Investors Reward Companies That Highlight Digital Initiatives

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Digital technologies have the potential to transform a wide range of businesses, especially in traditionally non technological sectors. Motivated by the breadth of these digital transformations, we’ve done research  exploring how frequently they are occurring, what benefits they are creating and what impact they are having on financial performance. We’ve tried to answer three specific questions:

First, how extensive is the adoption of digital technologies by non-tech firms? We find that firms that are larger and younger, and that hold more cash and spend less on capital expenditures, are also more likely to go digital. Companies with weaker performance are going digital sooner, perhaps as a possible response to competitive pressures.

Second, what are the benefits of going digital? For one, investors seem to love it. Valuations of firms that go digital are 7% to 21% higher than those of peers. Moreover, firms that go digital also receive higher valuations on their earnings. Their price-earnings ratio is 3% to 9% higher, and they receive 30% to 90% higher returns per dollar of incremental earnings than firms that don’t disclose digital activities.

Third, how are companies faring as they adopt digital technologies? Surprisingly, we find little evidence of immediate improvement in financial performance. We find positive performance benefits only in terms of asset turnover (a measure of efficiency of use of assets), which increases by 3% to 9% over three years relative to peers, following the disclosure of digital activities.

However, we find no change in overall financial performance (measured by return on assets) and significant declines in operating margins and sales growth (lower by 14% to 42% and 10% to 30% respectively) when digital activities are disclosed. These limited benefits could be due to several factors.

One, the gains from digital activity take a long … Read More...

Inlaks, Temenos drive digital transformation in Vista Bank Group

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Inlaks, an ICT infrastructure and systems integrator in Sub-Saharan Africa has partnered with Temenos, a banking software company to implement the digital transformation strides of Vista Group. Vista Bank is a challenger bank with the vision of building a world-class Pan-African financial institution.

Implementing the Temenos software will support Vista Banks’ innovative strategy of generating new products and services speedily to cater for its operating market, thus enabling the company to provide its customers with market-leading services through enhanced functionality and digital channels while conducting its banking operations.

Femi Adeoti, managing director, Africa operations at Inlaks said: “As a Temenos partner for over 20 years, it is our delight to provide best in class digital banking solutions to Vista Bank via Temenos who has held the number one position for core banking solutions according to IBS ranking for 18 years running. Inlaks as a company thrives on providing innovative solutions that enable our customers adapt and stand out in the ever-evolving landscape of financial technology.”

Jean-Paul Mergeai, managing director Middle East & Africa at Temenos said: “We look forward to working as a close strategic technology partner of the bank as it realises its goal of building a world-class Pan-African financial institution group in addition to driving both economic development and financial inclusion in Africa. With Temenos’ market-leading, cloud-agnostic, cloud-agnostic technology the bank will be in an ideal position to meet their commitment of providing cutting-edge digital banking solutions, as well as innovative products and services, aimed at satisfying the unique needs of their customers.”

“This partnership further strengthens Temenos’ long-standing presence in West Africa where for years our real-time and scalable banking software has been helping financial institutions address their evolving customer demands and regulatory requirements,” he said.

Inlaks  partners with leading original equipment … Read More...