With banks across Ethiopia set to face a growing number of challenges; Finastra, the financial software application and marketplace provider, explored how they could adapt their approach to ensure long-term growth during its latest event.

Finastra recently hosted the ‘Bankers Breakfast Forum’ in Addis Ababa, the capital of Ethiopia, to explore the challenges faced by banks in the region amid high inflation and interest rate environments, increasing volatility in financial markets, changing customer demands and increasing regulatory pressures.

The forum saw a number of senior stakeholders at banks attend, including C-suite executives, treasury directors and directors of risk.

Jigar Dedhia, head of solution consulting MEA, treasury and capital markets at Finastra

During a keynote, Jigar Dedhia, head of solution consulting MEA, treasury and capital markets at Finastra, highlighted that more volatility in Ethiopia’s FX market is expected this year, as the country’s debt poses significant risks to its economy and currency.

While positive sentiment remains, as banks in Ethiopia posted their highest growth rate in six years, inefficiencies could lead to missed revenue opportunities. Around 60 per cent of the value created by top-performing banks in a postcrisis recovery is generated within the first two years. Jigar emphasised that by investing in a treasury management system now, banks can effectively hedge their balance sheet risk and take advantage of the opportunity for growth.

A panel discussion followed the keynote, featuring Hassen Mohammed, VP of information systems at Hijra Bank, Makram Salloum, regional head of sales for Africa, treasury and capital markets at Finastra and Zerihun Girma, director of risk and compliance at ZamZam Bank. The panellists discussed how banks can redefine their treasury departments in the modern financial services landscape.

Jigar Dedhia took to the stage in Ethiopia to discuss banks
Jigar Dedhia took to the stage in Addis Ababa
Key takeaways

During the panel, the participants discussed how Ethiopian banks are facing more challenges in complying with complex regulations. For instance, banks must comply with the ISO 20022 messaging standard, International Financial Reporting Standard (IFRS) and directives to ensure effective liquidity management practices. As a result, costs and the time taken to implement relevant changes can be significant.

With this in mind, what solutions could banks in the region utilise to ease these challenges? 

One possible solution could involve the introduction of AI to analyse far greater amounts of financial data in real time. This could enable treasurers to make faster, more informed decisions. AI algorithms could detect patterns and anomalies that traditional methods would be more likely to miss, improving the accuracy of forecasts and reducing the potential for errors.

Panellists also highlighted the importance of automation, cloud and microservices, straight-through processing and analytics – all of which are critical components for modern treasuries. Banks in Ethiopia may require enhanced functionality, modular and scalable solutions for effective asset liability management and to adapt more quickly to new customer, industry and regulatory demands.

Finally, panellists covered the importance of collaboration. Through open finance and APIs, banks in the country can collaborate with technology companies to increase their speed of innovation and reduce the total cost of ownership when rolling out new solutions.

By tapping into an ecosystem of fintechs, they can quickly and seamlessly implement value-added services to future-proof their business and decrease time to value. Remaining competitive ultimately depends on a bank’s ability to provide great products, knowledge, technology and customer service.

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