Bank customers are looking for a friction-free experience across all channels. This whitepaper examines the use of OTPs and what alternatives are available for banks looking to maintain high security, comply with regulation but also increase ease of use.

Telecom and fintech companies have been instrumental in highlighting the right of every African to basicfinancial services through their mobile phones. Even though large parts of the continent remainunderdeveloped in terms of having a functioning financial services sector, telecom companies have been producing solutions to millions of Africa’s unbanked mobile users to enable them to buy goods, transfer money, pay bills and access other banking services.

According to a 2016 BCG report, only 25% of Africans have regular bank accounts as financial service providers haven’t made the continent a priority due to the high cost to serve and low margins of traditional bankaccounts in Africa.

Financial services companies are increasingly seeking opportunities to be at the forefront of innovation. Historically, banks have been slow to translate consumer demands into technologies like paperless statements and mobile check imaging. However, they were quick to implement online banking and, today, customers who bank online are typically more satisfied as well as more cost effective to maintain. Banks have also responded to the shift in consumer demand for mobile banking on tablets and smartphones.

The next challenge facing financial services is how to address the rise of consumer trends evolving mainly outside of the industry. This paper focuses on three significant phenomena that will ultimately impact every bank.

Globally, many banks are embracing the innovation challenge in different ways. Some become the venture capitalists for start-ups who could become their innovation provider. Others set up in-house innovation labs, encourage employee innovation or join global accelerator programmes. The most recent trend is for banks and innovators to find each other in innovation eco-systems or networks, often facilitated by third parties. Most banks however, follow a multi-pronged approach.

This paper argues that banks need to include working with smaller fintech firms in their innovation strategy. Within the context of banks' legacy systems and the compliance driven regulated industry, smaller fintech start-ups (new and new to the industry) are appropriate and effective collaborating partners. It is perhaps the industry most suited to disruption from the 'outside' in collaboration with the 'inside'.