BY MENGISTEAB TESHOME
It is no longer an option to stick to old analogue ways and manual habits for any industry, including the financial services sector. And for those looking to improve efficiency and competitive appeal, digitalization is a must.
In many ways the financial services industry is often viewed as one of the most traditional but it is also one of the fastest moving and one of the sectors with the most to gain from digitalization.
The financial sector was one of the first to begin collecting consumer data and, as a result, is a goldmine of customer information. However, this data has very little value without the analysis and interpretation that can turn it into a valuable business asset. Digitalization is the connection between the raw data and intelligence that can be used in everything, from business strategy to creating better customer relationships.
Financial services products benefit hugely from digitalization. There are efficiency and process savings internally, as well as the extensive appeal that digital products create. Millennial are a key generation for the financial services industry right now and expectations among that demographic are very much focused on appealing products that are easily accessible, flexible and low cost – all features that digitalization can help financial sector businesses to develop.
Legacy IT systems can be slow, cumbersome, time consuming and expensive. Increasingly, digitalization offers the opportunity for financial services businesses to upgrade to internal systems that are comprehensive and efficient. Financial businesses investing in digitalization can switch to a more agile business model that is bespoke to individual needs, as opposed to one size fits all. Gone are the days when IT systems that aren’t quite the right fit must be tolerated with constant work around and temporary solutions. Thanks to increased digitalization it’s possible to create a cohesive, consistent and comprehensive system that is scalable alongside the business and tailored to its individual needs.
Finance is one industry that has suffered from some negative perceptions when it comes to customer interactions. Accusations of inaccessibility, too much jargon, confusing products, slow responses and a lack of consumer insight have all been thrown at the sector over the years.
Yes, digitalization offers the opportunity for the finance sector to improve customer interactions. From customer service bots to clear and concise apps and social ads, through digitalization the industry can reach out to a broader range of consumers, speaking a language that they understand. The result is ongoing relationships that have a much higher business value.
Due to continuous digitalization, technology advances and this provides us with new tools that accelerate and optimize our work processes. Adoption of digitalization is very important for the banking sector and it has become increasingly exposed to the strong pressure of change, attributed by the global pandemic.
The core way tech has transformed the financial industry is through automation by simplifying the tedious tasks which provide a raft of benefits from cost and time saving which enables staff to focus on other key priorities and in turn provide a better service for their customers.
In sum, finance digitalization entails the integration of multiple technologies and strategies that enable the finance function to deliver value in the digital age.
Here are some of the measures taken by the Government of Ethiopia in liberalizing and digitizing the finance sector are crucial to achieve the economic ambitions of the nation in the years to come, an economic researcher said.
It is obviously known that after PM Abiy Ahmed came to power in 2018, the country has been undertaking economic reforms, including liberalization and partial privatization of some sectors.
Addressing the parliament in February this year, the premier noted that Ethiopia has closed its doors to foreign banks for a long time.
He added that henceforth, local banks need to prepare for competition as foreign banks would be allowed to operate in the country any time soon.
Abiy advised the banks to modernize their systems and prepare themselves for the upcoming competition with foreign banks since Ethiopia was set to open its doors for the banks.
The Economic Researcher at the independent Ethiopian Economic Association, Adem Feto told local media that the government has a wider agenda of liberalization and digitalization in the financial market.
“I think the government has taken some steps in liberalizing parts of the financial sector,” he added.
“Nowadays, more people have the chance to access banks and more people have access to digital financial services, which is an encouraging move.”
According to a recent report of the National Bank of Ethiopia, the introduction of Tele-Birr has, for instance, enhanced the digital system in the sector.
The banking industry has registered better performance on various healthy variables, including in asset, loan repayment, and other healthy parameters, during the concluded Ethiopian fiscal year, the National Bank Governor Yinager Dessie (Ph.D) revealed recently.
For the economic researcher Adem, digitalization is growing and “recent measures being taken by the National Bank of Ethiopia would take us one step forward. For example, micro finance institutions are allowed to become banks.”
The researcher noted that there are also liberalization measures in the pipeline that allow foreign banks to enter the economy. “This is one of the tasks that take the economy forward,” he noted.
Last week, the Council of Ministers passed a decision to open up the banking sector to foreign investors.
Opening up the banking industry to foreign investors supports the sector’s services with knowledge and technology and moves the country’s economy to a higher level of connection with the international market, Office of the Prime Minister stressed in its statement.
The policy also helps to increase competitiveness and efficiency of the financial sector, to have sufficient financial supply; to facilitate the supply of foreign currency; to increase job opportunities; and to ensure continuous economic growth by ensuring economic efficiency and global competitiveness.
THE ETHIOPIAN HERALD WEDNESDAY 14 SEPTEMBER 2022
