Standard Bank is looking to partner with telecommunications firms, retailers and fintech disruptors as it repositions itself as a diversified Pan African financial services giant with a targeted retail client base of 25-million people by 2025.
That revelation comes a little more than a month after Standard Bank concluded its buyout of minority shareholders in insurer Liberty Holdings, which it plans to integrate into its broader banking operations. While Standard Bank had about 10-million clients in SA and 6-million in the rest of Africa at the end of 2021, it believes it can add another 5-million in its home market and 4-million in the rest of the continent by 2025.
“We think the accelerator of this plan is in fact partnering,” Funeka Montjane, CEO of consumer and high net worth clients at Standard Bank, told Business Day in an interview. “There are ongoing discussions with multiple partners …multiple telcos across the continent. Not only telcos … retailers as well. We’ve got three prospective partners … fintechs, early conversations with the likes of the telcos and retailers. We want to partner and create additional value together.”
Standard Bank’s plan to grow its retail client base to 25-million by 2025 forms part of a broader strategy rejig announced in August 2021 that will see it target a return on equity of between 17% and 20% while at the same time lowering its cost-to-income ratio to under 55%. In its latest financial results for the year to end-2021 the group’s return on equity was at 14.7% while its group-wide cost-to-income ratio was just under 58%.
However, the cost-to-income ratio for the consumer and high-net-worth banking unit was higher at 61.5% at end-2021 while for the group’s business and commercial banking arm it was at 63.5%.
Montjane says meeting Standard Bank’s targets will require expanding the bank’s retail franchise and boosting cross selling of products and services within the group. That’s where better integration of Liberty and asset manager Stanlib will come in handy as the group looks beyond banking for new revenue streams.
Montjane says Standard Bank wants to not only bank more clients but offer them more of its insurance, asset management and financial advice services as well. To achieve that it plans to roll out more of Liberty’s higher end insurance products to its affluent banking clients such as the insurer’s Lifestyle Protector offering, which provides tailored life, income and disability protection.
“There is an opportunity for us to do complex risk which is predominantly in the affluent space,” says Montjane, adding that when Standard Bank’s roughly 1-million affluent clients are added to Liberty’s few hundred thousand the group may well upend rival FNB as the biggest player in that space.
“We think that the combination of Standard Bank and Liberty renders the affluent client base of the combined business bigger than FNB,” she says. “There’s a big cross sell game there.”
Delivering on that cross selling opportunity requires it to align the distribution strategies of Liberty and Standard Bank, which involves getting the insurer’s financial advisors to work with the group’s bankers. At the lower end of the income spectrum, where clients are seeking life cover under R1m, Standard Bank wants to roll out simpler products with easier underwriting procedures that are limited to just three questions with no medical or HIV tests required.
Montjane says this forms part of Standard Bank’s ambition to bank the entire customer pyramid, from lower income consumers to affluent clients at the top. She says that requires the bank to look beyond defining customers according to income levels and to view them more in terms of communities with specific banking, insurance and investment needs.
She says Standard Bank is in the process of rolling out “hyper specific” banking propositions aimed at professionals in the health and IT sectors and is planning to launch a youth-focussed banking platform.
However, a big part of Montjane’s focus is the rest of Africa where she identifies Nigeria, Kenya, Uganda, Ghana and Mozambique as Standard Bank’s biggest opportunities outside of SA. To tap those markets Standard Bank is leveraging its strong corporate and investment banking presence in the rest of Africa to offer workplace banking and lending solutions to the staff of its business clients.
For the less formal market Standard Bank is focused on rolling out its UNAYO mobile money solution.
“If you want to do the rest of the pyramid do not dare go and do branches — it’s all about mobile money,” she says.
Asked to identify the biggest retail banking opportunity in Africa she picks Nigeria without hesitation, despite that country’s reputation as being somewhat of a graveyard for SA businesses.
“We’ve got to get Nigeria right one way or another,“ she says. “You can’t go and do basic banking there. You’ll spend so much money putting down the infrastructure and you are going to pay in tears. But you can partner with other disruptors … other people who are trying to disrupt the market, fintechs, telcos.”
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