How regulations need to change to promote African cloud, bank services

Cloud technology can give a boost to financial services, helping Africa's huge unbanked population, but regulations are a hurdle. Here's what needs to change.

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Alex Ishchenko / Getty

Athough sub-Saharan Africa has a huge unbanked population, stringent regulations still hamper the ability of financial organisations to use cloud services to optimise their technology infrastructure.

Cloud infrastructure can contribute to developing countries' growth and enable access to financial services that play a key role in getting more Africans economically active, according to the World Bank. About 66 percent of the sub-Saharan Africa population does not have access to, or does not use, banks and other financial services, the World Bank said.

Regulations, however, limit innovative approaches to growth, according to a range of sources. Barriers to growth and innovation include poor technical knowledge of many regulatory officials; special taxes and licensing fees for certain services; corrupt practices among officials; and complex license procurement procedures.

By making better use of cloud technology, financial institutions could cut costs, improve efficiency across business units and geographies, and reach more customers, according to a recent report, Cloud Banking in Africa: The Regulatory Opportunity, from Genesis Analytics and Orange Business Services.

Cloud computing can change how financial service providers (FSPs) use technology by moving away from a model of consuming ICT products -- having to invest in hardware and software assets that require large amounts of capital that are then depreciated over time -- to one of consuming services, where the hardware or software is rented on a needs basis, according to the report. But regulatory regimes often stand in the way.

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