In the first round table I E&M-PwC Banking Forum, held on Thursday 18 April in Maputo, “ESG, Financial Inclusion and the Digital Transition in Mozambique from the Perspective of Systemic Banks” was the theme that brought together, for the first time, the CEOs of the three largest banks in the Mozambican interbank market. Standard Bank, BCI and Millennium bim, represented at the highest level, shared initiatives, debated strategies and presented action plans on the adoption of sustainability criteria (ESG), digital transition and financial inclusion in a debate that, in summary, showed an alignment of perspectives between the three systemic banks, although with different ways of approaching some of the issues facing the financial system globally. Watch the full video of the first round table at the end of the article.
ESG Adoption in Banking Institutions
The adoption of environmental, social and good governance (ESG) criteria by the main national banks is now a decisive and strategic issue for the entire sector. Bernardo Aparício, CEO of Standard Bank, began by highlighting the need for a “fair and equitable energy transition” for all, emphasising the role of the institution he leads in supporting “companies that contribute to the development of essential ecosystems”, and recalling significant projects in infrastructure and transitional energy that Standard Bank has financed, “as a result of its commitment to sustainable growth on the African continent”, he pointed out. You can watch the full video of the panel at the end of the article.
“We are aware of the importance of balancing environmental and social issues, so that progress in one sector does not jeopardise the other. With a presence in 20 African countries, we realise that the transition to sustainable energies must not hinder the development of these nations. Our commitment is to grow with the continent, fostering progress in Africa and improving the lives of its inhabitants,” he added, without forgetting the bank’s “commitment to significant transitional energy projects, such as natural gas,” of which it is one of the financiers. He also emphasised the continued support for projects in countries like Mozambique, Namibia and Uganda, “promoting an energy transition adapted to African needs”.
BCI’s CEO, Francisco Costa, emphasised “the importance of the bank’s internal and external initiatives” to promote sustainable practices, mentioning that, “Internally, we focus on our consumption and on rationalising the energies we use, namely the transition to renewable energies,” revealing that “solar energy pilots are already being implemented in some branches, which reflects a genuine concern and a conscious approach to these issues,” he said. On the outside, he assumed that, due to the bank’s size and impact on the economy, there is an influence for change, “which we already exert on our suppliers”, he pointed out, and then gave an example: “We have adopted ESG criteria in the procurement process, demonstrating the integration of these values into our daily operations”, he emphasised.
As a bank with majority European shareholders (Caixa Geral de Depósitos and BPI), he also spoke about the impact of European regulations on ESG targets, particularly on the carbon neutrality we hope to achieve in the coming decades. He also emphasised his conviction that “it is possible to leverage the economy and business by adopting ESG practices, rather than limiting it, through active collaboration with clients in integrating these practices”.
For his part, João Martins, CEO of Millennium bim, emphasised “the urgency of recognising and acting on climate change”, stressing the importance of reformulating organisational and consumption patterns to ensure sustainability. And he made clear the bank’s ambition “to be an agent of change, committed to adopting sustainable practices and actively contributing to the preservation of the planet”. He went on to outline some of the measures put in place by the bank: “we are introducing a new branch concept, similar to the one BCI is implementing, which incorporates the use of solar panels. The idea is for each branch to be carbon neutral. In addition, at our head office, we are investing significantly in installing solar panels on the large areas available, to substantially reduce our carbon footprint,” he explained.
Profit vs green investment? It’s not the way…
In recent years, there has been a latent issue in the global financial system related to ‘green’ investments, which are increasingly prioritised over projects that have an environmental impact, such as investments in extractive industries or oil & gas. Bernardo Aparício emphasised, in this regard, “the responsibility of banks to promote the energy transition, which is essential for achieving sustainability objectives,” he said. “Allocating capital to ESG-aligned projects is a business opportunity as well as a responsibility,” he said.
Francisco Costa, focussed on the synergy between profitability and social responsibility. “I don’t see a conflict between profit and green investment, on the contrary. The more profitable the company, the greater its capacity to contribute socially,” he emphasised. And he exemplified the bank’s commitment to sustainable practices, citing “the partnership with Biofund and the launch of a biodegradable card are reflections of our social responsibility DNA.”
On the Millennium Bim side, João Martins addressed the complexity and inevitability of the ESG agenda and wanted to make it clear that the two are not in conflict, quite the opposite. “We are facing an honourable but necessary change, which will require a profound adaptation in the way we all operate,” he pointed out. And he did not fail to express “the bank’s commitment to overcoming the challenges of sustainable development”, alluding once again to the need to “balance investments and sustainable practices”, not least because, he said, “this is not a trade-off, that’s not how I see it. It is possible to continue investing in the economy and its growth, in an increasingly sustainable way and with less impact, and there are more and more tools for this in the financial sector.”
Digital Innovation “Essential” for Promoting Financial Inclusion
Another of the major topics under discussion was, of course, the ongoing digital transition, where the leaders of the three largest national banks explained the strategies adopted by their institutions to capitalise on the digital age, expand the range of financial services on offer and, a point common to all, bring the greatest number of banking services closer and at the lowest possible cost to the greatest number of Mozambicans over the next few years. And the discussions centred on how digital transformation is opening doors to greater access to banking services, reflecting a joint effort to incorporate more Mozambicans into the formal financial system.
Bernardo Aparício, from Standard Bank, began by listing Standard Bank’s projects focused precisely on digitalisation and financial inclusion. “We are aligned with getting as many Mozambicans as possible into the formal economy and payment system, and at ever lower costs. There are several projects under development, such as the new payment system, real-time transfers and biometrics, which will start soon. These are projects that have been worked on in collaboration with the entire financial sector and the regulator, and which will continue to progress over the next few years to facilitate and reduce the cost of transactionalisation in Mozambique.”
Francisco Costa, from BCI, explained that the bank is involved in “an internal digitisation drive that focuses on the significant impact on data processing, building value through data analysis and reducing operational errors”. He continued: “These actions strengthen the banking business and have a positive impact on customers, increasing the bank’s ability to improve customer knowledge, segmentation and proximity, which makes the market more efficient and able to respond to customer needs.”
As for Millennium bim, João Martins emphasised that the digital strategy “is fundamental” in the bank’s operations and that, already today, “all decisions are made with digital in mind, because it is through this medium that financial inclusion is promoted”, he said, and then went on to say. “BIM’s digital strategy is divided into two main strands, external and internal. In the first, the bank has invested heavily in its mobile applications and other digital solutions, which is evidenced by the significant figures: more than 20 million transactions are carried out monthly via mobile, with peaks of up to 30 million. Robust systems are essential to support this volume of transactions and to offer the service that customers expect and need. As for the internal side, bim is committed to digitising and automating processes to achieve the level of service we want. Without this internal digital evolution, the bank wouldn’t be able to expand and serve a growing number of customers, which is what we want.”
Cyber Security: An Old Challenge, With New Threats Lurking. AI is Already Present and Will Be Part of the Future
Bernardo Aparício began by emphasising “the need for a thorough understanding of cyber risks” on the part of everyone involved, from employees to customers. “Knowledge is the first essential step in preventing cyber attacks,” he emphasised, before going on to point out that investment in cutting-edge technology and careful access management are another pillar of the bank’s defence strategy. “We continually invest in advanced technology, bringing us up to global standards, to protect our infrastructures and channels,” he explained.
Francisco Costa from BCI emphasised the importance of a robust business continuity plan. “In addition to investments in security, we prepare for the eventuality of attacks, and we know that they are inevitable, ensuring that the bank can restore operational normality as quickly as possible.”
Milenium bim, in the voice of João Martins, emphasised the emerging role of artificial intelligence (AI) in fraud detection and prevention. “AI is a valuable resource in our security strategy, improving not only fraud detection but also the provision of services,” he commented, without failing to point out the fact that, once again, “this type of attack is becoming increasingly widespread”, making it an inevitability.
On the last question of the debate, the rise of Artificial Intelligence and how it can be used by the financial sector, the three agreed, pointing out that there are still more doubts than certainties about its potential, which is only just beginning to be grasped by the banking sector and many others, but the doubt about how and when it will enter banking operations has been dispelled, and the three largest national banks are already using it, from customer support to analysing big data.
The first edition of the Banking Forum, a joint initiative of Media4Development, the Mozambican publisher that owns Economia & Mercado magazine and the Diário Económico and 360º Mozambique portals, in partnership with the PWC consultancy, had as its theme “Banking and the Challenges of ESG and Digital Transition in Mozambique”.
The first edition of this Forum took place in a context in which the emerging challenges of ESG (Environmental, Social and Governance) and digital transition and transformation are central to Mozambique’s Sustainable Development and brought together, publicly and for the first time, the main CEOs of some of the largest national banking institutions – BCI, Standard Bank, Millennium bim, Access Bank, FNB and Nedbank, as well as the Mozambican Banking Association.
Watch the full video of the first panel here:
