Banking is, by its very nature, a conservative and regulated industry – and never more so than in recent times as we face changes driven by the many crises and challenges that have rocked the industry over the past decade.
The challenge then to bring innovative answers to a banking landscape, particularly in emerging or developing economies, has become increasingly difficult. It’s a challenge that banks themselves seem hard-pressed to answer on their own.
The well-developed (and respected) South African banking industry has over several years been taking on the challenge of innovating to answer the need for financial inclusion – to bank the un- and under-banked. A consistent answer to this challenge – one that provides not only broad access to financial services but also offers real consumer benefit and aspirational qualities – seems to have eluded the market so far, despite some promising offerings.
The most interesting developments in answering this challenge are however starting to emerge not from the traditional retail banks, but rather from innovative banking partnerships. This concept (we call it Alliance Banking) goes deeper than co-branding and creates a partnership that marries the security, trust and control needed in the banking world with the innovative distribution and technical capabilities created in the entrepreneurial world. Instead of simply pasting a label onto an existing banking product, these partnerships create unique offerings that takes incredibly innovative technologies, processes and distribution and packages it within the governance, controls and protections of the banking world.
Our own MobileMoney alliance partnership with MTN, Pick n Pay and TYME has created a consumer offering that is not only a fully-fledged bank account (with the trust, control and security that concept implies) but also an access tool that creates serious consumer value. MTN’s ability to create a disruptively low price-point and Pick n Pay’s enormous distribution footprint combine to create a powerful answer to the financial inclusion challenge across South Africa’s geography. This is further enhanced by the innovative range of services offered on the platform, as well as the end-user’s ability to benefit from airtime rewards and enhanced Pick n Pay rewards. This kind of partnership benefits from the vested interest and involvement from all parties that is unique to Alliance Banking (as opposed to co-branding). The partners not only market jointly but collaborate on the management and operations of the business, making sure that each leads the business elements that are core to their business – technology, distribution, regulatory, marketing and more.
We’re excited to be at the forefront of this unique development in banking. The opportunity to create meaningful banking solutions through these partnerships really lies in finding the right partners, having the skillset to enable these offerings within the regulatory environment and to ultimately connect to the customer with an offering that builds on the foundation of good, solid banking to create a unique and meaningful offer. Smaller banks are leading this charge and it’s creating a new and interesting competitive environment – and that can only be good for the consumer!