Behold! Neobanking Is The Future

Discussions on whether or not brick and mortar or just traditional banking will soon become obsolete, especially now with neo banking gradually taking form, clouded the first day of the 2021vRegional Fintech Summit, hosted both virtually and in person.

Neobanking is this kind of digital banking that has no physical bank branches, so rather than being physically present at a specific location, banking is done entirely online. It is a revolution in the banking industry and is expected to completely phase out bring and mortar banking.

Speaking at a panel on the future of banking during the #CIOFintechSummit, Kamal Budhabatti, Group CEO at Craft Silicon described neo banking as ‘normal banking done with a different mindset’. He further noted that neo banking has still not been realised in the region due to unclear customer acquisition strategies.

“The ball game in neo banking is customer acquisition. It is still unclear how o achieve this which is why mobile operators assume the role of neo banks in East Africa,” Kamal said.

But something is certain. Neobanks are taking over the fintech industry by a storm and it is a respecter of no boundaries.

Also speaking at the panel was Lanre Bamisebi, the Group CIO at Equity Group. He said, “Neo banking creates room for borderless banking, that essentially enables one the access to credit facilities in a different country from where their credit score is.”

These borderless transactions, as he noted, call for Data-driven decisions to inform the decision-making process of a neo bank.

“Neo banks should be very modernized for ease to collect and analyze data and understand how customers behave in the ecosystem. So data is really vital for such banking technology.”

The data aspect of neo banking like traditional banking then calls for stringent regulation measures and to speak to this, was Anne Mutheu, the Managing Partner at Mutie Advocates.

She avered that time is ripe for neo banking regulation in the region although the technology seems ahead of the regulator.

The regulator is playing catchup with the neo banking technology,” she said. “Covid19 proved that we don’t need physical banks and we should not allow ourselves to return to banking as was pre-covid.”

Mutheu observed that with a new player on the market every day, whose primary intention is to simplify financial services to a greater extent, the only wise decision is to set regulation framework in the country that will enable the financial service players to innovate towards the achievement of 100 per cent neo banking.

Angel Setumo, the Head of Strategy and Innovation at Letshego Holdings Group also spoke at the panel noting that
neo banks are customer-centric as they provide personalized services fired up via technology.

“Africa is staring at an era of rising fintech. We need to talk about the new consumerism and how to transact digitally to grow the numbers for neo banks,” she said. “The pandemic enhanced the growth of digital transactions and today, more and more people are getting comfortable making online payments. Let’s secure that space.”

This panel was moderated by Hussein Ali, a Co-Founder & CEO, Kipochi Limited.