FNB’s app strategy is leaving rivals in the dust

FNB’s deliberate move to aggressively shift transaction to its mobile app from other digital (and physical) channels is paying off handsomely. If recent trends are sustained, transaction volumes on its mobile app will overtake those on internet banking by June.

Year-on-year growth rates for volumes on its app have ranged between 60% and 80%, while those for internet banking have been up between 4% and 15% until the 1% decline in the most recent period. In the six months to December 2017, nearly 74 million transactions were done via the app, versus 104 million on internet banking.

The bank has been using the carrot-and-stick approach via its eBucks rewards programme to drive this change. A number of years ago, reward points were earned if customers did all their electronic payments/transactions via the app in a month. In July 2016, the bank introduced a qualifying requirement where (under 60) Premier customers had to log in to the FNB app at least once a month to earn rewards.

The acceleration in year-onyear transaction volume growth in December 2016 – to 80% – further shows how successful it has been in driving behaviour change.

In terms of active app users, rivals are far behind. Absa had 653 000 active users on its mobile app at December 2017, while Standard Bank reported 848 000 active users at end-June 2017 (it’ll provide an update to December today). Nedbank says it had 891 000 active retail clients across all digital channels at December 2017.

Contrast this with FNB, which reported 875 000 active banking app users as far back as June 2014. Today, it has over two million active users, with R27 billion in transactions being processed per month (at October).

Against this migration to digital and especially mobile channels, revenues have come under pressure. In 2016, it said this would require a “recalibration” of its branch network. It’s tackled this on multiple fronts: reducing staff costs (and headcount), moving to a modular approach when fitting out branches, and trimming its physical space and footprint. It’s also investing in electronic channels and in-branch digital capabilities to take out further costs.

Hilton Tarrant works at immedia. He owns shares in FirstRand, first purchased in July 2011.