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ATMIAATM and Payments Innovation SummitRome, October 2019Title: ATM in Africa –More than just a machineDarryl Poonan*Head ATM Channel. Standard Bank Africa Regions,Africa is our home, we drive her growth
ATM on the African ContinentWhat makes banking in Africa exciting is the sheer complexity of the environments. Thisopportunity fires up digital innovation at a massive pace.While new digital entrants have shown some impact, the question of how to get cash in hand tocustomers in most African economies which are heavily cash based has not been answered bydigital disruptors.The race is on.The African continent has a low per capita ATM install base to serve a cash reliant population andtherefore ATM stands its ground and has potential to grow!Managing the ATM Channel in this diverse continent I call home is both challenging and rewarding.It all comes down to that moment of truth when a customer touches the screen and we say – weare ready for you!2
Executive Summary Cash is still king in Africa Banks in Africa are on a growth path – roaring to life! Alternate payment channels and digital banks making impact, butmost customers still need cash High cost of delivery and low return on assets demands thechannel to respond
Welcome to AfricaJambo4
Standard Bank GroupPurposeAfrica is our home, we drive hergrowthPresence20 countries in sub-Saharan AfricaTeam52,000 passionate peopleCompetitive positionAs at 30 June 2019, we are thelargest bank in Africa by assets5
Africa – The ATM StoryboardGlobal TrendsDownward Pressure on ATMDigital disruptorsCost pressureSome research indicatesa 1% drop in installBase of a 3.3 milliontotal baseCustomer behaviorchangesAfricaOpportunity-35% of countriesprojected growthof 6% or more-17% of globalunbanked adultsare in AfricaFinancial InclusionstrategiesLow ATMs percapitaEconomies areheavily cash basedThreatsATM needs to respond-Highcost / assetratio-Wealthy areshifting todisruptors-Lower segmentsare not generatingenough revenue,high cost to serve-Central Banklegislation impactstime to market-Pricing pressureDefending theOpportunityStandard Bank’sinitiatives2019-2020Managing in aComplexEnvironmentIncrease Revenue It is tempting to DCC-Ratio of adults to Increase volumes standardiseeverything, butATMs far lower Smart selectionnot always thethan globalof newright solutionaveragecapabilities Think broadly,-Reduce cost toImprovebut actserveEfficienciesspecifically – tight-Increase revenue Reduce costrope!streams Improve ROI on Across 14-Optimise offering,SS modelscountries? As aplacement Improveleader you-99% of paymentsavailabilitycannot do thisare Cash in Africa – Placementwithout yourmake ATM morecriteriapeople,relevant! CleverInspiration andmanagement ofPassion islogisticseverything! Leaner, simpler6
ATM Potential for growth in AfricaSub-Saharan Africa, with about 350 million unbanked adults,accounts for 17 percent of the global total.15.4 ATMs per 100,000 adults compared to 43 in comparativemarkets like Latin AmericaAfrica’s ATM growth potentialEven where the install base is growing,the role of the ATM must change.It must be more than just a cashdispensing machine.7
Pressure on the Install Base in digitized countriesIllustrated relationship between Wealth Segment shift and decline in ATM install baseGraphic BGraphic AIt is clear that the install base is slowing down in the digitizedcountries. Illustrated in graphic A.Significantly attributed to the shift of Affluent and Middle segmentsto Internet and Mobile banking mainly for transactions / payments asillustrated in graphic BAre these segments lost to ATM or can they be reattracted by reimagining the offeringPotential for growth sits in the Core Middle and Mass segments– how can we readjust the cost of serving to make this lucrative?8
Banks could leapfrog physical channels direct to e-TailingA View on the Viability of Digital Banks in AfricaAfrican Banks are on the Digital banking journey. While traditional Banks transform, low cost digital bankshave recently entered the sector triggering fierce competition on pricing and offering.Three new start up Digital Banks have recently opened in South Africa and a major competitor has been rolling outdigital banking in other African countries. This competitor has closed branches and removed ATMs.The uptake in South Africa has been impressive, one example is 400,000 new accounts in 4 months.However, research suggests that in highly digital countries in Africa like Kenya and Nigeria, digital disruptors are notseen as a significant threat as the likes of M-Pesa and Safaricom have existed for a while with low impact.The advantage of digital disruptors is their ability to be more customer centric without expensive legacy systems.The disadvantages are the immaturity of credit offering and therefore low ability to attract primary customers,the high price of security and most significantly, they do not address the need for cash – which is the primary paymentmethod on the continent.9
OpportunitiesCheck pointCost and ROIIncrease revenueLoss of SegmentsImprove customerexperienceSlow to marketReduce costReduce branchesDemand for cashRoom to growDisruptorsDownward PressureRethink offering10
We operate in a diverse landscapesSani Pass, ictoria FallsNamibia Desert .And the same standardsapply everywhereHumidityLagos CityHumidityOn an island in Lake Victoria11
Managing the ATM Complexity8 latesconstant newnotes14 countries15 SLAs percountryRegulatorsMultiplevendorsuppliersPower supplyshortageAligning theteam andCulturesHumidity anddustARATMShipping leadtimes12
Improving ATM Availability. Outline of how we improved from 74 to 96% in 1 year94%74%Monitoring SystemSet KPI’s – what determines up time?Specific country configurationsCategorise sites (priority 1,2,3)Implement in countries, user access and responsibilitiesReportingOperating ModelRoles and responsibilities. Custodians - Critical foot soldiersInclude service vendorsAdjust Service SLAs re response timesUse the output data practicallyUse reports to find bottom 20% and act on itFind root causes and develop action plansDeep dive with the teams13
Conclusion .Striving to deliver a superior service in a complex environment is inspiring because it is not simple. And I am Lit!I am lit because getting it right in that moment of magic when my customer transacts successfully on of any of over 2000devices in 14 countries is thrilling.Lets get real, a trip to the ATM is not the highlight of anyone’s day, it is a mundane but necessary task. But if theexperience goes wrong, it will be discussed at dinner and understandably so.Making banking simpler for the customer is what it is all about. To do this it is essential to have a handle on theend to end value chain - from branding design to system architecture, hardware and software builds,compliance all the way through to the custodian in the van meeting a 2 hour TaT to load cash.16,000 transactions per hour on average and growing tells us that ATM is relevant and not going anywhere soon.The potential of what we can do next is even more of a thrill and cannot wait. I am Lit. Sono acceso!14
Grazie, signore e signori15
ATM and Payments Innovation Summit. Rome, October 2019 . Darryl Poonan * Head ATM Channel. Standard Bank Africa Regions, Africa is our home, we drive her growth . This opportunity fires up digital innovation at a massive pace. While new digital entrants have shown some impact, the question of how to get cash in hand to
