Interview with Catherine Muraga, CIO – Stanbic Bank Kenya
We interviewed Catherine Muraga the Chief Information Officer (CIO) at Stanbic Bank Kenya – one of the largest banks in Africa. Catherine is well versed with the Information Technology (IT) landscape having worked in different industry sectors including Manufacturing, Airline and Banking industry. She provides strategic vision and operational IT leadership for the Information Technology Department and controlling all IT functions. We asked her a few questions around COVID-19 and how Stanbic Bank is working around this pandemic.
1. What would you say was the first shift that you personally saw, felt and experienced from a banking point of view as soon as the pandemic hit and how have you overcome some these challenges so far?
At the onset and from a branch perspective, there was a dip in foot flow and an uptake of banking services offered on digital channels. Banks continued offering services while ensuring health and safety of both staff and customers. The directive to zero rate M-pesa and Pesalink transaction fees also aided in the payments reach widening and consequently an increase in transactions.
To paint a bit of color on the payments reach widening- a visit to some of the local markets and I saw all traders had an option to settle the bill through Mpesa; this was previously an area dominated by cash transactions. According to the Central Bank of Kenya – Status and Outlook report dated 21st May 2020, there was noted increase in values of bank to e-wallet transfers which could imply some success in the measure of reducing use of physical cash. (Read report here)
From a bank and industry perspective, for instance Stanbic bank Kenya reacted by issuing three-month loan repayment holiday and together with the industry, extended loan re-structures. This being part of the implementation of the emergency measures to mitigate the adverse impact of the pandemic and as guided by the Central Bank of Kenya. I also saw the adoption of online meetings by Relationship Managers and as part of Customer engagement. Overall, the pandemic has been a great accelerator of digital and agile ways of working.Staff were enabled to work from home on short notice and this came with heightened focus on cyber-security.
Digital product offering was enriched in such a short time – this ranged from Customer onboarding, enhanced features to process payments, conversion of more customers to take up internet banking and enhanced capability to access credit facilities.
2. Would you say that the shift to digitalization will be hastened due to the pandemic?
Indeed, it is quite interesting that a global pandemic forced many to digitize. Our daily lives have changed drastically, from our work to school to entertainment, many have had to rethink their response towards the pandemic. In order to limit the spread of the virus. Financial institutions like ourselves have had to turn to digital tools to keep our client services going. It’s been imperative to digitally transform our places of work to operate effectively. Those companies able to use technology well to keep going and rethink their business model for the future by fast-tracking digital transformation will be ones ahead of their competition.
3. What are some of the steps your bank has taken in this regard?
In responding to our clients’ needs and the changing operating environment, Stanbic Bank Kenya has undertaken a review of its business and operating model to ensure that we serve our clients more effectively and efficiently. With the digital economy putting new demands on the banking industry, their business is now immersed in a digital transformation journey. The digital transformation agenda plays a critical role in redesigning the entire operations of the Bank, through innovation of products, services and channels. As a result, the employee skills base as well as organization structure of the Bank are expected to transform to mirror that strategy. The banks technological journey is client led and driven, meaning that we are constantly improving on systems, processes and solutions to ensure that the experience is better and simpler.
The bank is looking at how to enhance that experience using data analytics and thus the need to also enhance skills on areas like AI etc. This means we must innovate faster and better, putting the customer at the center of how we build, engage and deliver by connecting the physical world to the digital world. Naturally, this requires a shift in mindset and culture. In order to become a truly digitally transformed financial services Group, we need to harness data to complement our digital transformation strategy, which is crucially significant for our business decision-making and customer-centric re-orientation in the marketplace.
During this COVID-19 period our efforts are primarily focused on ensuring the safety and well-being of our staff and customers as well as putting systems and capabilities in place to minimize business disruption to our clients and services. Our digital products offer ease and convenience, no matter where you are located, and this replaces the need to visit our physical branches. During times like these, digital, contact free banking help our clients carry on with their personal and business lives without disruption.
- Digital banking: All our mobile money and Pesalink remain free of charge. In order to reinforce the security of your funds and transactions, we recently added the self PIN reset feature that allows you to select your password online at your own convenience and gives you more control. With our digital banking solutions, we automated the process of opening accounts for individuals and will soon launch a digital lending mobile application aimed at supporting our SME clients. To facilitate the operations of our international business clients, we have entered a partnership with SimbaPay that enables customers to remit money to India, China, and Uganda. Through our Africa China Agent Proposition (ACAP), we will continue exposing Kenyan entrepreneurs to suppliers in China, building their networks, and deriving better quality goods at great terms and prices.
- Loan restructuring: After careful deliberation, in April our bank pioneered debt relief, providing loan moratoriums to underline our commitment to walking with customers through this period. We realized that the pandemic has disrupted livelihoods and as a trusted financial partner, we continue to do our best to support customers.
To this end, our individual, Small and Medium-Sized Enterprises (SMEs) and corporate partners had a total of Ksh 31 billion in restructured loans. This has provided great relief for all who have been impacted by the pandemic.
- Community support: As a sustainable business, we realize that we must place our communities before profit and that we cannot thrive when the communities around us are not; this remains deeply entrenched in our culture. In response to the call from to the Ministry of Health and the wider Government of Kenya to mobilize resources to combat the Coronavirus pandemic, Stanbic Bank Kenya through the Stanbic Foundation, in partnership with Base Titanium, Centum, Gulf Energy, Valar Frontier, and Africa Practice, handed over a total of 192 high flow nasal cannula oxygen therapy devices worth KSh147 million to the Ministry of Health.
- DADA services: This is a flagship offering, designed specifically to empower enterprises run by and involving women. It was designed with input from customers and includes both non-financial and financial offerings to see businesses achieve their desired potential. The DADA team has been keen to build customer capacity and has set up digital engagement platforms such as webinars and virtual boot camps designed to equip businesses with management skills that will guide you on how to navigate through the challenges caused by the COVID-19 pandemic.
4. From a credit perspective, we have seen loan holidays being offered, CRB negative listings scrapped to some extent especially in Kenya to cushion borrowers among other incentives. How has this affected the banking industry?
Apart from reduced liquidity in the short term, the full impact of these actions is yet to be felt. The industry concern is the economic impact the prolonged ‘COVID period’ will have on the Bank’s customers and their ability to service their maturing obligations. In spite of the measures taken of scrapping listings and offering moratorium we are beginning to see the rate of default rising and customers who are on moratorium advising of their inability to continue servicing the loans either because of reduction/closure of business or loss of employment or even reduced income/salary. If the situation persist beyond year end, we are likely to see increased default resulting in higher provisions and reduced profitability in the industry.
5. As a CIO, what are the other new areas of focus you working on that are unique to the region apart from Digitization of services? What are the trends you see unfolding in the industry?
With regards to trends, I see the following unfolding in the industry;
- Hybrid workforce of remote and in-office users – This will be a cross-functional strategy that teams in Risk Management, IT, Human Capital and Facilities will focus on.
- IT teams will have to focus on how to reduce contact at the workplace and in with the objective to prevent virus spreading. For instance, adoption of workflow tools, contactless solutions in meeting rooms etc.
- Savings on real estate costs moving to support work from home IT costs. How do organizations enable their staff to work from home?
- IT Budget – There will be a renewed emphasis on operational efficiency type of initiatives, and cost controls. Under operational efficiency, there will be a redefinition of business processes that may come with the increased adoption of robotics process automation.
6. Social distancing and working from home seem to be the new norm. Banking has traditionally relied on face to face interactions with customers, especially SMEs. How does Banking 3.0 look like?
- Curated to you and not to the masses.
- What you like, your aspirations and goals unlike before where a product was geared towards the mass market.
- Experiential where user experience is the main driver of the product and service.
b) Technology led particularly for payments;
- Cheques to digital payments
- Cash to mobile payments and QR codes
- Banks will increasingly leverage use of data, both structured and unstructured to inform their strategy, crafting of products and the Go to Market approach.
There will be enhanced integrations to third party agencies such as government entities, Telcos, Fintechs and social media in order to collect customer insights and offer personalized products.
Catherine Muraga – CIO, Stanbic Bank Kenya