Don’t expect Nedbank, Discovery Bank, Capitec and FNB to change just yet

 ·2 Sep 2022

South African banks are becoming more digitised, opening the door to full online banking; however, many argue that there is still a need for in-person branches.

Recent data from Boston Consulting Group (BCG), in collaboration with financial services firm Discovery, found that the majority of consumers (86%) are ready for digital banking as long as banks in the country can provide ease of use and secure channels. The research surveyed 1,000 people across the board, from executives in the industry to average consumers.

It found that more than two-thirds of South Africans (69%) expect that the country’s banks will switch to a totally digital banking system within five years. Some newer entrants are already there, with caveats, and include Bank Zero, and Tyme Bank.

This shift in consumer expectations goes beyond the simple expectation that banks will provide digital applications and websites on top of their basic in-person services and operations, reported BCG.

Discovery noted, however, that they cannot make a complete shift to digital as it would leave behind a large portion of the population who have money habits that rely on legacy systems such as physical branches.

Mike Brown, the chief executive officer of Nedbank, speaking to BusinessDay, said that it is trying to move toward a balance whereby digital banking capabilities are combined with face-to-face human interaction at a branch level. This comes despite the bank reducing branch floor space over the years.

BusinessDay reported that when asked about the new data from BCG, Brown said: “There is a segment of people who are entirely happy to do everything digitally — but there’s very definitely a segment of people who need some digital coupled with some human interaction.”

“While banking is increasingly digital, the way we like to think of it as ‘warm digital’: we’re digital when you want it, and we’re human when you need it. We feel most clients need a bit of both.”

Capitec shares Brown’s sentiment. In a recent media round table, Graham Lee, the group executive for the retail banking sector at Capitec told BusinessTech that it would not be reducing its branch network despite the migration to digital.

Lee said that a bank sells trust to a consumer and often that is best conveyed through face-to-face. Capitec aims to be a complete bank however, and will continue with its digital push.

Earlier this year, FNB said that with a heavy emphasis on digitisation and smaller branches, to accommodate both digital and in-person client contacts, it wants to continue modernising its branch network.

Raj Makanjee, the chief executive officer of FNB Retail and Private Banking said that in the future, FNB branches would be as much as 76% smaller than they already are, ranging from an average of 350sqm to 460sqm.

According to Makanjee, the bank is constantly evaluating the number of branches it has, where they are located, and the services that are needed in the localities where they do business.

Despite digital migration, FNB noted that it also recognises that there is no technological substitute for personalised advice.

“As a result, we believe that clients who use our branches should be able to perform day-to-day banking through our digital zones, with the option to consult with our experts for human assistance as needed,” said Makanjee.

Read: Cheapest bank accounts in South Africa right now

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