Standard Bank plans to cut its branch network in SA by about 15%, potentially leading to the loss of more than 1,000 jobs,
as the country’s largest bank by deposits adapts to clients moving to digital channels.
"The shift in customer behaviour means that our clients are using our branches less," the group said in a statement on Thursday.
"As such, we have relooked at our retail and business banking delivery model."
The bank intends to close 91 branches before the end of June, putting about 1,200 jobs at risk. Actual job losses could be lower as it retrains staff and transfers positions internally.
The announcement follows a similar one in November, which affected 526 jobs. Standard Bank could not provide clarity on the actual number to be cut as "it depends on employees who apply or take up other vacant opportunities within the bank", it told Business Day.
The move appears to be the partial fulfilment of an undertaking by Standard Bank Group CEO, Sim Tshabalala, who told investors at the presentation of the group’s results last week that they were "very serious" about cost discipline. It is more bad news for an economy with an unemployment rate of 27%.
Standard Bank SA’s Personal and Business Banking (PBB) division that oversees the branch network has struggled to keep costs in line with revenue growth that’s been flat, largely as a result of the weak local economy.
A key metric, which measures costs in relation to revenue at a bank’s operations, the cost-to-income ratio, rose at the PBB division to 55.6% in 2018, from 52.9% the year before, putting margins under pressure.
Activity through traditional retail banking has been replaced by cheaper and more convenient forms of banking through digital channels such as internet and cellphone banking.
The group recently completed an overhaul of its core banking platform which has accelerated the use of its
digital channels.
The number of active users performing mobile banking through Standard Bank’s smartphone app rose 30% in 2018 to nearly 1.3-million users.
In contrast, the physical size of its branch network has dropped 21% since 2010. The number of branches dropped by 11 in 2018 to 629.
The announcement also comes at a time of significant change for the wider industry.
The "Big Four" banks, which comprises Absa, Nedbank, FNB and Standard, are bracing for a slew of new entrants that have the benefit of technology that is far cheaper to acquire than when the systems were developed for the incumbents.
This includes Patrice Motsepe’s TymeBank, Adrian Gore’s Discovery Bank and Michael Jordaan’s Bank Zero.
In addition, African Bank is set to launch its refreshed transactional offering, MyWorld, in the next few weeks.
"Given the investments in the core banking system and the front end, we think we will survive the onslaught," Tshabalala said last week.
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