Standard Bank is giving Kenny Fihla more teeth. The head of corporate and investment banking (CIB) at Africa’s largest lender by assets has been handed more power at group level, making him a potential successor to group CEO Sim Tshabalala.
The move signals the bank’s confidence in Fihla’s ability to steer its core business. More specifically, it hands the Soweto-, Vrede- and Sterkpruit-raised executive an oversight role on the bank’s bold 2021 strategy that rolled the dice on its digital future.
Sure, CEO succession planning is the responsibility of the board. But Fihla’s enhanced role makes him a strong candidate to take over from Tshabalala, who has been at the helm since 2013. That’s a commendable effort at developing potential future leaders to fill other business-critical positions.
Standard Bank’s approach to grooming leaders contrasts sharply with other prominent SA companies — notably Truworths, whose boss Michael Mark has been occupying the position for about three decades.
Mark has gained near-mythical status, playing a statesman-like role that the board has struggled to fill. Succession plan after succession plan since 2014 when Mark first announced his intention to call it day have run into stumbling blocks.
To avoid falling into the same trap, management at Standard Bank is developing Fihla for bigger things. Fihla, who joined Standard Bank in 2006 and has led the CIB unit since 2017, will become more involved in the strategic initiatives at the group level, while the rest of the group’s heads of the main business units and corporate functions will continue report directly to Tshabalala, Standard Bank spokesperson Ross Linstrom said.
If he succeeded Tshabalala, Fihla would chair the bank’s executive committee, which comprises the heads of the bank’s four main divisions: CIB, personal and business banking, wealth, and Africa regions.
The latter is where Tshabalala will devote more of his time. The bank operates in 19 other African countries, where it sees huge growth potential and hurdles.
Fihla’s elevation rewards his achievements in leading the CIB business, which accounts for a big chunk of the group’s profit. Under his leadership, Standard Bank strengthened its relationship with the Industrial and Commercial Bank of China, the world’s largest bank and a 20% shareholder of Standard Bank. The partnership has helped the bank to facilitate trade and investment flows between Africa and China, as well as to diversify its funding sources and currency exposures.
His next big task will be to build on the bank’s relatively new growth blueprint — he was one of the brains behind it — that rolls the dice on Standard Bank’s digital future. Under the plan, Standard Bank is shifting its business model from a provider of basic financial services and products to a digital platform that complements its own.
The model is not new in the SA banking industry: FirstRand is already selling mobile phones, gaming consoles and television sets on its digital platform. In 2020, Nedbank launched Avo, a super app that enables businesses ranging from retailers and restaurants to plumbing and electrical concerns to offer their services to Nedbank clients.
But Standard Bank was the first to pitch it as a group-wide framework for how it will create value for shareholders, what problems it will solve and with details about growth opportunities in the market.
It was a bold move from Tshabalala, who describes himself as a “boy from Soweto”, and it explained a surprise R12bn buyout of Liberty Holdings, the insurance group with which it has had an “arms-length relationship” for decades. The insurer is being folded into the digital mall alongside other financial services offerings.
The idea behind the strategy is easy to grasp. Standard Bank is turning its banking app, already widely used by millions of the lender’s customers for services traditionally offered in bricks-and-mortar branches, into a digital marketplace that links trillions of rand in deposits to payments and other forms of nonbank services and products. For example, in the future Standard Bank will provide not only mortgage loans but clients will be able to find everything from furniture and maintenance services to an electrician in the app.
Under the plan the bank wants a return on equity — a key measure of bank profitability — of up to 20% by 2025, and 7%-9% annual revenue growth. That’s because the bank estimates that the platform business opportunity in Africa is worth R15-trillion in new income streams. Tapping just 10% of that value will nearly double Standard Bank’s annual revenue, reflected in the latest financial results of just more than R100bn.
Standard Bank’s shareholders will be hoping that Fihla can bite into this opportunity.
Update: January 9 2023:
The article has been amended to add Standard Bank’s comment that Fihla would be involved in strategic initiatives at the group level, and to clarify that the heads of departments in the group would still report to Tshabalala.
• Motsoeneng is Business Day deputy editor.
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