CAPE TOWN – African countries had a “huge advantage” over developed countries to be a winner in the 4th Industrial Revolution (4IR) due to their large, youthful and growing population who have only known digital services, Deloitte Global Financial Services Industry leader Bob Conti said on Thursday.
African countries had largely only been spectators of the last three industrial revolutions, but this time the odds were in their favour to allow for a rapid uptake of new technologies and consequent economic growth, said Massmart chairperson Kuseni Dlamini.
Conti and Dlamini spoke on Thursday at the World Economic Forum on Africa conference in Cape Town, where Deloitte and Mastercard released a report on the future of payments in South Africa.
Conti said that in developed countries digital growth was being impeded by legacy issues, such as the continuing investment required by legacy business models, by staff still working on legacy businesses, and consumer resistance to change and from misunderstanding the benefits of digital.
“Great progress has been made in increasing access to financial services in the country, with 80 percent of the adult population now banked – up from just 46 percent in 2004,” said Mastercard Southern Africa division president Mark Elliot.
Despite this increase, most consumers are still not frequently using payment cards or digital solutions for every day payments, he said.
Cash is costly – it cost consumers R23 billion a year, or 0.52 percent of gross domestic product, the cost of which was mostly borne by low-income earners.
New digital technologies have disrupted traditional businesses, such as banking, enabling new entrants such as telecoms and retailers.
“The convergence of these industries, enabled by technology, is already giving consumers access to a wealth of financial services such as insurance and remittances in a seamless and more affordable way,” said Elliot.
Advanced analytics and AI, which are being used to unlock insights into more personalised services, had the potential to benefit small businesses and informal cash-based businesses, as the information could unlock credit given that these tools help financial services providers better evaluate risk.
Further industry convergence was inevitable, and would be further influenced by regulatory changes in South Africa, if European and UK examples of open banking were followed.
Conti said that in future financial regulators were likely to shift focus from entities and risks to becoming more focused on markets, eco-systems and risks. Over the longer term, there might also be a shift towards reserve banks adopting digital coin.