The Financial Brand Insights - Winter 2021

Profitability As a Design Principle

Digitization has also the potential to increase the financial inclusion especially of women by enabling them to access banking products and services from anywhere, at any time. Bank branches are not always close to women, especially in conservative cultures or rural regions, and it can be difficult for them to leave their homes to go to a bank, or even find one. One of the unique financial inclusion opportunities delivered in Africa is the establishment of an agency banking model. This is an arrangement that allows a retail outlet to serve as a representative of the agent of the bank, offering transactional services to the bank’s customers as defined by agency banking guidelines. Agency banking allows the traditional banks to extend their network of branches and services in a cost-efficient manner through authorised agents. Standard Chartered has introduced agent banking in Uganda, comprising almost 10,000 touch points for cash deposits and withdrawals that aid in reshaping its distribution model. This coupled with a recent collaboration with Airtel Africa — a leading telco with a presence in 15 African markets — will drive financial inclusion across key markets in Africa by providing consumers with increased access to mobile financial services. This model is now being rapidly expanded to the other markets in Africa.

A challenge that most stand-alone digital banks globally are facing is the slow path to profitability. Technology can be transformational but is not cheap and has a relatively long gestation period. Profitability was a clear design principle in the way our bank approached this transformation by aggressively cutting legacy cost whilst pivoting to exponential digital-led growth. This has brought forward the break-even for these investments. As the dust settles on this phase of the Bank’s transformational journey, it is clear that the successful transformation of a legacy bank into a true digital bank has a disproportionate payoff as it combines the century-old trust that customers have with the exponential growth possible from a low-cost, future-ready digital platform. By choosing Africa as the battleground to demonstrate early signs of success, Standard Chartered has not only underlined its ambition for the continent, but also the confidence with which it is executing a technology-led, cultural transformation. There’s a long way to go as this strategy plays out and it is too early to claim victory. But the early positive signs of the Bank’s transformation in Africa could become the template for banking incumbents to become nimble and win. ▪

THE FINANCIAL BRAND INSIGHTS WINTER 2021