Lessons from Asia for South Africa's payments modernisation journey
Broadening financial inclusion has been a social, economic and political priority in South Africa since 1994, but we now recognise that meaningful inclusion goes way beyond ensuring someone simply has a bank account. The promise of digital channels and digital transactions is that they will truly democratise the financial system for the benefit of all. The potential impact of this kind of technologically-enabled transformation has been noticed at the highest level, with President Cyril Ramaphosa’s announcement of the establishment of the Presidential Commission on 4IR.
As part of the South African modernisation journey, an industry study tour was conducted to countries that would be of interest and relevance to South Africa. BankservAfrica and the Payments Association of South Africa (PASA) requested PwC to host the industry study tour to pursue learning from a regulatory level down to transition pathways, infrastructural and technological options selected and understanding how the markets respond to and interact with these new capabilities and products
Twenty-two delegates from across the industry took part in the tour to India, Thailand, China and Singapore. These countries were selected because they have similar payments modernisation goals and have achieved industry transformation. Payments transformation can be a critical lever to catalyse growth, and due to the rate of change in the digital world, a payments journey will continue evolving.
A large-scale rapid payments journey needs an immensely strong national imperative driven by government, in collaboration with banks, associations and fintechs. The national imperative needs to be supported by a regulatory framework that promotes and does not stifle innovation.
While clear sponsorship and funding is a primary enabler, the collaboration of participants is the fundamental cornerstone of success. Large-scale collateral benefits can only be achieved if all parties involved work collaboratively with defined roles and responsibilities.
Success is an ecosystem value play, and players need to focus and understand how their value proposition integrates into the ecosystem. They need to collaborate and be socially responsible and commercially viable, or risk being left behind.
Fintechs and non-banks can be leveraged to drive consumer adoption and have become larger than traditional banks. This is an ecosystem play with all role players, not just banks.
Twenty-three delegates representing banks, non-banks, system operators, regulators and industry associations were represented in the group that embarked on the study tour to learn from other countries that have or are implementing advanced real-time payments ecosystems. The countries selected for this tour were India, Thailand, China and Singapore.
The objective of the tour was to learn from these markets about how they overcame their challenges, embraced technology and benefited their respective countries and markets. Within each country, the delegation wanted to gain an understanding of the full payment ecosystem from customers and banks, to fintechs, payment system operators, technology providers and regulators. The Industry delegation wanted to gain an understanding of how each participant – whether bank, regulator, system operator or fintech – participated in the payments ecosystem, how they were regulated and what positive or negative elements should be harnessed or avoided to benefit the ecosystem as a whole, and ultimately benefit the people of the country.
Each country visited has similar socio-economic challenges, as well as similar payments modernisation goals to South Africa. Each has achieved great things in various aspects of their payments transformation process and have managed to leapfrog many more-advanced economies in their implementations in a very short time. This report outlines the learnings and proposed focus areas for consideration for modernisation of the South African payments eco-system.
Partner/Director, PwC South Africa
Tel: +27 (0) 11 287 0289