"There is a generation of people growing up in Africa who have a cellphone long before they think of getting a bank account," says BankservAfrica CEO Chris Hamilton.
That provides an opportunity for banks to build digital systems from the outset, rather than having to migrate customers into new ways of doing things.
BankservAfrica, the largest automated payments clearing house in Africa, and Society for Worldwide Interbank Financial Telecommunication (Swift), the world's leading provider of secure financial-messaging services, are working to solve a systemic issue that could help SA take advantage of the information age: a better payments system.
The existing system is beset with inefficiencies due to old infrastructure, with two fundamental problems: the slow speed of concluding payments; and the capacity to relay only basic information between banks.
At an event in Johannesburg in November, the two companies urged the banking industry to invest in modern systems that will allow for effective real-time payments between banks locally and internationally.
"There is evidence to suggest a strong link between the sophistication and efficiency of financial market infrastructures (FMIs) and economic growth. For this reason, many governments, including SA, have made enhancements to FMIs a major priority," said Alain Raes, CEO for Europe, the Middle East, Africa and Asia Pacific at Swift.
With mobile penetration at 100% in countries like SA, Ghana, Mali and Gabon, according to GSM Intelligence, there is an opportunity to create digital payment solutions. But for that to happen, the mainstream banking systems need to catch up with the times.
A person in SA can immediately send or receive money through an intrabank transfer, for example from one Nedbank account to another. Interbank transfers, on the other hand, such as Standard Bank to FNB, typically take two to three working days. This is a problem. The current solution is a R40 fee for an instant payment, but this has proved steep for many South Africans.
The banking sector and the Reserve Bank have a plan, detailed in the National Payment System Framework and Strategy Vision 2025, that includes modernising the NPS to allow for deeper integration of SA's economy with the rest of the world, allowing companies and individuals to easily transact with each other locally and abroad...