Digital

At Genesis we provide digital strategy support and advice to our clients looking to embark on a transformation journey, enter new markets with a digital proposition or optimise their existing strategy through better use of digital analytics.

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Expertise Areas

Digital transformation

Financial institutions realise the potential of “going digital” to improve organisational efficiency, reduce costs, leverage data to tailor products and services and to design the business around the customer journey. Digital transformation goes beyond developing an online presence or mobile channel. It requires businesses to break siloes and integrate data.

Our experience includes helping financial institutions develop a digital strategy; marrying our understanding of market and customer drivers, to develop appropriate customer propositions that realise the benefits of a digital infrastructure; mapping customer journeys to optimise physical and digital channels; and developing the operational architecture to support a digital strategy.

Digital payments

Africa is often seen at the forefront of mobile financial innovation. The high uptake of mobile phones and relatively underdeveloped banking infrastructure fostered an explosion of mobile financial services offering mobile payments or wallets.

We have worked with new entrants to the sector seeking to optimise their business model, incumbent financial institutions wanting to remain competitive and regulators looking to ensure that the innovation is accessible and promotes inclusion.

Fintech market enablement

While the value of fintech investment in Africa is comparatively low compared with developed markets, fintech has the potential to improve access, reduce the cost and improve the efficiency of financial services. We have worked with fintechs to evaluate and advise on their business models and with regulators seeking to encourage innovation without introducing risks to the financial system.

Our experience in this space demonstrates that for fintech to succeed, there are a number of factors to consider. Entrepreneurs need to ensure that product design addresses customer needs and that the financial challenges of the target market are well understood. The success of a fintech is also heavily dependent on the ecosystem in which it operates.

Projects

Helping South African bank to keep up with digital innovation

Project name:
Future of payments project

Service:
Strategy
Business and operating models
Digital

Sector:
Financial services
Payments

Area of Expertise:
Market analysis
Segmentation
Competitive positioning
Customer value proposition (CVP) development and execution
Digital transformation

Client:
Large South African bank

Date:
2017

Country:
South Africa


The growth in non-cash payments has increased the revenue potential of the payment sector, making it one of the high-stakes sectors in financial services.

Until recently, banks were dominant but new players have successfully challenged this dominance. From MNOs to fintechs to third-party payment processors, increased technology has intensified competition. Improved speed, ease, security and cost of making payments are common in contactless payments to biometric authentication features, social-media payments and distributed ledger platforms.

Banks are faced with how best to respond to these developments. Genesis engaged with a large South African bank to create and maintain a market insights capability that would enable it to develop internal points of view on developments in the payments sector, allowing the bank to respond with appropriate short-term and medium-term strategies.

Genesis compiled a live database of developments within the payments sector and analysed them according to the payment flow, rail and theme. From this, we built a comprehensive as-is analysis of the payments space, identifying the ongoing technological developments as well as that of the competitors, both banks and other entities.

We formed our points of view on key issues that the bank needed to consider. These included, among others, the entry of Chinese payment giants into the South African market and innovations in the acceptance frontier. We outlined the main trends and analysed their impact, imminence and risk to the bank.

Our insights provided the bank with a comprehensive view of the trends and developments in the payments sector. Our recommendations included considerations for short-term tactical investments and also longer-term considerations of the direction of payments innovation.

Our insights were presented to the senior management and key stakeholders of the bank. These formed the basis for discussion on appropriate strategies the bank should take regarding its payment services and product offerings.

30 Kenyan banks adopt innovative payments infrastructure

Project name:
PesaLink Channel migration strategy

Service:
Strategy
Digital
Financial inclusion
Business and operating models
Market analysis and positioning

Sector:
Financial services
Payments

Area of Expertise:
Market analysis
Financial modelling
Market entry and growth strategy
Digital payments

Client:
FSD Kenya

Date:
2017

Country:
Kenya


Kenya has been at the forefront of mobile payment innovation in Africa, primarily through the rapid growth of the mobile money ecosystem. Leading this are non-banks, in particular Safaricom, which pioneered payment solutions for consumers with little access to formal financial services.

With the banking industry facing a challenge of falling card transactions, banks needed a new low-cost payment solution to compete with non-bank payment providers.

MNOs have been the primary drivers of financial inclusion in Kenya. To improve the banks’ contribution to financial inclusion, collaboration between FSD Kenya and banking industry stakeholders led to the creation of PesaLink – a payment infrastructure that allows banks to offer real-time, person-to-person transfers at a low cost.

PesaLink met with some resistance from banks over concerns that it would cannibalise their fee revenues from existing payment products, without understanding that traditional banking products were declining in the face of Safaricom’s growing market share.

Genesis partnered with FSD Kenya to develop a business case to convince Kenyan banks of the value of joining PesaLink. Genesis carried out a series of stakeholder interviews with the banks to understand their problems. Incorporating these findings with historical payments trends in the market as well as bank data, Genesis developed a financial model to assess the impact of PesaLink on the banks’ existing product revenues.

The model incorporated the expected revenue diversion from existing bank products and illustrated the potential savings from the more efficient PesaLink infrastructure. It demonstrated the opportunity for increased transactions because of convenience to the client, resulting in raised revenues for the banks. The model was shared and workshopped with the banks.

Through Genesis’s work there was greater buy-in from banks to develop their unique products to be rolled out on PesaLink. Thirty banks now offer products on the PesaLink infrastructure, resulting in KSH15-billion transaction value flowing through the infrastructure in the first six months of its launch.

Building model for a branchless retail bank

Project name:
Development of an operating model for a new retail bank in South Africa

Service:
Business and operating models
Digital

Sector:
Financial services
Retail banking

Area of Expertise:
Business model advisory
Operating model design
Capabilities mapping
Cost allocation models
Digital transformation

Client:
Confidential

Date:
2012

Country:
South Africa


The mid-value retail banking market in South Africa is over-traded and highly competitive.

Any new player would need a clear and differentiated customer value proposition (CVP) in order to acquire a share of the market. In the higher-income segments, retail banking offerings must, in addition, be at the cutting edge of technology, as clients in those segments expect and demand the convenience of digital channels.

Genesis partnered with an existing specialist bank in South Africa to design an operating model for their proposed retail operations.

As the bank’s target clientele was professionals in the middle-income segment, the operating model was designed to be cashless and centred around an online offering with call centre functionality to provide back-up.

Physical infrastructure would be outsourced to existing retail banks.

We designed the bank’s operating model through the following five phases:

This process was concluded with the development of a high-level implementation roadmap designed to provide the bank with the key dates and milestones required before going live. It outlined the people, process, technology and infrastructure milestones required to build, test and deploy the retail offering successfully.

Balancing innovation with regulation to grow SA financial services

Project name:
The impact of the fourth industrial revolution on financial services in South Africa

Service:
Business and operating models
Market analysis and positioning
Regulatory economics and accounting
Digital

Sector:
Financial services
Retail banking
Capital markets
Payments

Area of Expertise:
Fintech market enablement

Client:
Centre for Excellence in Financial Services

Date:
2017

Country:
South Africa


Technology is changing the way financial services are produced and consumed worldwide. South Africa has long been acknowledged for having a sound, advanced banking system. However, at the onset of the fourth industrial revolution, with humans and technology interacting like never before, South Africa faces a new set of opportunities and challenges as technology becomes a central part of financial services.

Policymakers and regulators must find ways to preserve our sound financial system, while enabling innovation that promotes improved access to finance and growth in the financial services sector.

To understand which policy and regulatory approaches best suit the South African financial sector in managing this balancing act, it is crucial to know where South Africa stands relative to its global peers. Genesis partnered with the Centre of Excellence in Financial Services to answer this question in a report titled “The impact of the fourth industrial revolution on the South African financial services market”.

The centre wanted to benchmark our technological innovation against international trends, and partnered with Genesis to undertake an industry-wide analysis of financial-technology (fintech) and innovation in the South African financial services market. This is a landmark report that provides the most comprehensive analysis of innovation in financial services in South Africa, how it is disrupting the sector, and what the implications are for South African regulators based on international best practice.

The analysis included identifying and researching successful local fintechs in the core banking functions of payments, deposits and lending, capital raising, investment management, and market provisioning. The team conducted over 40 interviews with stakeholders from banks, innovation labs, fintechs and regulators to understand their perceptions of innovation in the South African market, how digitally enabled banks were, the impact of a digital revolution on the existing operations of banks, and any challenges in achieving a digital strategy.

This information, together with research, allowed us to document the approach the industry was taking with regard to fintech, to highlight some of the cutting-edge technology that is shaping innovation, and to consider how regulation could support this industry while protecting consumers and ensuring the stability of the financial services sector.

The report provides a comprehensive overview of fintech and financial innovation in South Africa, the approaches to fintech regulation around the word, and how this should influence South African regulators’ approach to regulating fintech. The Centre of Excellence chose to submit the report to the Basel Committee on Banking Supervision in response to their consultative document on the implications of fintech for the financial sector. The report is now available to the public on the Centre of Excellence website and will generate necessary debate amongst industry stakeholders and regulators on this important topic.

Impact of 4th industrial revolution on SA financial services market: Executive summary and Full report

SA fintech policy to take shape in 2019

Media report: Better banking through technology

Mapping out path for local card-processing in SA

Project name:
South African card switch strategy

Service:
Market analysis and positioning
Strategy
Digital

Sector:
Financial services
Payments

Area of Expertise:
Digital payments

Client:
Bankserve

Date:
2016

Country:
South Africa


South Africa is unusual in having a domestic payment switch that can process domestic card transactions in addition to the global processing schemes (Visa and MasterCard). This brings a number of unique benefits: South Africa’s payments system maintains an element of sovereignty, protected from political fluctuations elsewhere, and the global processing schemes’ prices can be benchmarked against a local processor.

However, South Africa’s domestic payment switch, BankservAfrica (Bankserv), is under increasing pressure from the global processing schemes. With the rise in digital payment innovations, banks typically move large portions of their card-processing to Visa or MasterCard to access these digital innovations.

Genesis partnered Bankserv to address this competitive pressure and determine how to continue providing card-switching services to the South African market. We worked closely with Bankserv and an international payments consultancy to extensively scope the domestic payments landscape, in particularly estimating the probability of cash and EFT being substituted for card payments in the future.

We then helped Bankserv understand its vulnerability to losses in card volumes by conducting a scenario analysis and a volume-based cost reallocation. This provided Bankserv with the minimum processing volume it would need for the business to remain sustainable and highlighted how changes to the card business would impact the cost of processing all other products.

Given the findings from the analysis, Genesis developed a number of strategic options for Bankserv to consider. The options included maintaining the current business model, with a few enhancements; pursuing a strategy to facilitate innovation across the network; or exiting and selling the card-processing business. The options were not mutually exclusive and each option was assessed against a number of criteria to understand which could be practically implemented.

The analysis and recommendations were presented to the executive committee. It resulted in Bankserv beginning a consultative process with its shareholders to understand how best to shape its card business to meet the needs of the South African market and maintain the benefits of domestic card-processing.

Photo by CafeCredit

Digital strategy for large global card scheme in South Africa

Project name:
Digital strategy for a large international card scheme in South Africa

Service:
Digital

Sector:
Financial services
Payments

Area of Expertise:
Digital transformation
Digital payments

Client:
Confidential

Date:
2015

Country:
South Africa


Genesis Analytics was commissioned by a large international card scheme to analyse and develop a strategy to position the scheme in the South African digital payments market.

The project team conducted an analysis of adoption trends in different digital payment channels. This identified opportunities for disruptive innovation and outlined a series of strategic actions the client could adopt in order to benefit from emerging opportunities.

The team’s recommendations were accepted by the client and formed the foundation for a multi-million-rand go-to-market strategy.

Unlocking competition in digital finance in Africa & Asia

Project name:
Unlocking competition in digital finance

Service:
Financial inclusion
Competition economics
Digital

Sector:
Financial services

Area of Expertise:
Digital transformation
Fintech market enablement

Client:
Confidential

Date:
2015 - 2016

Country:
Bangladesh
India
Kenya
Nigeria


Genesis was commissioned to study impediments to more effective competition in mobile money markets in four markets – India, Bangladesh, Kenya and Nigeria. The explosive growth in mobile money in a number of countries has made a key contribution to providing the poor with access to financial services.

At the same time, in some of these markets, the presence of dominant providers, inappropriate regulations, and other problems may prevent effective competition, to the detriment of consumers and to innovation.

The purpose of the study was to provide the client with insights into (i) potential regulatory or market-based solutions to identified problems; and (ii) how these might be promoted to improve competitive outcomes for consumers of digital financial services (“DFS”).

The team conducted the study by utilising four main tools i.e.:

  • A competition policy framework based on economic theory
  • An extensive literature review on DFS, payment systems, competition and regulation issues in network industries, and also in multi-sided platform industries
  • Stakeholder engagements in the four countries, i.e., DFS/MFS providers, regulators, banks and mobile network operators (MNOs)
  • Internal financial sector expertise and knowledge provided by the project leader, Richard Ketley.

In addition to various country-specific recommendations, Genesis identified the following cross-cutting priorities:

  • That appropriate regulation is required for USSD pricing. Cost-based pricing of USSD is a critical enabler of competition.
  • Regulators should drive full interoperability between competing MFS platforms
  • Regulatory capacity building is required at the interface between competition law and payment systems regulation to develop the pro-competitive regulatory approaches in future.

The findings of the report are that environments in which mobile network operators are able to offer mobile financial services, and there is a dominant player in the data and voice market, the potential for network effects to give the dominant provider market power is high.

This market power can be offset by appropriate regulatory interventions. It is less clear that these interventions will drive down the price of the services given demand elasticities for different product types.

Sizing the SA digital banking market

Project name:
Sizing the digital banking market

Service:
Financial institution expertise
Market analysis and positioning
Digital

Sector:
Financial services
Retail banking

Area of Expertise:
Market entry and growth strategy
Competitive positioning
Digital transformation
Fintech market enablement

Client:
A Pan-African bank

Date:
2015

Country:
South Africa


Genesis was commissioned to complete a comprehensive market sizing of the digital banking platforms in South Africa. This involved a market view and a detailed competitor sizing for online channels.

This project put in context the demand and supply sides of the market in order to gear a large Pan-African bank for innovative digital practices in the future. Genesis, in conjunction with Moxon, developed up-take and adoption predictive models for the bank’s team.

With this the bank identified customer sets within its client base to actively target for adoption campaigns. We also developed a comprehensive insights report on the digital landscape within South Africa.

Specifically, this report touched on the demographics of the country, cellphone, PC and tablet usage statistics, as well as market share analysis of device and digital channel usage. These insights were used by the bank in the development of the bank’s digital strategy.

Navigating increasing competition for large South African retail bank

Project name:
Transactional Product Strategy

Service:
Market analysis and positioning
Digital

Sector:
Financial services
Retail banking

Area of Expertise:
Market analysis
Competitive positioning
Digital transformation

Client:
Confidential

Date:
2018

Country:
South Africa


Retail banks face the challenge of maintaining and growing core customer relationships, and consequently market share, in a competitive market that attracts agile, digital, customer-centric competitors.

Our client, a large retail bank, was exposed to these pressures.

Traditionally the customer’s main banking relationship was determined by where a customer held their transactional banking account. However, the bank found that other features – among these access to credit, loyalty programmes, service models and digital channels - were impacting customers’ choice of bank.

Transactional products themselves were no longer a customer acquisition tool. As a result, the bank required assistance to redefine its growth strategy for transactional products, focusing on how to grow transactional revenue.

To begin we determined that there were four areas we needed to consider: attracting new customers, ensuring that existing customers were offered appropriate transactional products, encouraging customers to transact more, and retaining existing customers.

We began our analysis by identifying key global themes impacting transactional banking and international examples of transactional banking innovations.

We completed an extensive analysis of the competitive retail banking landscape, looked at service standards and product offerings, and compared loyalty schemes, digital channels and self-service options. We analysed the business unit’s revenue drivers to identify revenue streams that could be improved. We also identified key dependencies between the transactional banking business unit and other areas of the bank.

This top-down approach allowed us to recommend areas in which the bank could positively differentiate between these areas and grow transactional revenue in the four identified.

At the end of the project we had helped the client identify a winning customer value proposition that fused product centricity with client centricity by recommending a dynamic product suit that was simple and appealed to customer behaviour and attitudes, thus serving them at every stage of their life journey.

Business model for e-wallet customer payments

Project name:
Licence application and business model for an e-wallet and peer-to-peer lender

Service:
Business and operating models
Digital
Regulatory economics and accounting

Sector:
Financial services

Area of Expertise:
Fintech market enablement
Digital transformation

Client:
A large provider of online retailing and services

Date:
2014

Country:
Nigeria


Genesis was commissioned by a large provider of online retailing and services to examine the regulatory regime of Nigeria, with respect to the launch of an e-wallet for customer payments and the launch of a peer-to-peer lending service.

The project involved the development of a detailed business plan for each business, and an assessment of the licensing options available for each business, as well as a review of the regulatory model that is evolving globally with respect to peer-to-peer lending.

Following the advice of the consultants, the business model was reconfigured to take advantage of the card eco-system which would reduce the complexity of operations and the need for additional licences.

Meet the Team

Areas of Service Expertise

  • Digital transformation
  • Digital payments
  • Fintech market enablement

Related Sectors

  • Financial services
  • Corporate and investment banking
  • Business banking
  • Payments
  • Retail banking
  • Capital markets

Projects

Project

Helping South African bank to keep up with digital innovation

Genesis engaged with a large South African bank to create and maintain a market insights capability that would enable it to develop internal points of view on developments in the payments sector, allowing the bank to respond with appropriate short-term and medium-term strategies.

View Project
Project

30 Kenyan banks adopt innovative payments infrastructure

Genesis partnered with FSD Kenya to develop a business case to convince 30 Kenyan banks of the value of joining PesaLink, a payment infrastructure that allows banks to offer real-time, person-to-person transfers at a low cost.

View Project

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Leading the team

Bavani Naidoo

Partner (Financial Services Strategy)

Bavani Naidoo
Partner (Financial Services Strategy)
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Richard Ketley

Director and Managing Partner (Financial Services Strategy)

Richard Ketley
Director and Managing Partner (Financial Services Strategy)
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Jason Wang

Manager

Jason Wang
Manager
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Mark Schoeman

Manager (Youth and Technology)

Mark Schoeman
Manager (Youth and Technology)
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