Applied Research Paper:

A CONCEPTUAL STUDY ON THE PROBLEMS AND CHALLENGES OF DIGITAL

BANKING IN NAMIBIA

HP-GSB STAMP

I declare that this assignment is my own work. I further declare that where material has been
used from other sources, whether by paraphrasing or by direct quotation, it has been fully
acknowledged and referenced. I have retained a copy of this assignment for my records.

Student’s Signature:…………… Date:…………………..

SURNAME: Mabuku
FIRST NAME: Ammon Mwiya
EMAIL ADDRESS: giftmabuku@gmail.com
STUDENT NUMBER: 212001574
COURSE TITLE: Master of Business Administration /Cohort9
MODULE TITLE Information Systems Management (Code: ISM911M)
MODULE FACILITATOR: Prof. NM Ochara
EMAIL ADDRESS: nochara@nust.na
ASSIGNMENT DUE DATE: 24 October 2022
Contents
ABSTRACT....................................................................................................................................ii

Introduction......................................................................................................................................1

Case Context Analysis.....................................................................................................................3

Research Background..................................................................................................................3

Problem statement........................................................................................................................3

Digitization Instead of Digitalization...........................................................................................5

An evolution from ancient banking systems................................................................................6

Business Model of the Organization................................................................................................7

Value Creation.............................................................................................................................7

Value Delivery.............................................................................................................................9

SWOT Analysis & Business Model Innovation for Namibia’s Digital Banking......................13

Strengths.....................................................................................................................................13

Threats........................................................................................................................................18

Organizational Architecture for the Proposed Business Model....................................................19

Operations..................................................................................................................................20

Coordination...............................................................................................................................20

Delivery, Direction and Control.................................................................................................21

Planning & Intelligence and development.................................................................................21

Policy or Identity........................................................................................................................22

Conclusion.....................................................................................................................................22

Recommendations..........................................................................................................................23

Reference.......................................................................................................................................25

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ABSTRACT
Despite the fact that the acceptance and growth rates of digital payments have the desire for cash
has recently reached substantial levels, and it still exists today and still continues to grow
globally in both wealthy and emerging economies. The Namibian Financial System (NPS) is
essential to promoting Namibia's economic development and growth. A NPS's modernization
such as digitalization is an ongoing procedure, and we keep going to see fast accelerations in
major changes to national worldwide payment systems, and Namibia is no different. Security and
compliance are two of the largest digital banking concerns ever, though using digitalization to
speed up client communications.

A top priority should be given to digital security. The significance of installing efficient yet user-
friendly controls on social messages cannot be emphasized in a sector where trust is essential.
We've been hearing a lot more lately about global digitalization and related processes. Therefore,
digitalization is already a significant component of contemporary trends. This research article
will cover the key aspects of digitalization, digital transformation, and its effect on Namibian
banks' financial services. The paper also focuses on the beginning of a new digital era in
financial markets and the requirement for the regulator to change its strategy over time. It has
been looked at how regulators are forming the reality of working with larger organizations and
areas, the necessity of analysing larger databases, and the significance of making full use of
digital opportunities for more effective performance of their functions. The blatantly
advantageous uses of new technology solutions are also covered. Therefore, the potential for
modern technology It is highlighted that developments are taking place to make it easier to hide a
variety of illicit activities, including tax evasion, fraud, and money laundering.

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Introduction
Information and communication technology (ICT) is recognized as the most crucial sector for the
socioeconomic growth of Namibia in the government's Vision 2030. Namibia's ICT industry is
often underappreciated, and its importance to achieving national development goals is also
stressed. The National Development Plan Four (NDP4) classifies the information and
communications technology (ICT) sector as a fundamental enabler to pursue three NDP4
developmental goals, including economic growth, employment creation, and income equality.
Due to the financial support it offers to other sectors and the subsequent encouragement of
capital formation, the banking sector is known as the sector of development of all other
industries. With the digitization of financial systems come new opportunities as well as
difficulties and game rules for the global market. The nation's ability to adjust to changing
circumstances heavily influences its position on the international scene. A digital banking system
offers new advantages that may allow for a reduction in daily physical transactions. Developing
nations such as Namibia have the chance to modernize their economies and support the growth
of the digital economy. The hurdles that poor countries must overcome include a lack of access
to the most recent technology, advanced telecommunications infrastructure, low computer
literacy, as well as various cultural and socioeconomic variables. On the other hand, it is feasible
to "skip" a few processes and efficiently adapt to the needs of the global market provided
banking policies are clear and plans and objectives are also clear.

Many developing nations are unable to fully meet the needs of the digital economy, despite the
high added value that these economies are known for. The global adoption of technology and the
digital transformation are both being accelerated by the COVID-19 pandemic. Like other
industries, the electronic commerce sector is evolving quickly. This quickening of innovation is
improving how businesses in the financial sector trade with one another and how financial
services are dispersed and provided to customers. The core of the financial system has always
been payment systems as we know them, although interest in them has recently increased. Tech
start-ups and big technologies, or businesses with a significant digital footprint but whose
fundamental business models have so far been restricted to non-financial activities, are
disrupting the traditional bank-based payments environment. To ensure that the public has access
to pertinent information, decision-makers like the Ministry of Finance and the Bank of Namibia

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regularly seeks to engage in a variety of ways with all stakeholders, including businesses and
consumers, inside the National Payment System (NPS). Namibian banks offer their clients a
variety of digital banking services, including National Electronic Fund Transfer, Real Time
Gross Settlement, Debit and Credit Cards, Mobile Banking, Inter Bank Mobile Payment System,
and others. There are various issues and challenges in the implementation of digitalization to
banking within Namibia such as Investments, Digitization Instead of Digitalization, Senior
Management's Lack of Understanding of The Necessity of Digital Transformation, Synergy with
the Bank's IT Team, An evolution from ancient banking systems and To buy or build the banking
system. In this context, the analysis of the unique characteristics of the banking industry has over
time reflected a technical impact on the industry, which is especially apparent now that the
notion of digital banking is receiving more and more attention.

Figure 1: Digital Mobile Banking

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Case Context Analysis
Research Background
Nuuyoma (2020) maintains that Electronic (internet and mobile) banking is inevitably the future
way of banking across all market spectrum in Namibia. Although most business categories have
migrated to digital banking, people around the country still operator or are still utilising the
conventional and traditional method of banking particularly those in the least developed area of
the country. Numerous aspects of life in Namibia have changed because of technological
advancement. This includes the evolution of traditional components, such as the manner that
banking was once performed to the present-day. This shift in banking development has
introduced new dangers and values to the banking industry that weren't previously present.
Digital banking is described by (Proctor ,2019) as the digitization (or moving online) of all the
traditional banking activities and programs services that were historically were only available to
customers when physically inside of a bank branch.

Although the necessary enabling infrastructures are in place, this advancement in Namibia's uses
of electronic banking is not yet mature, as evidenced by the fact that small and medium-sized
customers are not yet using it. These customer groups continue to use large amounts of cash and
in-person transfers to make payments to third parties while neglecting the current and practical
banking methods. Small and medium-sized firms are known to be the engines and sources of
economic growth, sustainability, and the generation of numerous job opportunities. The adoption
of electronic banking not only lowers the high cost of traditional banking, but also lowers the
high burden of cost spent by the bank in the form of overtime wage payments and bank process
efficiency. To avoid losing customers to recently established mobile payment operators, the
banking process is being diversified to change the paradigm from a high cost to an effective,
convenient, and affordable banking system.

Problem statement
The banks in Namibia are constantly crowded with clients who are primarily withdrawing,
depositing, and moving funds to suppliers, third parties, and employees. The objective to
introduction of digital and mobile banking technologies was to create another channel of banking
which allows clients to execute banking activities at their places which allow banks to save on
logistic costs (FNB Namibia, 2011). Every industry is digitizing, and the banking industry is

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working hard to cope. Although digital banking is becoming more popular today, it is good to
know that digital banking services are still facing several challenges. However, it should not go
without mentioning that there are some profitable opportunities in digital banking.

Republic of Namibia Ministry of Higher Education, Technology, and Innovation states that
majority of Namibia's payment systems are cash-based. Although the nation lags other
industrialized nations in terms of using digital payment systems, it is starting to become more
common. The expansion of cashless policies—systems that allow transactions to take place and
run without the need of money or banknotes—has enhanced Namibia's level of economic
activity. To increase the effectiveness of digital systems, banks should invest more in ICT
because doing so will increase their long-term revenue and boost Namibia's economic growth.
Namibia should also start a public awareness campaign to further inform the public on the
specifics of the cashless system, particularly with regard to web payments and cheque
transactions. This is anticipated to increase public knowledge of the issue and lessen any
potential opposition from the financial community, positioning the economy to gain from the
cashless policy.

Investments

One of the issues preventing the rise of digitization around Namibian banks is investment. When
a bank is implementing the active phase of transformation, the amount of investment needed to
see concrete benefits is roughly 10% of the bank's annual expenses. Normally, the active phase
lasts between one and three years. The level of investment may gradually decline in the future,
but it is clear to me that once the process of digital transformation has begun, it cannot be
reversed. It needs ongoing financial assistance. A large-scale bank transformation may be
hampered by the difficulties many IT directors have in justifying and receiving investments. The
decision to adopt an overly direct approach is one of the key errors I've observed here.
Shareholders often receive a breakdown of the related expenses, for which very few people are
typically mentally ready. By concentrating instead on metrics that indicate the gains the bank
will experience from investing in digitalization, you may avoid this: This may include the sum of
money the bank will save, an increase in productivity, etc.

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Digitization Instead of Digitalization
By making only cosmetic improvements to a bank, the business model cannot be altered. In a
similar vein, I don't think digitization can be used in place of digitalization. The main distinction
between these two concepts is that digitization refers to the development of a novel process or
product, whereas digitalization refers to the enhancement of already-existing processes and
goods. As a result, significant cost savings from digitalization may not occur. In many instances,
banks take the less difficult route and attempt to digitize already-established business operations
while marketing them as a breakthrough. People who support a company's digital transformation
should first consider streamlining operations. Effectiveness can be gauged by how much the
human element is removed from corporate processes.

Figure 2: The Digital Transformation

Senior Management's Lack of Understanding of The Necessity of Digital Transformation

Teigland (2018) concludes that, the current transformation landscape has increased the pressure
on businesses and their organizations to change their technology, systems, traditional ways of
working, and approaches to solutions. This has resulted in quicker changes that involve more
than just the formal organizational structure because they involve many stakeholders. Of all of
these challenges in this research, this one is arguably the most challenging. My observation is
that few managers recognize or even care that digitalization is the "locomotive" of our age.
However, given that projects are costly and the "don't touch it; it works" mentality is still
prevalent, why should they make any changes? Lack of comprehension results in either minimal
or no support for people in charge of the transformation programs. It is hoped that at least one
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board member will be a vocal proponent of digital transformation. The management of any firm
must strike a balance between the shift in technology and the internal organizational and human
capital if it is to successfully guide the company through major transformation. It is very
important to thoroughly research these barriers because they are one of the major obstacles that
large corporations confront when undergoing digital transformation.

Synergy With the Bank's IT Team

There are many difficulties related to digital transformation, and there is no one right approach to
take. Investing in the right people, having skilled staff, and getting top-level assistance are some
of the issues you could encounter. The largest and most challenging problem, though, is how to
persuade your colleagues to adopt a change-agent mentality.

An evolution from ancient banking systems

Many individuals are unaware that the majority of financial systems still employ the old
conventional methods. This has been in use for more than 60 years and was not designed to work
with the technology of the day. While the demand for seamless digital banking is growing,
upgrading these banking systems and installing suitable ones typically takes a long time. Old,
aged individuals or senior citizens highly prefer the old way of doing things meaning they do not
prefer learning the new banking method. In contrast to needing to speak with someone who
handles their needs for them, self-service options provided by digital solutions like mobile apps
let customers handle their own demands. Customers were able to access their accounts from
anywhere, without having to visit a real bank branch, thanks to digital banking during pandemics
and more people visited bank branches than before.

To buy or build the banking system

Some banks are frantically trying to adopt digital banking due to the high level of demand for it.
However, because they are unsure of whether type of system would function properly, the
majority of banks are not implementing digital banking swiftly. Some people prefer to buy these
systems because they wish to work with a tried-and-true system. Others favour having a system

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 customized just for them. Remember that each type of system has advantages and disadvantages.
Many non-financial organizations provide services that are quite comparable to what is
anticipated for digital banking today. For instance, social media sites like Facebook allow users
to transfer money right to a recipient's bank account. It is challenging for these financial
institutions to function because they are not constrained by any regulations, as is the case with
banking institutions. Social media sites, for instance, have a sizable fan following to begin with.

Ministry of Finance

Namibia Financial
Institutions Supervisory
Bank of Namibia (regulator)
Authority (NAMFISA)

Bank Windhoek Nedbank

First National Bank Standard Bank
Namibia
Business Model of the Organization
Value Creation
Under Namibia’s 5th National Development Plan (NDP5) vision, goals and objectives the
document speaks about value creation. The National Planning Commission (2017) states that as a
nation less than 30 years old, Namibia’s economy reflects its youth. Namibia’s industries had no
contact with the global market before independence in 1990. For this reason, a key challenge is
to develop products and processes that have high value in the global marketplace. This being
said, it references the fact of how digitalization should be taken into consideration. Furthermore,
The National Planning Commission (2017) concludes that, the upgrading of value chains will
help the country grow less dependent on foreign investment. By producing a value-chain
environment, the country will greatly increase its revenue by collecting taxes on income,
production, and gross operating surplus. This in turn, will produce both the resources and the

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impetus for enhanced investments in education and training. The following are digital value
creators:

Availability of a digital ID for all people based on global best practices

By encouraging greater inclusion across the nation, which increases access to banking services,
increasing formalization, which helps decrease fraud, protects rights, and increases transparency,
and encouraging digitization, which fosters efficiencies and user-friendliness, digital ID holds
the potential to enable economic value creation for each of these three groups.

Digital innovation opportunities in the payment’s ecosystem (e.g., e-money, QR, 2D, Tap-
and-Go, NFC, biometric, cash-out with and without purchase etc.)

In some situations, QR code payments may eventually be replaced by facial and fingerprint
biometrics, which are currently receiving a lot of attention in the payments industry. This
scenario goes beyond simply authenticating or authorizing a card or QR code transaction using a
biometric.

Figure 3: QR, 2D, Tap-and-Go

Political and economic stability for sound financial sector services

Financial stability is crucial because it indicates a healthy financial system, which is crucial since
it boosts confidence in the system and prevents occurrences like bank runs, which can shake up
the economy. A stable financial system also conveys to the public that their money is handled in

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a way that won't put it in undue danger. Funds, including pension savings, should pay particular
attention to this. An early warning system for relevant indicators is one of the components of
financial stability. Another is stress testing, which is used to stimulate and prepare for potential
genuine system pressures. The information above aids regulators in keeping an eye on the system
and planning strategies to mitigate any stress that may be present or become apparent.

Value Delivery
Acquisition of new customers is cheaper and easier

Customers need banks just as much as banks need customers. As a result, Namibian financial
institutions can no longer be indifferent to how they draw in customers for their financial
services. The good news is that you can draw these clients to you more affordably and easily.
The Internet offers excellent opportunities for communicating with these potential customers
directly and on their devices. This makes it simpler to influence them, which in turn increases the
likelihood that they will approach you. The new word of mouth is known as content marketing.
With both prospects and consumers, it fosters trust and raises engagement.

Enables Innovation & Adaptability

Banking institutions are better equipped thanks to digital transformation to respond to

technological and business developments and expand their efforts for incremental gains. An
institution can only satisfy the needs of the new generation of clients if it can modernize itself.
Modern digital technology has completely changed how banking has traditionally been done.
Many new avenues for banks to connect with their consumers have been created with the
introduction of shopping portals such as Namibia’s Ohlthaver & List portfolio of companies
which introduced DotDune which intends to champion local businesses and brands by offering
them a reliable platform to conveniently sell their products online, whilst giving consumers a
fresh, dynamic online marketplace which delivers their purchases straight to their doors., social
media platforms, and integrated mobile apps. Banking organizations must embrace this new
digital world by embarking on a digital transformation.

Personalized Offering

Namibian financial organizations can now better understand what customers genuinely desire
thanks to digital transformation. Instead of relying solely on speculation, they can tailor their

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financial services and offers to the needs of their clients. With the help of individualized offers,
new creative technical advances enable banks to increase client engagement. For example,
Standard Bank Namibia offers a complete range of personal banking products and services. They
have solutions to fit all customer financial needs, from bank accounts and credit cards to loans
and insurance. Their advisors can help guide customers to make wisest financial decisions, to
secure both your money and your future.

How does Banking System Captures Value?

First, there is a direct correlation between the productivity of the economy and bank efficiency.
Assets in the banking sector make up a large share of total production. For depositors, banks
offer liquidity, payments, and safekeeping. They then direct these funds toward investment and
working capital needs. Additionally, banks are expected to take on a specific role in financing
small firms because they frequently have very limited access to other external sources of
funding. Additionally, banks are crucial to maintaining a payment system that works well and
permits the free movement of money and resources to be put to use where they will yield the
greatest results. According to Assessment Report on Namibia (1994) and the Namibian
Newspapers (July 7, 1999, p.10) there are currently five commercial banks in Namibia, with 127
branches and a total asset worth of around N$ 8281.1 million as of December 1998. The First
National Bank, Standard Bank, Commercial Bank of Namibia, Bank Windhoek, and the newest
member, City Savings, and Investment Bank, which only recently boarded the train in 1994, are
among them.

Operating Asset Ratios (OAR)

Bank incomes and expenses are compared to the average total assets using operating asset ratios.
The primary benefit of OAR is their direct comparability to the interest rates charged on loans
and deposits. However, it must be emphasized once more that the usefulness of this ratio may be
impacted by banks' varying capital structures, business combinations, and accounting processes.

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Table 1 contains the ratios calculated for Namibian banks. Although the period 1996-1998 is
rather short for any meaningful trend analysis, the results on table 1 allow for some tentative
deductions. Generally, gross margins defined as the sum of interest margins and non-interest
income is high for all banks covered by the study ranging from 7.2% to 11 %. High gross
margins often correlate strongly with high interest margins and high operating costs.

Table 1

Banks/Years Interest Non- Gross Opera- Loan Total Pre-tax After

Margin int. Margin Loss Costs tax
ting Income
Income Prov. Income
Costs

FNB 7.2 2.8 10.0 4.3 1.3 5.6 4.3 2.9

96 7.5 3.0 10.0 4.1 1.6 5.7 4.4 2.9
97 7.1 3.9 11.0 4.5 1.6 6.1 4.8 3.0
98

SBN 5.4 2.6 8.0 4.4 0.4 4.8 3.1 2.1

96 5.8 2.6 8.5 4.7 0.4 5.1 3.3 2.2
97 6.3 3.0 9.4 4.7 1.0 5.7 3.6 2.1
98

CBN 4.8 4.8 9.6 3.8 1.1 5.0 1.8 1.3

96 5.0 2.1 7.2 3.7 1.2 4.9 1.7 2.3
97 4.3 2.4 6.8 3.6 1.0 4.7 2.0 2.0
98

BW 6.0 6.0 12.1 5.4 0.7 6.2 2.9 1.9

96 6.5 3.1 9.7 5.4 0.8 6.2 3.5 2.3
97 6.1 3.0 9.1 4.7 1.0 5.8 3.3 2.0
98

CSIB 8.9 0.8 9.8 7.2 2.3 9.6 -13.3 n.a.

96 16.2 0.5 16.8 5.1 4.5 9.6 -6.4 n.a
97
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 98 12.8 0.6 13.5 5.4 16.4 21.8 -8.3 n.a

Source: Annual Reports of various banks

SWOT Analysis & Business Model Innovation for Namibia’s Digital Banking
Strengths
This section represents the responses from the questionnaire that were compiled to get the matrix
below.
Table 2

Variables Modalities Frequency Percentage

Strengths Availability 6 10.98%

Save time 10 30.41%
and efforts
Low cost 9 18.37%
Accessibility 2 12.24
Made 20 28.00%
shopping
easier
Total 49 100%

Availability

The availability of the services anywhere is the key strength, with a percentage of 10.98%
according to the findings in table 2 Some consumers see banking digitalization trends as
beneficial because they will save time and effort by not having to visit the bank and pay
commission. Namibia has experienced such economic progress both domestically and globally
thanks to banks. This growth has been aided by supply and demand, which has also increased
financial trade, financial stability, and financial security. Additionally, it contributes to rising
employment and a decline in global poverty. Digital banking has never been simpler. Without
entering the branch of your bank, you can deposit checks, pay bills, and apply for credit cards.

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However, you'll probably still need to schedule a meeting with a financial advisor if you want
more "in-depth" services.

Save time and efforts

The digitalization of banking in Namibia will help with the reaching out to groups of individuals
who aren't covered by financial institution branches, particularly in far-off places that are
challenging to connect to the internet network. Furthermore, with the questionnaires result of
30.41%, the fact that mobile banking is a lot faster choice is another way that it saves your
client’s time. The banking consumers are no longer in need to set aside a specific period of time
each day to make payments or deposit checks. They can do more by pressing a few buttons on
their mobile device than they can by using their computer's keyboard or speaking to a contact
centre agent.

Low cost

Another strength is that digitalization of banking can increase government financial knowledge
and enable individuals to access financial services swiftly, affordably, and easily. Investors in
Financial Technology, however with a 18.37%, might benefit from the profits made by the
company. Due to the ease of access to financial or capital sources, enhancing community welfare
is of utmost importance.

Accessibility

Customers should consider the services' accessibility as well. For instance, mobile banking
applications offer a variety of simple-to-use services, and these days, most people prefer using
their phones to computers. The capability of reaching populations that are not served by
financial institution branches, especially in far-off places where the internet network is
challenging to access.as it its depicted in the Metrix analysis it only covered 12.24%.

Made shopping easier

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With payment mechanisms becoming increasingly linked with online buying platforms, online
purchasing has become a piece of cake. Online payments have benefited greatly from internet
banking with a sufficient share of 28%.

Weaknesses

Table 3

Weaknesses Network 10 28.40%

difficulties
Lack of personal 7 6.00%
relationship
Shifting banking 5 12.52%
habits

Security risk 22 50.00%

Continuous 2 3.08%
Updates

Total: 46 100%

Network difficulties

The greatest drawback which most of the banks across the nation is facing, according to 28.40%
of the respondents, is network issues; due to Namibia’s poor internet connection, people have
trouble connecting and completing their purchases. People concurred that Namibia offers few
services and that they are not well informed about services. Namibia runs the danger of
encountering service and technology outages whenever we utilize the internet. Your ability to
access your accounts may be impacted by system stability and effectiveness if your connection is
sluggish or unavailable. Similar to this, bank servers are still susceptible to both intentional and
unintentional outages, no matter how advanced the technology. When a system is down, users
cannot conduct transactions or make payments, and security worries regarding data and funds
start to surface.

Lack of personal relationship

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With a 6.00 %, It can be challenging to satisfy more complicated consumer needs only through
digital banking. Many people around the country miss the advantages of maintaining a close
relationship with their bank, even though bankers can frequently make difficult banking
situations easier to navigate. Customers may more readily assess their alternatives and find
solutions that fit their needs when they have an in-person banking connection rather than through
self-service. A combination of internet banking for routine transactional needs and one-on-one
interactions with bank employees to assist consumers in finding the best solutions for their
overall banking needs would be the ideal situation.

Shifting banking habits

According to Mitham (2021), Online banking usage has seen a surge during the pandemic. In the
middle of social distancing practices, contactless solutions have seen an increase in digital
banking usage. In 2020, contactless transactions will climb by 40% globally, according to
Mastercard. The need for fully digital, contactless banking solutions will keep rising as
consumers transition to the digital world and businesses start to expand their e-commerce
capabilities. Banks must maintain the relevance of their product offerings in light of the evolving
patterns of digital banking. With a 12.52% lining It’s up to marketers to make sure that clients are
aware of their bank's comprehensive product offering when they add new online banking
features such as Ewallet, bluewallet, boosting their online banking experience and educating
them about the many advantages of doing their banking online.

Security risk

Due to the inherent worries that are typically connected with online banking, security is one of
the biggest hurdles for online banking marketers. Despite the fact that financial systems are built
to be nearly impenetrable, cyberattacks and fraudulent conduct nonetheless happen on a regular
basis. However, users frequently are unaware that their online behaviours may be endangering
them. fraudulent bank transactions use mobile browsers and applications. Fraudsters take
advantage of users' lax privacy practices. People are more susceptible to internet attacks like
login credential theft and phishing, which may result in fraudulent bank transactions, when they
use weak passwords and unprotected networks. From the results, we can infer that compared to
network issues, security is just 50.00 %, which indicates that people have faith in the system.

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Continuous Updates

Frequent changes & adjustments to the bank’s website & delivery channels that require re-
familiarization & in some cases re-registration & documentation. Can be difficult for clients to
get familiarized with the bank’s website & e-banking channel – each bank has its own unique
website & methods. Furthermore, Might require lots of paperwork & procedures for registration
& set-up, such as documentations & power of attorney to spouses beyond what is required for
traditional paper-based dealings. These updates accounts to 3.08%.

Opportunities

Opportunities Enhanced Services 12 15.77%

Partnerships 15 10.74%

New Customers 17 25.00%

Major Banking 7 8.44%

Innovations

Increased Protectio 25 40.05%
n

Total: 76 100%

Enhanced Services

At 40.77%, With the access that digital banking offers, you may interact with your consumers in
novel ways. This not only improves the customer experience, but it also gives banks new
opportunities for profit. For many people, the process of getting a loan or creating a new line of
credit, for instance, might be scary. You may assist your clients in finding the best option for

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them while they are at home by providing information on several options on your website and a
way for them to apply online.

Partnerships

Banks are collaborating more often with fintech firms and outside apps. This is a win-win
situation for both parties because it allows your consumers flexible money management and
enhances the user experience without requiring the bank to completely redesign its system.
Additionally with a 19.74%, it offers stability and a chance for the businesses to attract new
clients. These kinds of partnerships can also assist you in connecting with the potentially
profitable bitcoin sector, which will be highly valued by some customers.

New Customers

Most people today anticipate using digital and mobile banking, especially younger people who
might be creating their first account. Offering a seamless and user-friendly banking experience
on your app and website, as would occur in traditional banks, is now essential for attracting these
new consumers. Your digital banking system can assist you in gathering data on emerging trends
in addition to drawing in new customers. This data can then be used to forecast emerging trends
and technological improvements in the banking industry and the economy at large.

Major Banking Innovations

Major banking innovations, better user experiences can be provided by banks that embrace the
digital world than by those that have not. Digitally enabled banks can provide their customers
with round-the-clock access, remote check deposits, and mobile payment options. Before the
advent of digital technology, this kind of accessibility was unimaginable, and it is now
increasingly necessary for ensuring client pleasure. Increased Protection, although technology
has the potential to introduce a number of vulnerabilities, it may also be used to better protect the
data of your consumers. Recent years have seen a rise in the use of biometric security, with face,
voice, and retinal ID becoming more and more common.

Increased Protection

Although technology has the potential to introduce a number of vulnerabilities, it may also be
used to better protect the data of your consumers. Recent years have seen a rise in the use of

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biometric security, with face, voice, and retinal ID becoming more and more common. You may
give your users a safe and secure customer experience by streamlining your risk and compliance
operations with the aid of artificial intelligence (AI) and computer automation.

Threats
Threats Networking threats 54 40.77%

Reputational 5 6.48%
Threats

Legal threats 13 13.05%

Other Risks 2 2.6%

Increased Protectio 4 33.1 %
n

Rising Expectations 3 4%

Total: 76 100%

Networking

The rate of network disturbance is 71%, which is a significant problem that could lead to a
customer loss. Most consumers are unaware of the value of particular system functions, which
prompts the Bank to develop innovative technology. Customers may choose to switch to another
bank as a result of the market's fierce rivalry brought on by the innovation of services.
Cybercriminals have pounced on the fact that more software systems and data are being housed
in the cloud, making cloud-based attacks one of the most pervasive cyberthreats to the banking
sector. In order to prevent damaging breaches, banks must make sure that the cloud infrastructure
is configured securely.

Reputational Threats

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Any country's reputation is extremely important. When it comes to electronic banking, a bank
runs the danger of losing its reputation if it doesn't carry out essential tasks or operates
inconsistently with consumer expectations. This eventually results in a reduction in funds or
clients. A system or product not performing as expected, serious flaws in the system, security
breaches (internal or external), misleading customers about the procedures and policies of using
e-banking, certain communication problems that prevent the customer from accessing his
account, etc. are a few causes for this risk.

Legal threats

There is a legal risk if there is a violation of laws, rules, or established practices, or when the
legal rights and obligations of any party to a transaction are unclear. Because the practice of e-
banking is still relatively new, many laws and regulations are unclear. The legal danger is raised
as a result.

Other Risks

Other dangers of e-banking include credit risk, liquidity risk, interest rate risk, market risk, etc.,
much like with traditional banking. However, because e-banking uses electronic channels and
has no physical borders, these risks are heightened. All of the problems listed above could be
brought on by design faults, inadequate technology, careless staff members, and unauthorized
system access (intentional or not). For a secure environment for conducting business, banks must
employ the appropriate technology, systems, and access controls.

Rising Expectations

The modern customer demands a high level of personalisation and convenience from their
banking experience because they are smarter, savvier, and more educated than ever before. These
elevated expectations are significantly influenced by shifting customer demographics: Each new
generation of banking customers has a greater natural awareness of technology and, as a result, a
higher expectation of digitized experiences. Based on this pattern, banks should anticipate that
upcoming generations will be even more tech savvy and committed to omnichannel banking.

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Organizational Architecture for the Proposed Business Model
Many established banks were up until very recently concentrated on a digital transformation that
would move their existing structures and services onto a digital infrastructure with an intuitive
user interface. They saw this as the only way to compete with banks in the country, which were
providing traditional banking services and products while utilizing a more user-friendly digital
strategy that curious clients were willing to test.

Banks accelerated their digitalization schedules as 2022 brought in a new decade and new,
unanticipated problems, but most did not revaluate their overarching objectives or business
strategies. They persisted in bringing their current value chain and business model online. That
strategy is now antiquated. Digital-only competitors are rapidly inventing and redefining the
rules. The longer banks stick with their classic vertical-integration approach, the more likely it is
that consumers will defect to more progressive rivals. The conventional form of digital banking
available today can help banks lower costs and increase efficiency, but capturing future growth
requires going beyond digitalization and taking into account a variety of innovative business
models

However, some incumbents have not yet addressed the considerably more complicated ways in
which the financial sector is shifting. Banks across the nation, including Nedbank, Bank
Windhoek, First National Bank, and Standard Bank, are aware that the biggest obstacle to their
digital transformation is cultural change. Although cultural change requires time, these banks
believe that a new organizational structure might accelerate the digital transformation since it
makes it easier for workers to adapt to the correct work environment and ways of doing things.

Operations
Since Bank of Namibia (BON) provides a regulatory and supervisory oversight on banking
institutions, which is necessary to develop and promote a sound and stable banking system
around Namibia. A new generation of core banking system suppliers has arisen in recent years
that are better suited to meet the demands of digital banking. These contemporary suppliers often
give more flexibility, scalability, and interconnection at a substantially cheaper price, serving
both fintech start-ups and established banks. Modern core banking technology is cloud-native,
making it possible to scale capacity automatically, distribute software continuously, and instantly

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create new environments using code. Additionally, it provides a singular client view independent
of core financial platforms or data warehouses.

Senior management positions like unit heads, Chief Operations Officer and Chief Executive
Officer are not included in the operations system. The role of project managers here represents
the management at the operations level. An organization's operations can be broken down into
different implementations. Authentication, ATM/branch maintenance, and payment purpose
mapping are examples of banking services that could fall under this category.

Coordination
There is a requirement to coordinate the actions of a company with multiple operations. Without
this function, there would be overlap in activities, inconsistent operation. This could result in the
overall organization's inefficiency. As a crucial component of a bank's safe and sound operation
and a potential threat to the bank's risk profile, solid corporate governance is of particular
importance to supervisors. Because there is less need for supervisory intervention, well-governed
banks help to maintain an effective and economical supervisory process.

A supervisor may be able to rely more on internal procedures at the bank with good corporate
governance in digital banking. The importance of having the proper levels of authority,
responsibility, accountability, and checks and balances within each bank—including those of the
board of directors, senior management, and the risk, compliance, and internal audit functions—is
highlighted in this regard by supervisory experience. A clear and explicit corrective action plan
that outlines how the bank's financial situation will be improved is required. The ability to judge
whether or not more steps are required depends on the supervisor. The government, central bank,
resolution authorities, and other domestic and foreign regulatory bodies should be consulted or
informed by a supervisor through established channels. As the bank deteriorates, coordination
with the pertinent authorities should be increased.

Delivery, Direction and Control

The supervisory evaluation includes obtaining quantitative and qualitative data on the risks
facing the bank and evaluating the bank's capacity to manage or reduce these risks through
internal governance and control frameworks, as well as capital and liquidity resources. The
information should be gathered by supervisors using a variety of techniques, and they should set
up processes to support their conclusions about the bank's ability to reduce identified risks. Peer

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group reviews might be a useful tool for spotting outliers. By implementing these procedures,
supervisory authorities should be able to identify banks that are likely to become weak due to
flaws or inadequate financial resources in relation to risks. The main components of the
supervisory review process are presented in this section:

(i) on-site examination, off-site reviews and forward-looking supervision; (ii) surveillance of the
banking system and macroprudential instruments; (iii) contact with sources of information; and
(iv) supervisory evaluation systems.

Planning & Intelligence and development

Digital technologies are not the only thing that must be used to achieve digital transformation
Information flow, which is essential to frontend digital activities, is facilitated by the underlying
infrastructure in a significant way. Therefore, it's crucial to update your outdated infrastructure in
order to support digital platforms. Shorter release cycles can be achieved with continuous
integration and delivery using microservice design, APIs, and DevOps. Continuous improvement
can only be attained with an efficient innovation delivery pipeline founded on agile principles.
The pipeline should be so efficient that it can easily monitor shifting market trends, test novel
items, and support quick feedback mechanisms to iterate on products for improvements. This
cycle inevitably helps with on-demand service delivery, ongoing innovation, and ongoing
improvement, which speeds up time to market.

Finally, the business should have all digital capabilities, including strategy, culture, appropriate
technologies, money, expertise, and more, that are essential for a successful transition to digital
banking. Develop a great digital strategy by drawing lessons from past mistakes, implementing
the best methods now accessible, and more.

Policy or Identity
For the purposes of the policy model, the proportionality principle recommends that nations like
Namibia should gather sufficient data that are pertinent for the successful operation of the digital
ID system within the banking industry. The front-end functionality of banking activities should
be identical to that of banking services, and customers should be able to see them. They can
serve as a central office, branch offices, internet services, bank cards, ATMs, and POS devices,
for instance. Bankers should be able to see front-end banking operations through the admin
control panel and server from the back end. To reduce the burden on staff to execute everyday

22
operations, digital banks must use technology to automate administrative tasks and data
processing.

There isn't much of a distinction between digital banks and traditional banks in terms of services.
Both can provide banking services such loans, investments, transfers, withdrawals, and savings.
The form makes a difference. Digital banks can operate just with a head office and typically do
not require the presence of a branch office, in contrast to conventional banks, which have a
physical form in the form of a head office and branches. Additionally, other variances are
frequently discovered and are apparent from the benefits provided. Higher interest rates, lower or
even waived transfer fees, and reduced administrative costs are a few examples. Naturally,
subject to the relevant terms and restrictions set forth by the bank.

Conclusion
For managing one's funds, digital banking gives a better level of convenience. However, it still
poses problems for monetary stability and private information. Digital banking has led to the
compromise of many people's account information. Therefore, one should be mindful of the
hazards if using it for financial transactions. Knowing the risks and issues allows him to take
preventative measures for a safer digital banking experience. The digital banking system, which
allows for money transfers throughout the globe, is well-liked both domestically and
internationally. Both bank customers and bankers can benefit from this arrangement. It may
appear quite simple and straightforward to use physical cash as a form of payment. However,
there are significant risks for all users. When travelling with big sums of money, security is
necessary in addition to the expense. The time wasted traveling to the ATM, bank, mobile money
agent, or retailer to make a physical payment may have been invested in a valuable activity that
would have added value. Reliability, followed by security, communication, and responsiveness,
is the most crucial aspect of service quality. This demonstrates how digitization makes banking
services more accessible, convenient, and timesaving. To reform and prepare their clients for the
digitized banking environment, the banking sector still needs to make a lot of adjustments.
Although banks are making every effort to give their clients the finest security alternatives, there
are still several variables that compromise online consumer engagement.

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Recommendations
From the above conclusion that cash payment is a slowing processes to economic development,
its best to recommended that there is a need to adopt alternate methods of payments, and that
mass awareness to the general public should be conducted if the Namibian economy is to realize
the objective and benefits of fully adopting a cashless economy .The Bank of Namibia, which
serves as a liaison between banks in Namibia, maintains a working group that looks at various
problems with digital banking and offers solutions. Several of these suggestions are. All banks in
Namibia are required to adhere to a standard when considering security issues. In addition, this
standard ought to be created by the Namibian Banks Association. To ensure the confidentiality
and privacy of data, all banks must implement sufficient security measures. In addition, they
need to apply logical access control to put it into practice. Banks must create an anti-money
laundering (ALM) technology for reporting and querying to reduce the danger of money
laundering. Every bank must have a documented, unambiguous security plan. Banks must also
rigorously enforce physical access control. For the sake of the nation's rural and remote
locations, banks must implement a vast digital banking network. To create a culture of banking
free from fraud, banks must have a procedure for internally resolving complaints.

Furthermore, in order to attract and fully integrate Namibians to digitalized banking platform
through educational programs that feature benefits of the services, banking institutions in
Namibia should aggressively promote internet and mobile banking technologies through
increased marketing and promotion activities. The bank should create services in regional
tongues so that all the towns around Namibia can completely understand the features of banking
goods and services. Peer-to-peer payments are among the features of lowest value. However,
many banks now provide the option to send money instantly to anyone in the country through
your mobile banking app, which might be useful. Your mobile app may also provide features
like locating nearby ATMs, cardless ATM withdrawal, budgeting and tracking tools, and more.
Banks that prioritize providing a human touch across all of their digital channels should be
sought after by customers because they strike the correct mix between the human aspect and
digital automation.

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