This article follows on from my recent article entitled, "So what's going to happen to banks now".
I recently presented at the Brand in Banking and Finance conference where there was some talk not only on the future of banking in the context of the current global instability, but also talk about the huge unbanked population and the evolution of microfinance.
I also commented on a recent European Retail conference, where we discussed trends in the financial services and retail industries which have seen considerable convergence over the last decade. We also discussed the impact of mobile on retail financial services, at which point an interesting discussion followed, particularly in the context of access to financial services in Africa.
The fact is that in deep rural Africa, mobile telecommunications brands have a much stronger presence than banking brands. So I wondered - since there has already been quite significant convergence in retail and financial services (credit products, insurance products and sometimes even entire banks getting involved), how probable and feasible is the integration of banks, retailers and of telecommunications companies likely to be in future, especially with the huge drive in mobile banking right now and the brand presence of the telecommunications companies in deep rural Africa? After all, it is well known that Africa will most likely leapfrog the bricks-and-mortar banking infrastructure of developed countries with mobile technology, given that the development of a physical infrastructure will cost too much, will take to long, and will then probably not even be cost-effective
While banks may not have the appetite right now to drive M&A activity given compressed interest margins and reduced profitability (and reduced valuations!), telecommunication companies have remained strongly profitable. Given their financial strength and wireless footprint, is there a chance that we may see telecommunications companies beginning to buy banks that have acquired retailers, or acquiring retailers that themselves have begun creating various financial services offerings, where the telecommunications brand becomes the fully-fledged financial services brand for the unbanked? Let's wait and see.
I recently presented at the Brand in Banking and Finance conference where there was some talk not only on the future of banking in the context of the current global instability, but also talk about the huge unbanked population and the evolution of microfinance.
I also commented on a recent European Retail conference, where we discussed trends in the financial services and retail industries which have seen considerable convergence over the last decade. We also discussed the impact of mobile on retail financial services, at which point an interesting discussion followed, particularly in the context of access to financial services in Africa.
The fact is that in deep rural Africa, mobile telecommunications brands have a much stronger presence than banking brands. So I wondered - since there has already been quite significant convergence in retail and financial services (credit products, insurance products and sometimes even entire banks getting involved), how probable and feasible is the integration of banks, retailers and of telecommunications companies likely to be in future, especially with the huge drive in mobile banking right now and the brand presence of the telecommunications companies in deep rural Africa? After all, it is well known that Africa will most likely leapfrog the bricks-and-mortar banking infrastructure of developed countries with mobile technology, given that the development of a physical infrastructure will cost too much, will take to long, and will then probably not even be cost-effective
While banks may not have the appetite right now to drive M&A activity given compressed interest margins and reduced profitability (and reduced valuations!), telecommunication companies have remained strongly profitable. Given their financial strength and wireless footprint, is there a chance that we may see telecommunications companies beginning to buy banks that have acquired retailers, or acquiring retailers that themselves have begun creating various financial services offerings, where the telecommunications brand becomes the fully-fledged financial services brand for the unbanked? Let's wait and see.
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