to the report, four out of the 14 sub-sectors surveyed reported expansion (above the 50 per cent threshold) in September.

It listed the expansion order as electrical equipment; transportation equipment; cement and nonmetallic mineral products.

It said the remaining sub-sectors reported contractions in the following order: petroleum & coal products; primary metal; furniture & related products; printing & related support activities; food, beverage & tobacco products; textile, apparel, leather & footwear; chemical & pharmaceutical products; fabricated metal products and plastics & rubber products; while the paper product sub-sector was stable.

Production

At 47.3 points, the production level index for the manufacturing sector indicated contraction in September for the fifth consecutive month.

Of the 14 sub-sectors surveyed, five recorded increased production level, one reported same level of production, while eight recorded declines in production.

New Orders

At 46.4 points, the new orders index also contracted in September for the fifth consecutive month. Six sub-sectors reported expansion in new orders, while the remaining eight recorded contraction in the month.

Supplier Delivery Time

The manufacturing supplier delivery time index stood at 53.5 points in the month, indicating a faster supplier delivery time for the fifth time.

Six of the 14 sub-sectors recorded improved suppliers’ delivery time, five reported same level, while three recorded slower delivery time

Employment Level

The employment level index stood at 44.1 points, indicating contraction in employment level for the sixth consecutive month.

Of the 14 sub-sectors, two recorded growth in employment, three recorded same level of employment, while the remaining nine recorded lower employment level in the review month.

Raw material Inventories

The manufacturing sector inventories index also contracted for the sixth consecutive time in September to 43.0 points. Four of the 14 sub-sectors recorded growth in inventories, while the remaining 10 recorded lower raw material inventories.


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FG Sacked IST Members over Fraud- Ahmed

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Mrs Zainab Ahmed, minister of Finance Budget and National Planning, has said the Federal Government sacked some past members of the Investments and Securities Tribunal (IST) as they indulged in corruption.

FG Sacked IST Members over Fraud- Ahmed

Inaugurating the new members, the minister charged the new members to eschew corruption and be forthright.

Bar. Azi Amos Isaac was appointed as Chairman for a five year term and Bar. Nosa Smart Osemwengie, was re-appointed as member for a second term of four years.

“The problem with the tribunal has been infighting amongst members, lack of industrial harmony and series of complaints bordering on maladministration.

“This has been the bane of the tribunal and a source of embarrassment not only for the Ministry of Finance but for the government in general,” Ahmed said.

The new chairman, Azi, assured the finance minister that, “the teething issue of restiveness has been addressed since he assumed duty,” adding that, “The place is calm and the staff have become very supportive.”

Azi said since 2003, the tribunal has “given judgment in the value of assets worth over N844 billion and that from 2017 to date, they have given decisions in monetary value totalling over N28bn.

“It has not failed in its adjudicatory responsibility.

“It has carried out its assignment with candour and integrity and intends to improve on what has been on ground.”

 


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CBN Bans Customer-to-Customer Forex Transfer

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Central Bank of Nigeria (CBN) has banned transfer of foreign exchange (forex) from one customer to another.

CBN Bans Customer-to-Customer Forex Transfer

According to the apex bank, forex cash lodgements into domiciliary accounts can only be done by the account owners henceforth.

An internal memo available in the media space explains that the new guidelines are necessary to review the utilisation of inflows into customers domiciliary accounts.

The circular states: “Forex inflows cannot be credited to customers until the legitimacy of funds is established.

“They can have unfettered access by telegraphic transfers up to a limit of $40,000 monthly for payment of medical bills, school fees, subscription to professional bodies subject to existing CBN guidelines.

“Transfers from one customer to another is prohibited. Transfer within related companies is allowed subject to a limit of $50,000 per month.”

It recommended that proceeds from non-oil exports should be sold to banks, used for repayment of dollar term loans, and self-utilisation for trade transactions for LC, bills and Form A.

Also oil export proceeds from E&P companies are to be used to pay contractors and service providers employed by the oil companies in addition to the recommended uses for non-oil FX proceeds.

Offshore forex inflows from other Nigerian banks and internal account to forex transfers sourced from offshore inflows are to be used for trade transactions subject to eligibility for E-Form M.

“Upon confirmation of the legitimacy of the inflows, customers can have unfettered access, subject to a maximum of $50,000,” the document read.

“Utilisation for trade transactions subject to processing of eligible trade transactions using E-Form M. Payment for services must be backed with demand note from offshore beneficiary and other regulatory documents.

“Related party transfers are allowed to the maximum of the inflow received. The transfer request should be backed by a signed instruction from the account holder.” Payment of government fees and levies are also allowed to the maritime, oil and gas, aviation. government parastatals and export processing zones.

 


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