Sleeping giant awakening in Somalia banking sector?


Somalia banking sector playing catch up with mobile money

Somalia has proven its resilience and it is now one of the most active mobile money markets in the world.

The country of 14 million people is overtaking most other African countries, even superseding the use of cash in regular transactions.

Convenience and safety are some of the reasons why mobile money has been so successful in Somalia.

The same, however, cannot be said of the banking sector since Somalia lacked a strong formal banking system for long.

As of 2018, an estimated 15 per cent of the population had a bank account. Despite this, mobile money has helped to expand financial inclusion, especially for vulnerable groups.

To overcome this challenge, Sombank has selected banking software company, Temenos Islamic Banking, to create innovative financial products to help with the country’s economic growth, leveraging the market-leading capabilities of Temenos Infinity and Temenos Transact.

The Temenos cloud platform will enable Sombank to reduce time and cost in deploying digital banking products designed to increase access to financial services to all Somali speaking populations. On the other hand, Temenos technology will enable Sombank to accelerate digital transformation and offer a unified banking experience to customers in-branch and online.

Read: Why the Pandemic made digitization in Africa a success

Last month, Temenos, announced that the privately owned Islamic bank in Somalia had selected the Temenos Islamic Banking solution in the cloud to accelerate its digital transformation and create innovative products to increase access to financial services in Somalia.

Sombank will implement the full front-to-back Temenos Islamic Banking platform combining the market-leading capabilities of Temenos Infinity and Temenos Transact. The platform’s scalable innovative technology provides superior features for Islamic banks to offer their customers Shari’ah-compliant products and the best digital experience. The cloud-native solution will enable Sombank to design and launch customized digital products more quickly while also reducing its operating costs.

Financial inclusion is core to Sombank’s mission. Temenos’ cloud-native technology will allow Sombank to create innovative digital products and offer lower-cost services that are more accessible to all Somalians via a mobile device, including current and savings accounts for individuals and small businesses as well as the latest mobile money products.

A recent report produced for Temenos by the Economist Intelligence Unit found that governments across the Middle East and Africa regions are increasingly embracing digital agendas to encourage financial inclusion and accelerate digital banking and a cashless economy.

According to the report, smartphone use expected to hit 74 per cent in the region by 2025 and the affordability of smartphones is a key driver in the development of mobile-only and mobile-first banks.

Read also: Islamic banking is poised for growth in Africa

Currently, Sombank serves customers via branch and online network and representative offices throughout Somalia.

Sombank will use the Temenos Infinity digital front office to create a unified customer experience for all financial and non-financial services across all channels, helping its staff serve customers faster in-branch and online.

Sombank CEO, Garad Khalif. Nor, stated: “We are excited to partner with Temenos to deliver next-generation digital experiences to Somalian customers. We selected Temenos because of its worldwide reputation, cutting-edge technology, and regional expertise in Africa. While we are a relatively new bank, Sombank has big ambitions to play a significant role in rebuilding the country’s financial infrastructure by improving access to financial services throughout Somalia and beyond. Implementing the Temenos banking platform in the cloud will allow us to achieve rapid time to value for new digital products and the cost savings to fulfil this vision.”

Jean-Paul Mergeai, Managing Director – Middle-East & Africa, Temenos, commented: “We are delighted that Sombank has selected Temenos Islamic Banking to advance its digital banking strategy. Temenos has a strong presence in Africa and a track record helping Islamic Banks with their digital transformation. For over 20 years, Temenos has been empowering the Islamic finance community with flexible and innovative Shari’ah compliant solutions that are specifically designed to improve customer experiences.”

The Shari’ah-compliant bank was approved by the Central Bank of Somalia (CBS) starting operations in 2019.

Sombank is a sister Company of Tawakal Money Transfer which gives it an added advantage in tapping into a large customer base which is already in place.

The bank has already made significant investments in fixed assets in Somalia in the form of Commercial Buildings developed in the Capital Mogadishu, Garowe, Galkacyo, Galdogob, Bosasso with many more such investments planned.

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