SA's banks are taking a leap forward in technology and in the services they offer to attract and retain customers amid intense competition.
Initiatives under way include integrating banking and accounting systems, targeting niche customer groups with individualised banking services, and offering an array of services via digital banking apps.
Absa, often seen as a technology laggard, plans to kickstart innovation in its payment processes with the integration of the Syspro 8 enterprise resource planning (ERP) system.
Marius Wessels, head of professional services at Syspro Africa, says accounting and ERP systems will combine with banking systems to enhance speed, efficiency and accuracy.
“A shift is under way in how banks and financial corporations adopt and apply new technologies of the future. Accounting and ERP system integration has become a primary concern for these enterprises, and ease of integration has become a primary focus.”
Last month, Investec launched programmable banking for business and private banking clients, offering them the ability to create individualised banking services.
Aimed at IT professionals such as software developers and programmers, it allows them to build code that, for example, defines rules to approve or decline specific transactions.
Devina Maharaj, programme head of Investec Business Online and application programming interface (API) banking, said: “It allows them to write these rules that can say, my card must only work between eight and 10. Or it can only work at this merchant. Or, as soon as I swipe my card, instead of sending me an SMS message, I can make it go into my Slack channel, for instance.
“The idea is, how do we develop a proposition that makes software developers feel really comfortable, but also empowers them in the world of banking?”
Cumesh Moodliar, head of Investec Private Bank SA, said: “Our digital capability needed to get the next injection and step up in terms of where we need to go as a business. Having these coders working with us through the programmable banking module is helping us build on that.”
So far more than 500 developers have joined the initiative.
They all want to diversify and grow their noninterest revenue
— Craig Pheiffer of Sasfin Wealth
“A key part of Investec’s strategic intent is to bring software engineers and IT professionals on board to help them grow their wealth and unlock new opportunities. We acknowledge their skills and see how IT professionals are fundamentally improving the world and how we operate, engage and transact in it. By investing in this particular market segment, we believe that we can have a significant impact on society and the economy at large.”
This month, FNB unveiled the latest evolution of its mobile banking app that takes it into new realms with low-cost online courses from Udemy, security service GuardMe and an ad-free eBucks Games portal with no monthly subscription.
It also expanded the FNB Connect service, which offers savings on mobile phone accounts and high-end smartphones, laptops and tablets.
FNB CEO Jacques Celliers said the launch was a major step in the bank’s efforts to be relevant to customers in every context, beyond basic banking.
“The lifestyle solutions we are integrating into our ecosystem will set new standards for value-added services in the financial services industry. Our expanded value propositions to insurance and investments are really gaining a lot of traction. We built out what we refer to loosely as lifestyle offers, as additional reasons people choose our platform.
“We've attracted a tremendous amount of attention over the years to the ability to have topped up airtime or electricity or water, the day-to-day needs that people have. Over time we've expanded that, those expanded opportunities give us further traction, and out of those interactions we create more stickiness.
“If we can retain clients more and have more regular interactions, we can create more activity.”
Warwick Bam, head of research at Avior Capital Markets, said a bank's business case comes back to attracting and retaining customers.
“Commercially, banks benefit from higher transactional revenue if goods and services are purchased directly off its banking app. In a similar way to how social media platforms leverage a captive audience of daily users, banks are realising that the banking app offers valuable visual space for the sale of third-party products and direct advertising.”
In the process, the data generated in the course of regular activity becomes a strategic asset.
“Banks are getting access to more granular transactional data, enabling targeted offers and customised credit solutions at the point of sale. Successful banking models in 2030 will monetise transactional data in more effective ways. Data insights, available to banks with the appropriate software systems, create real-time, actionable leads, benefiting merchants through higher sales and banks through transaction fees.”
Craig Pheiffer, chief investment strategist at Sasfin Wealth, said: “The difference between interest paid on deposits and interest earned on loans is the banks’ bread and butter, but they all want to diversify and grow their noninterest revenue.”
He believes that while banks need to get the basics right and prioritise core banking, they can’t be left behind by competitors. “They can well focus on both ends of the spectrum simultaneously.”
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