Absa just hired the architect of M-Pesa’s continental scale and product evolution. The appointment of Sitoyo Lopokoiyit means Absa sees the front door of retail banking shifting from branches to wallets.
That’s partly defensive, a bid to stop telcos and fintech from owning everyday customers, and partly offensive because payments are one of the fast-growing slices of retail revenue, per Morgan Stanley’s analysts.
The Reserve Bank is doing the heavy lifting. A national switch, a digital ID and clearer rules for email are turning legal fog into a national payment system that is easy for banks, fintechs, telecos and retailers to plug into.
The move to open the national payment system to non-banks leaves incumbents with little choice. Either they build a competitive front end or cede customer relationships. Global analysis shows payments are a multitrillion-dollar market, and platform players are taking an outsized share. Tiny fees on millions of daily transactions add up fast, to put it simply.
Public grumbles about banking fees sharpen the pressure. South African banks draw as much as 45% of their income from fees, ie non-interest revenue (NIR). That compares with as low as 35% for European and US banks, which are profiting handsomely in the payments space. For instance, JP Morgan’s payments unit generated $5.1bn in quarterly revenue last month, putting it on a $20bn-plus run rate and cementing payments as a profit engine.
The good thing is that Absa’s ChatWallet gives it a foothold in that fight. ChatWallet gives the bank a live payments interface and a user base to test product hooks, merchant deals and instant credit offers. Hiring Lopokoiyit, a proven payments scaler, signals intent to turn ChatWallet into a commercial distribution engine rather than a marketing experiment.
So yes, the Lopokoiyit appointment is defensive in plain sight. But it buys Absa a shot at platform economics if the bank treats it as a structural change rather than a marketing coup.
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