Inside FNBB’s plan to stay ahead of the pack
While the country’s biggest bank earned its prime position in the market by being the leading innovator of financial services technology, COVID-19 spurred its competitors to close the gap in digitisation. However, First National Bank has an ace up its sle
Writing in the group’s annual report for 2022 recently, First National Bank Botswana (FNBB) chairperson, Balisi Bonyongo noted the trend of heightened competition in the banking sector from both direct rivals and non-traditional financial services.
Essentially, the pandemic saw banks and related financial services providers boost their provision of digital services, as the response to COVID-19 included movement restrictions, travel bans and social distancing, the latter limiting the traffic in brick-and-mortar banking halls.
The heightened competition was focused on product offerings, with the more non-traditional banking players challenging the key mobile payments niche that FNBB has enjoyed in the market for years, mainly through its ewallet and cellphone banking solutions.
A prime example of this is that the paying of bills like utilities, Multichoice and others which was a key selling point for cellphone banking in previous years, is now possible across numerous competitors, including foreign exchange entities such as Mukuru.
“The increased adoption of digital banking and the rapid shift to remote working accelerated certain elements of our strategy, enabling the bank to survive the pandemic and to explore innovative new ways of serving customers,” Bonyongo noted.
“These disruptive trends opened up opportunities for traditional and non-traditional financial services providers to compete with incumbent banks, some attracting customers with unsustainable offers to gain market share.
“It also increased competition for talent as our competitors sought specialist banking skills and talent to achieve aggressive growth targets.”
According to the chairperson, the trends are expected to continue.
“Technology advances driving digital transformation will continue to pose risks and opportunities for the bank.
“Heightened competition is likely to remain a feature of Botswana’s financial services industry.”
At its core, the pandemic has resulted in increased competition for customers amongst banks and, more recently, the non-traditional financial services sector which includes the mobile money players and the cryptocurrency industry.
Customers squeezed by the difficult economic climate are shopping around for not only the best rates but add-on services that can make each of their hard-earned thebes stretch beyond simple transactional services.
FNBB, which burst into the local market 31 years ago and used technology innovation to surpass the two established titans it found already operating, appreciates that the gains of pioneering fintech do not guarantee continued market share.
“Competition for banking customers is increasing with non-traditional financial services providers, such as mobile network operators and fintechs, setting aggressive and public targets for gaining new market share,” bank officials noted in the annual report.
“They are closing the first-mover gap that FNBB enjoyed by introducing innovative new products rapidly, particularly in mobile payments.
“Customers are receptive to competitive offerings as disposable incomes are under increasing pressure and interest rates are rising.” The bank’s take on trends in the market is backed up by actual developments announced by its industry rivals and emerging non-traditional players. Nearly all the major banks in the country have stepped up their digital offerings and competing ‘ewallet-esque’ solutions, fine-tuning their Internet banking products and boosting cross-platform connectivity.