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Banks are the new slaves of technology

[vc_row][vc_column width=”2/3″][vc_column_text]$300 billion. Let me translate that into Kenya Shillings. Roughly, Kshs 30 trillion. Now let me put that into perspective. The Kenyan Government budget for the current financial year 2015/2016 is Kshs 2.1 trillion. So about 15 times that number. What is this $300 billion I’m going on and on about? That is the size of penalties that had been levied since 2010 to global financial institutions by June 2015 as reported by the Financial Times. These included fines, settlements and provisions for various levels of misconduct some of which is related to the global financial crisis of 2008. The culprits read like a who’s who on the red carpet to punitive pain: Bank of America, JP Morgan Chase, Standard Chartered, Citigroup, Barclays, Deutsche Bank, HSBC, BNP Paribas and on and on.

And the natural reaction for all these institutions is to tighten controls, seal loopholes, grow the compliance function and generally create enough bottlenecks internally to ensure regulatory compliance. The winners: audit and compliance teams who rule the roost over every single non-compliant new customer onboarding and new product approval process. The losers: the concept of the big, global monstrosity bank that straddles continents like a financial ash cloud. Compliance is expensive. Non-compliance is astronomically expensive. So it was with great interest that I listened to a talk by a renowned futurist called Neil Jacobson last week.

Neil paints a bleak future for the traditional global bank citing six reasons why there is a perfect storm in the global financial industry. First off, there is trust crisis. Even with pedigree board members, highly experienced (and paid) executives in management as well as world class operating systems and processes, many banks clearly can’t get the back end right. The chase for profit trumped controls many times. Secondly he cites the security and regulatory firestorm. I don’t need to harp on it as the number is clear: $300 billion and counting. Regulators are licking their chomps at the highly lucrative knuckle rapping that they have been undertaking. If nothing else, it’s a back alley way to raising more taxes. Thirdly is a technology tsunami. You don’t have to throw a stone very far today before it lands on a code writer, developing one app or the other as there are so many financial technology companies (fintechs) willing to throw money to anyone who comes up with the best app to help provide access to credit or money transfer. The classic thing is this: with the Internet, it doesn’t matter if that developer is sitting in a bedsitter in Kayole or a one bedroom flat in Silicon Valley. The one with the best solution wins. Visit iHub on Ngong road and see what I’m talking about. Facebook, as a matter of fact, is already running app competitions in Kenya. The demonetization of transactions such as matatu fare, paying for food at a restaurant, receiving payment for supplying milk or vegetables is very quickly democratizing the role of money movement beyond the traditional banking space. And banks are too clunky and too heavily regulated to make the quick changes that fintechs are able to exploit. Which brings me to the fourth reason for the perfect storm: an explosion of new, different and rude competitors who are not members of the “old boys club” (which requires academic and professional pedigree) and are alternative thinkers. At this point Neil introduced the audience to the acronym GAFA -which acronym derisively originates from French media – that stands for Google, Apple, Facebook and Amazon. None of which, with the exception of Apple, existed twenty five years ago and together virtually own the technology space. Three of these powerhouses got together in November 2015 under the auspices of “Financial Innovation Now”. Together with Intuit and PayPal, the other three giants Amazon, Apple and Google put together the coalition to act as a lobby that would help policy makers in Washington D.C. to understand the role of financial innovation in creating a modern financial system that is more secure, accessible and affordable. This is where it gets interesting as they twist the knife into the back of traditional banks, “Financial Innovation Now wants policymakers to understand how new technologies can help solve today’s policy challenges.” In other words, we need lawmakers not to be bottlenecks as we help sort out critical voter issues like access to financial tools and services as well as helping voters to save money and lower costs. Win-win for everyone, except the banks.

Once lawmakers start to understand the benefits of low cost, secure financial solutions that do not require deposit taking mechanisms, it is likely that they will apply a much lower prism of regulatory restrictions that are currently straitjacketing the financial industry. You don’t have to go far: look at the Mpesa functionality and the strict segregation of Mpesa funds from Safaricom deposits which was the regulatory compromise for accepting the service in the first place. Neil’s fifth reason for the financial perfect storm is that pressure from customers, staff, regulators and all stakeholders is growing. And his final reason was the ultimate challenge for all businesses beyond the financial industry: Customers are changing. A study presented at Europe’s Finovate 2015 showed that 30% of today’s workforce is made up of millenials, 85% of who want banking to be disrupted. Have you seen those young people whose eyes are constantly glued to their devices and would rather starve than not have data bundles? The solution is hand held and your solution had better dovetail into their solution.

Closer home, the impact may be less harsh. For now. But our homegrown financial institutions are morphing into regional powerhouses and it won’t be long before a few float to the top of the pan-African heap. The successful ones will be the ones that grow their customer base on the back of technological innovation rather than bricks and mortar. To quote Larry Page, one of the founders of Google: Companies fail because they miss the future.

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Twitter: @carolmusyoka[/vc_column_text][/vc_column][vc_column width=”1/3″][/vc_column][/vc_row]

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A different kind of hiring strategy

[vc_row][vc_column width=”2/3″][vc_column_text]There is nothing more daunting to a weekly columnist than a deadline hanging over one’s head and a dearth of excuses as all reasonable explanations have been utilized in the past. So I am just going to dive into an article I stumbled on The Huffington Post UK that demonstrates potential disruption in future hiring strategies. Penned by Lucy Sherriff, the article is titled “Ernst & Young Removes Degree Classification From Entry Criteria As There’s No Evidence University Equals Success”. It goes without saying that anyone reading that will sit up and pay attention as Ernst & Young (E&Y) is one of the Big Four global accounting firms and, according to the article, the fifth largest recruiter of graduates in the United Kingdom.

What has E&Y figured out that the rest of us haven’t? According to the article,
Maggie Stilwell, EY’s managing partner for talent, said the company would use online assessments to judge the potential of applicants. “Academic qualifications will still be taken into account and indeed remain an important consideration when assessing candidates as a whole, but will no longer act as a barrier to getting a foot in the door,” she said.
“Our own internal research of over 400 graduates found that screening students based on academic performance alone was too blunt an approach to recruitment.
“It found no evidence to conclude that previous success in higher education correlated with future success in subsequent professional qualifications undertaken.”

In addition to the quickly forgotten aviation college scandal, our back street forgers continue to churn out Nobel Prize winning copies of degrees that are bandied about loosely by job applicants. Delinquent university students brazenly get their dissertations and assignments written for a fee by academic hustlers arriving at a degree that is part figment of imagination, part luck and a whole lot of balderdash that will only be uncovered after the same delinquent student is mistakenly hired. Frankly speaking I have always wondered what it is that a university degree adds to a potential hire for a non-professional job. By professional I mean lawyer, doctor, engineer, architect, accountant and the like. In my former banking life, I worked with colleagues that were chemical engineers, doctors, civil engineers, computer scientists, art majors, political scientists amongst several other varieties of non-banking related degrees. You see, there is no such thing as a Bachelor of Banking degree. You just had to be numerate, literate and fortunate to land a degree in what was and still is perceived as a lucrative industry. It is only in the last 15 years when a degree became a minimum entry requirement into many of the banks. In Barclays particularly, I worked with many colleagues who had joined the bank straight after their A-levels. They were smart, experienced and highly professional individuals who had learnt everything about banking in exactly the same way that I, with my university degree, had learnt. By asking questions, by being given tasks, by making (horrendous and expensive) mistakes and by being sent for in-house training. Most importantly, they had one thing that I didn’t: institutional memory and good instincts that came from years of experience. No university can teach you that. It was also a great source of tension whenever a retrenchment rolled by, as they were the easiest to target once the “mimimum qualification is a degree” rule was applied.

The upshot of these ruminations is: not every job needs a degree. It just needs a numerate, literate and, in the fast paced and rapidly changing work environment that rules today, consummate user of technology. One who is not afraid to ask questions or posture about his university pedigree. One who has tons of good attitude and an aptitude to learn and one, I daresay, who scored a C+ and below in her secondary school exams. Why you ask? That student will spend her future proving that four years of studying cannot be crammed into eight weeks of exams the result of which are supposed to define the rest of her non-academic life. If you have any doubts pop into the public university nearest to you and sit in on one of the classes. Once you get tired of counting classes of more than 200 students that have one lecturer who is supposed to mark all their assignments and exam scripts, you will start to realize that perhaps that university degree isn’t the quality guarantee that you had in mind.

In other completely unrelated news, I watched with horror a news item a few weeks ago where traders in a market in Kitengela were having run-ins with locals. The bone of contention was the usual nonsensical tribal rhetoric of “you are not from here therefore you don’t deserve to be doing business here.” I’ve quipped my thoughts in rabid discussions about the “bubble” that is the Kitengela, Isinya and wider Kajiado County land frenzy. The number of family disputes that have already arisen from forged land titles by errant sons or land sales in exchange for motor vehicles that end up on stones as cars cannot fuel or service themselves are legendary. Kajiado County is (forgive me this newly found euphemism) a hotbed of bubbling land issues that are sure to surface during Kenya’s predictable election cycle. I sincerely hope that I am proved wrong, but Kajiado County will be in 2017 what the North Rift was in 2007 and Likoni in 1997. The number of “outsiders” who have legitimately bought land in the buying boom over the last eight years are bound to be the fly in the ointment of a rapidly declining local population who still need grazing pasture and who are painfully bearing the losses of squandered windfalls. I am reliably informed that other than land that is proximate to the main road, excitement has cooled for property in the hinterlands of Kitengela and Kisaju. Idle land, coupled with flat broke former landowners and some incendiary politicians: A recipe for a perfect political storm.

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Twitter: @carolmusyoka[/vc_column_text][/vc_column][vc_column width=”1/3″][/vc_column][/vc_row]

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Young Entrepreneurs That Walk The Talk

Entrepreneurship is the last refuge of the trouble making individual. ~ Natalie Clifford Barney

Ted* came to work in my team as an intern in early 2007. Back in those days, working in a financial institution such as Barclays was the alpha and omega of a professional career. He was a stroppy 22 year old, with hair that was at least 3 inches too long and shirts whose cuffs that were at least 3 inches too short of the wrist line. He was a breath of fresh air in an environment of monumental performance pressure underpinned by a staid, insipid office culture. About a month before the first anniversary of his employment, as he had successfully transitioned into a full time job, he came to talk to me about taking a few months off to tour the United States.

“What?” was my incredulous reply. “Yeah, I want to just go around the States, maybe I’ll go to Mexico as well. I just want to figure stuff out,” he said nonchalantly. “But what about your career, I mean, you’ll have this inexplicable black hole in your CV which can’t be addressed with the words ‘backpacked through the United States for the sake of it’ as a line item,” I whined. It didn’t matter. Ted left for the United States, and threw in a couple of months backpacking through Europe as well. When he got back, he decided to start up a business doing websites for companies, as he was now crystal clear that he never wanted to work for anyone again.

Last week, I spent a morning in the offices of Kevin*, a twenty six year old entrepreneur whose business it is to collect electronic data from the online community, make sense of it and then help businesses make strategic decisions by distilling the information into language that decision makers can understand. Kevin has travelled around the world in the last two years providing insights at global conferences as a leading voice on African social media tactics and tips.

For two straight hours I sat with Kevin and two of his team members, getting completely blown away by the quality of data that they are able to collate using people’s Instagram, Facebook and Twitter feeds as sources of what would look like rubbish data to the untrained eye, but is actually valuable information on the experience of products and services by Kenyan consumers. Kevin only has one permanent employee in his office. The rest of his team work on contract from wherever in Kenya that they can link up to a fast internet connection. His clients are multinationals and top tier local corporates who are now starting to understand the benefits of getting unsolicited real time customer experiences to improve on their product offerings.

In a classic serendipitous twist, Kevin’s landlord is Ted, who has now become the consummate entrepreneur. At twenty nine years old, Ted now has 26 employees providing web design, branding and social media marketing solutions to multinational and local organizations in the banking, FMCG and not for profit sectors. I walked through Ted’s offices, where young fellows with 5 inches of Afro, cuff less shirts, loud blaring music and a completely relaxed, colorful environment created extraordinary client solutions on large Mac computers. It turns out that Kevin needed space to set up his business, and Ted gave him a corner desk and unfettered access. “It’s all about how we work together, Kevin thinks differently and thinks big, as a result he has helped us on some of our work and we’ve done some projects together,” Ted told me later. In his playbook, having different people share his rented office space provides opportunity for getting different perspectives on how to do business. Paul is another twenty something entrepreneur sharing Ted’s space. “We liked his vibe and he liked ours so we gave him space as well,” Ted says of Paul. There is a refreshing openness in the way Ted operates with his sub-tenants and a strong culture of leverage from synergistic relationships within the workspace. His big break in providing customized Facebook pages for clients came through a famous Kenyan musician who had come to see his previous music industry production tenant. Ted and his team were trying out their new product and offered it to the musician who had nothing to lose. The marketing manager of a large FMCG multinational saw the page, loved it and commissioned Ted’s company to do one for them. The rest as they say is history as their highly visible work sold itself off its virtual platform.

There are many Ted’s and Kevin’s in Kenya. They have chosen to buck the trend that our education system has tried to force down our collective throats which trend says that cramming, passing exams, going to university and looking for a job is the ultimate route to Canaan. These young men, and the people that they work with are making a big difference in the way that their corporate clients are doing business and understanding a client demographic that is both fluid and fickle. They are providing a service on their own terms, not constrained by the astoundingly boring confines of office environments that stifle creativity.

For every Chicken-gate, Angloleasing-gate and Maize-gate tenderpreneur we have in Kenya, there are at least ten thousand young people who want to make an honest living doing what they are madly passionate about. They fight a system that has conditioned our society into thinking it’s all about passing a standard eight sieve into a smaller form four sieve into an even smaller university sieve that spits out graduates expecting to be absorbed into a small workforce. The chaff that remains at the top of the sieves is browbeaten into defeatism and a self-fulfilling prophecy of doom. I’m glad that Ted bucked the trend and walked out of employment despite my pathetic exhortations against his mad ideas. 26 employees are happier for it.

*Not their real names
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Twitter: @carolmusyoka