E-Services in Africa: Banking and Financial Sector


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E-Services in Africa: Banking and Financial Sector

  1. 1. United Nations Economic Commission for Africa Committee on Development Information E-Services in Africa: Banking and Financial Sector Addis Ababa, 23-28 April, 2005 Oumar Seck Executive Director - Financial, Technology & Linkage Services Regional Programme Coordinator Enterprise Africa [email_address] / +233.244.281632
  2. 2. ICT & the Financial Service Industry: Nature of the Interface <ul><li>FI delivery tools / financial products & services </li></ul><ul><ul><ul><ul><li>ATM, internet banking, mobile banking, home banking </li></ul></ul></ul></ul><ul><ul><ul><ul><li>e-wallet or e-cash ( cash card, payment card, credit card, smart card) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>e-financial information (securities, loan rate, mortgage rate, analyst, ..) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>e-BPP </li></ul></ul></ul></ul><ul><ul><ul><ul><li>e-clearing and collections (checks, drafts, receivables) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>e-borrowing, investment, advisory services </li></ul></ul></ul></ul>
  3. 3. e-Finance Landscape Customers Consumers Businesses Financial institutions Government Ngos & others International Organizations e-financial services <ul><li>ATM </li></ul><ul><li>Internet Banking </li></ul><ul><li>Mobile Banking </li></ul><ul><li>Home Banking </li></ul><ul><li>e-wallet </li></ul><ul><ul><li>Cash card </li></ul></ul><ul><ul><li>Payment card </li></ul></ul><ul><ul><li>Credit card </li></ul></ul><ul><ul><li>Smart card </li></ul></ul><ul><li>e-clearing </li></ul><ul><li>e-financial information </li></ul><ul><li>e-BPP </li></ul><ul><li>POS </li></ul>e-finance platforms <ul><li>Financial Portals </li></ul><ul><ul><li>Aggregator </li></ul></ul><ul><ul><li>Broker </li></ul></ul><ul><ul><li>Content creator </li></ul></ul><ul><ul><li>Market-maker </li></ul></ul><ul><ul><li>etc </li></ul></ul><ul><li>e-trading </li></ul><ul><li>e-banking </li></ul><ul><li>e-investment </li></ul><ul><li>e-stock exchange </li></ul><ul><li>e-derivatives exchange </li></ul><ul><li>e-insurance </li></ul><ul><li>e-clearing system </li></ul>Financial Services Providers Financial Conglomerates Global Money Center Banks Specialized Financial Services Providers National Treasurer Central Banks Utilities Companies Access Devices PC with modem Fixed Phone TV Mobile Phone Other Wireless Devices
  4. 4. ICT & the Financial Service Industry: Nature of the Interface <ul><li>FI back-office system </li></ul><ul><ul><ul><ul><li>Transaction processing </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Credit administration </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Investment administration </li></ul></ul></ul></ul><ul><li>FI financial decision-making perspective </li></ul><ul><ul><ul><ul><li>Informational finance </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Computational finance (pricing, risk modelling) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>KM and CRM </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Treasury integration </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Netting, X-currency pooling </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Trading (securities, derivatives) </li></ul></ul></ul></ul><ul><li>Financial service industry is the most ICT-intensive industry among all non ICT industries. </li></ul>
  5. 5. Financial Institutions’ ICT Portfolio Strategic ( positioning, first mover) (e.g . home banking) Source: adapted from Weil & Broadbent, 1998 Informational (control, integration, quality, decision-making ) (e.g. CRM software) Infrastructure (base foundation of shared ICT services) (e.g. Global router network) Transactional (cost reduction, throughput increase) ( e.g. ATM )
  6. 6. Defining an e-Strategy for the African Financial Service Industry <ul><li>Challenges </li></ul><ul><li>Strategic objectives </li></ul><ul><li>Strategic action plan </li></ul>
  7. 7. Challenges of the African Financial Service Industry <ul><li>Low banking / financial services penetration </li></ul><ul><li>Low savings mobilization, </li></ul><ul><li>Limited institutional term-finance </li></ul><ul><li>Limited functional efficiency </li></ul><ul><li>Limited allocation efficiency </li></ul><ul><li>Limited depth and width, rudimentary financial infrastructure </li></ul><ul><li>Limited access to international capital and risk management market </li></ul><ul><li>Limited cross-border capacity of national economies </li></ul><ul><li>Huge financial industry gap compared to advanced and other emerging economies </li></ul><ul><li>Repression against SMME </li></ul><ul><li>Limited access to SMME information </li></ul><ul><li>Fragile and non-integrated national financial systems </li></ul>
  8. 8. Objectives for an African eFinance Strategy <ul><li>Build the foundation of the eFinance industry </li></ul><ul><li>Integrate financial markets (national, regional, international) </li></ul><ul><li>Facilitate transactional banking </li></ul><ul><li>Improve the efficiency of financial system (processing, information, functions, allocation, outreach) </li></ul><ul><li>Modernise banking / financial industry info system </li></ul><ul><li>Promote an eFinance regulatory system conducive to market development in a secure system </li></ul><ul><li>Modernise financial products and their delivery( ref. to efinance landscape) </li></ul><ul><li>Facilitate access to X-border sources of capital and advisory services </li></ul><ul><li>Bridge gap with advanced financial markets </li></ul><ul><li>Promote innovative financial services for SMME </li></ul>
  9. 9. Action Plan for the African e-Finance Strategy <ul><li>Building the foundation of an e-Finance industry: </li></ul><ul><ul><ul><li>Information infrastructure (network layer & service infrastructure) </li></ul></ul></ul><ul><ul><ul><li>Human resources (engineers, technicians, skilled workers, and ICT economists) </li></ul></ul></ul><ul><ul><ul><li>Develop the ICT service industry itself </li></ul></ul></ul><ul><ul><ul><li>Improve connectivity </li></ul></ul></ul><ul><li>Promoting the functional efficiency of the FSI: </li></ul><ul><ul><ul><li>Incentives for back/front office ICT investment (funds, tax) </li></ul></ul></ul><ul><ul><ul><li>Global, regional and national ICT connectivity and compatibility (e.g. FinNet in Hong Kong) of the FSI </li></ul></ul></ul><ul><ul><ul><li>Dematerializing financial securities and other trade finance related papers / documents </li></ul></ul></ul><ul><ul><ul><li>Supply of ICT solutions </li></ul></ul></ul>
  10. 10. <ul><li>Promoting the allocation efficiency of the FSI: </li></ul><ul><ul><ul><li>Benchmark and adopt ICT-enable SME financing schemes (e.g. SMEloan scheme in Hong Kong, Pride Africa, CitiBusiness Direct) and Micro-finance schemes (e.g. Planet Finance, ACCION International, Gemcard , Standard Bank) </li></ul></ul></ul><ul><li>Promoting policy / regulatory / judiciary measures to preserve and deal with information security issues </li></ul><ul><ul><ul><li>Violation of personal information </li></ul></ul></ul><ul><ul><ul><li>e-signature </li></ul></ul></ul><ul><li>Promoting e-Finance related know-how transfer through </li></ul><ul><ul><ul><li>Industry and competitive intelligence </li></ul></ul></ul><ul><ul><ul><li>Benchmarking of good practices within and outside Africa </li></ul></ul></ul><ul><ul><ul><li>Capacity building </li></ul></ul></ul>Action Plan for the African e-Finance Strategy
  11. 11. <ul><li>Developing clusters of ICT-based businesses that would support the e-Finance industry </li></ul><ul><ul><ul><li>Targeted FDI and JV </li></ul></ul></ul><ul><ul><ul><li>ICT business parks </li></ul></ul></ul><ul><li>Mobilizing financial resources regionally and globally to implement the strategy with the following precautions: </li></ul><ul><ul><ul><li>Funds mobilized for Africa must be earmarked and effectively disbursed for Africa </li></ul></ul></ul><ul><ul><ul><li>Disbursement and programme / project management activities must be managed by Africans or Africa-based institutions </li></ul></ul></ul>Action Plan for the African e-Finance Strategy