Peter Crawley currently leads Citi’s franchise in South Africa and provides senior leadership in dealing with risk, franchise and business issues. He is also responsible for Citi’s treasury and trade business in Sub-Saharan Africa, spanning 11 presence and 26 non-presence countries.
Since Citi re-entered South Africa in 1995, it has grown to become the country’s sixth-largest commercial bank and its largest foreign bank. The institution focuses on the public sector and is also the third largest equity brokerage in South Africa, with capital and reserves representing over a quarter of the capital of all foreign banks in the country.
bobsguide sat down with Peter to discuss his market outlook for the regions as well as understand how the fintech industry is evolving.
Do you monitor the fintech sector closely?
Fintech is a huge focus for us, because we recognise the need for change. Co-creating with our clients is a great opportunity, even though Citi is a large institution with high regulatory standards imposed that we need to adhere to . It’s important for us to find ways to co-create and embrace the digital and disruptive technologies. There’s a real focus in making sure we adapt to any new environments that we find ourselves in, where entrepreneurs are looking at margin opportunities and where client’s needs have not been met. This is an opportunity for us as we have the skills, the assets, the capital and the counterparty risk credibility, so we need to transform and co-create with clients.
For the past four years, we’ve digitised more than 20 receivable partnerships into our eco-system where we could use networks of other institutions to solve our client’s challenges of reach and consider how important that may be.
We have also been trying to replace cash collection arrangements with Automated Banking machines (for corporates), which we’ve been piloting in Cameroon and Tanzania.
What do you believe we will see in 2017? What are your industry predictions/trends?
I believe there will be developments with financial technology. It’s really interesting to see how fintech is evolving in Africa. Around five years ago, we began looking at what fintech entrepreneurs were up to, then trying to understand what it meant to us. Did this represent the unbundling of banking, were they addressing clients’ un-met needs, and how exactly were they going to evolve? I think it’s the last question – how they’ve evolved – that we can really learn from.
Many entrepreneurs have now been snapped up by banks, so they clearly represented opportunities in the market. We see this a lot in the digital retail space, especially in South Africa. We saw one company – Tyme Capital, which launched its mobile bank service Take Your Money Everywhere in South Africa acquired by Commonwealth Bank of Australia (CBA). Another company, Firepay, which developed mobile payments service SnapScan, got acquired by the local Standard Bank at the end of last year.
We’ve also seen entrepreneurs involved with creating innovations across the globe. Kenyan electronic payments and non-bank credit card issuer M-Pesa, grew to become a market standard in less than four years, – where the focus was outside the banking system to address client needs. M-Pesa has now grown to a significant scale and is competing against banks.
What about developments with digital payment platforms?
We saw a situation in Nigeria where e-payments and e-collections company Remita has grown to reasonable scale. The inter-bank switches in Nigeria and in Kenya were both driven by entrepreneurially-minded individuals, and actually became a form of multi-bank regulatory driven standard. It’s interesting to see that fintech is not only about the unbundling of banking, but also about partnerships and driving industry solutions.
There are also challenges with the strengths of certain banking institutions. We saw a couple of banks face significant stress, yet they still hold quite a lot of promise in that the central bank has responded very well to these situations. They do benefit from low commodity prices, and have a very digitally-savvy and young population, which is exciting for the east African countries.
What do you think about digitising payments? Do you think that Sub-Saharan countries could transition to a cashless society?
I think it was a very bold decision for India to completely remove cash out of the economy, and we’re seeing it evolve in different ways. Mobile payments are the prolific example as it was the right response to a specific problem.
We’ve also seen that in Kenya there was a population of workers that had come out of rural areas to work in urban districts, and were struggling to remit funds back to the rural locations. The partnership between mobile network companies and the Government resulted in birth of M-Pesa a decade ago. That has morphed into a variety of financial services that creates offers on the same platform and into other geographies. It does depend heavily on the particular problem that the Government is trying to solve. In this particular case it wasn’t subject to financial inclusion, as in South Africa we have other financial growth problems but financial inclusion is not a problem. The country already had a very well developed payment, bank account and internet infrastructure in place already. It did however represent a good opportunity to leapfrog on the technology gap and address a particularly challenge.
What we’re seeing now is that non-traditional payment providers, not just mobile, seep into the financial eco system more broadly. It shouldn’t just be the traditional model or the banks payment clearing systems, but also adding in how the entrepreneurs platforms and businesses fit into the wider financial ecosystems by giving it the right regulatory oversight. That is what regulators are working quite hard on in many of our African geographies.
We’ve seen that play out well in markets such as Nigeria. Vision 20:20 celebrates 20 years of democracy with 20 partnerships, and is one of our largest economies with 180 million people. It’s an enormous population. Vision 20:20 had created a bunch of steps to reform the financial infrastructure, which resulted in the inter-bank clearing system that countries which were involved never had before. This then resulted in licensing for certain mobile banking arrangements, which resulted in the instant pay platform, which then resulted in the e-bills platform. I think it starts with a vision and addressing a certain need.