Work from Home. School from Home. Bank from Home. Diary

A NEWSLETTER FOR MEMBERS OF THE KENYA BANKERS ASSOCIATION

ISSUE 02 2021 Data Inflation? New Scope For Banking On The “New Gold’’

Data has become an instrumental ingredient the banking sector include assessing borrowers’ risk- for business success. The gains that can be profiles and risk management. tapped from resourcefully leveraging on insights However, the proliferation of data in the digital age gleaned from data across sectors have gained it creates a new challenge, particularly concerning the the uncanny description as the ‘oil of the digital rise of fake data and low capacity to utilize the resource age’ or the ‘new gold’. optimally. This makes it instructive for financial service Consequently, regulators now see data as a providers to proactively develop frameworks designed catalyst for greater innovation within the banking to enhance capacity to tap into the opportunities Appointment sector, with a potential that can speed up the presented by data. Mainstreaming data management in adoption of data-driven customer relationship operations can help in successfully navigating the data Gituku Kirika joined management models and mainstreaming traffic, besides helping to distinguish genuine data from Integrated Payment analytics in customizing products and services, fake data. Services Limited (IPSL) among other operational and service functions. Of note, COVID-19 touched off a new clamor for in January 2021. He is Other useful emergent applications of data in data-driven insights. Is it time, therefore, that banks a financial services and deliberately invested further in data analytics, by putting payments professional together teams devoted to processing the data and use with extensive banking the insights for a stronger financial services sector? and fintech leadership INSIGHT experience in delivering innovative solutions. Read more at In which year was the first indigenous bank established in Kenya? https://www.kba.co.ke/ Visit www.vanguardnewsletter.co.ke to submit your answer. news118.php

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Work from Home. School from home. Bank from home. AVAILABLE RIGHT NOW ON YOUR BANK APP OR MOBILE USSD. VANGUARD Comment Building Back Better: Harnessing The Potential of A Digital Transformation Journey The globe has fast-settled onto a new normal, precipitated by the COVID-19 pandemic. Data indicates that bank clients have sustained the shift to digital banking platforms. The sharp switch from physical to digital banking in 2020 raised the global share of digital transactions worldwide to levels hitherto unexpected, even in five years. According to The Economist, the mobile-banking traffic rose in America by 85 percent while online banking Trending registrations edged up by 200 percent in April 2020. In Kenya, the value of cash-out transactions via mobile money agents reached Sh606 billion in December 2020, according Will Bank Mergers, Acquisitions And to the Central Bank of Kenya. In the same month, the total Regional Expansion Sustain In 2021? value of currency outside banks stood at Sh234 billion, equivalent to every shilling in the country passing though Bank mergers and acquisitions sustained in Kenya’s banking industry in 2020, a mobile money agent 2.6 times in a single month, up from signaling a strong banking sector on the back of the ravages of the COVID-19 the average of 1.6 times since January 2016. pandemic. The industry remains well-capitalized and resilient despite the The banking landscape is changing fast. Currently, adverse impact on asset quality exacerbated by the COVID-19 pandemic. conventional banks represent about 72 percent of the Gains from mergers and acquisitions include efficiency, resulting from global banking and payments industry’s total market value, enhanced economies of scale as well as an enhanced ability to mobilize liquidity down from 81 percent at the start of 2020, and 96 percent through deposits. Regional expansion gathered pace in 2020, pointing to a new a decade ago. clamor to diversify banking presence. The International Monetary Fund forecasts Leveraging on new global digital trends, banks have that Kenya’s Gross Domestic Product could grow by 4.7 percent in 2021. It will reorganized their value propositions and are quickly tapping be notable to see how the industry dynamics play out in the year, continuing the into technology to meet their clients’ dynamic needs. Kenyan industry’s established resilience and vanguard role in shaping the region’s On the operational front, banks continue to mainstream vibrant banking landscape. flexible working models, designing strategies to create the best value for their customers and stakeholders. Kenyan banks made The most striking contribution to this digital entries into transformation journey for Kenya’s banking industry is plans COUNTRIES to support Persons With Disabilities to have a seamless IN 2020 banking experience. By the close of this month, banks will 4 provide roadmaps poised to set the stage for adjustments on their platforms and facilities in light of the recommendations of the Persons With Disability Report and Case Studies released by KBA in partnership with FSD-Kenya and inABLE. 4 Building Back Better also means learning from previous Number of Banks 4.7% challenges and designing strategies for a better future. It that were acquired in Projected Gross is exciting to note that the banking industry in Kenya is 2020 Domestic Product committed to promote inclusion for PWDs towards ensuring Growth in 2021 no one is left behind in the digital transformation journey. World Bank

CONTACT INFORMATION PHONE EMAIL Kenya Bankers Association (+254-20) 222 1704 / 222 4014 [email protected] VANGUARD Profile UP & ABOUT GUEST Digest Wasunna: Let More Women Role of Data In Have A Seat At Implementing Risk- The Table; They Based Pricing Are Capable BY Leaders LEMUEL After spending over a decade working in the banking sector, Elizabeth MANGLA Wasunna Ochwa believes a career in banking presents a positive challenge. Her most inspiring moments include creating a positive impact in the Risk-Based Pricing has taken centerstage in Kenya’s banking sector industry. Currently Director for Business Banking at Absa Bank-Kenya PLC, with the Central Bank of Kenya (CBK) championing the adoption of Ms. Wasunna Ochwa is no proponent for lowering standards to enable women pricing models by commercial banks. After the removal of interest ascend to leadership; they are capable leaders. rate caps, commercial banks were required to submit their loan pricing models to CBK for approval in 2019. How did your career in banking begin? As part of the intricate and involving approval process, CBK My first opportunity to join the banking industry was in Barclays Bank-Kenya, continues to engage banks on their pricing models which are now Absa-Kenya PLC. When I left college, I was lucky to get an opportunity to informed by bank capitalization, customer profile, business models work as an intern with the bank in Mombasa. among other factors. From your experience, what are some of the challenges that come with This ushers in a new dispensation where borrowers who a career in banking? pay their loans promptly will be rewarded for their good payment In the banking field, there is a lot that you need to learn which is a positive behavior. Borrowers who are late in repaying their loans or fail to challenge. A quote from Eleanor Roosevelt says you have to accept whatever honor their loan payments will be considered high-risk and will comes and the only important thing is that you meet it with courage and give access credit facilities at higher costs due to their high credit risk your best with an open mind because banking doesn’t just cover what you profile. Good payers will also be better positioned to negotiate see at the frontline. There is a lot more that goes on in the background and better loan terms while shopping for credit. so, the challenge is for you to open your mind, learn the different facets to Credit Information Sharing (CIS) plays a critical role in ensuring gain a wholesome view. This comes with another challenge. In the learning, credit providers mitigate information asymmetry and empirically you get absorbed sometimes challenging your work-life balance. You have price their credit facilities. Kenya has three licensed Credit Reference to find a balance in order to be wholesome, because only then can you give. Bureaus which offer tailored products and services focusing on What are some of the inspiring moments you have had in the course of risk management to their customers. Integration of payments data your career? and social media data enables financial institutions better define One of the things that really inspire me is the opportunity to positively impact customer segments and allocate capital more efficiently. people’s lives and businesses; to be seated in the SME and commercial Long gone are the days where a credit provider would do a Banking space and seeing it grow from an idea into a big business. The other binary check at the credit bureau to find out whether a borrower inspiration is meeting and interacting with different people, with different has been negatively listed or not. Credit information sharing has ideas and from different cultures. What I take from there is: how can I transfer had a negative perception since it had proverbially “denied” poor these positive ideas back home. payers’ access to credit and did not reward prompt payers. How can the banking sector support more women to take up leadership However, the times are changing, and the CIS mechanism roles? will be viewed as an enabler since credit providers will have the This year, the opportunity to celebrate women wherever they work – and visibility and confidence to appropriately price customers through especially in the banking industry – has been awesome. One thing I would credit decisioning premised on data whether credit, payments or ask the banking fraternity is to give women is a fair chance. The fact that social media data. Financial institutions need to realign their digital women are given a fair and equal chance at being the best that they can be strategies so as to leverage on the data economy. Data quality is one that I would recommend. They bring different positive perspectives in is and should remain a top priority for all stakeholders in the CIS decision making. mechanism since data accuracy, completeness, reliability and What would you advise young women who aspiring to be leaders in the timeliness will sustain the integrity of the CIS mechanism. banking industry? Credit providers with a high degree of data quality will When you come into an environment like this (banking), nobody expects you minimize on legal and reputational risks that have bedeviled non- to know everything. So, ensure that you have the basics i.e. you have integrity, compliant credit providers in the recent past. There have been great you are focused, and you are ready to do the hard work. Be inquisitive, be strides achieved in building Kenya’s credit infrastructure and banks ready to do over and above what you have already been assigned. Michelle are better positioned to implement CBK’s Banking Sector Charter Obama says don’t ever make decisions based on fear. Make decisions based through the first two pillars namely Consumer Centricity and Risk- on hope and possibility. Make decisions based on what should happen, not Based Pricing. what shouldn’t. The recently released draft of the Kenya National Payments System Vision and Strategy by the Central Bank of Kenya will in due Watch Podcast at www.vanguardnewsletter.co.ke time anchor open banking and usher in a new paradigm for data led products and services. Are you a banking industry professional who would like to share Mr. Mangla is the head of policy and compliance – at Credit Information about his or her inspirational professional journey? Write to us: Sharing Association- Kenya [email protected] We CELEBRATE the IMMENSE Leading CONTRIBUTION of in Ban king & Finance #ChoosetoChallenge

If you have a good attitude and demonstrate good ethical standards, then you have what it takes to be a good banker” - Nasim Devji, Group CEO & Managing Director, Diamond Trust Bank

As a leader, learn about the salient issues that define the culture of the organization. - Rebecca Mbithi, CEO, Family Bank

Be the leaders that adjusts the sail depending on the tides.” - Betty Korir, Chief Executive, Credit Bank

2021 International Women’s Day #AfricawomeninFinance