Investec keeps its eye on the ball
While other banks are targeting rapid digitisation and scale, Investec says it will continue to focus on providing “high levels of service and depth of service” to organically grow its private and corporate banking client base in SA and the UK, which remain its core markets.
While other banks are targeting rapid digitisation and scale, Investec says it will continue to focus on providing “high levels of service and depth of service” to organically grow its private and corporate banking client base in SA and the UK, which remain its core markets.
The bank, which is listed in Johannesburg and London, will also continue to focus on markets where it is “domestically relevant” rather than looking to expand into new territories.
After winding down its offshore operations in markets such as Ireland and Australia in recent years, Investec is instead opting to pursue deeper penetration of its SA and UK client bases by showcasing its full suite of capabilities, which span specialist banking, wealth management, and corporate and investment banking.
Investec has about 100,000 private clients in SA and about 5,500 in the UK, a significant proportion of which are highnet-worth individuals. It also has a significant corporate banking client base, mainly in the midmarket segment, and which operate across SA, the UK and the rest of Africa.
“Our current focal point is the SA and UK markets,” Nishlan Samujh, Investec’s group finance director, told Business Day. “There’s a deeper market in the two geographies that we operate in that is still untapped.”
Investec ’s understated growth ambition comes at a time when competition in the banking sector is hotting up as the traditional stalwarts flaunt the scale of their balance sheets in pursuit of new customers, and new digital-only entrants punt their speed and convenience.
The 159-year-old Standard Bank, Africa’s biggest bank by assets, has reorganised its internal structure and invested heavily in new digital platforms as part of its strategy to add at least 10-million customers across the continent by 2025. Absa, which now has a sizeable presence across Africa after its separation from Barclays Plc, has openly stated it wants to replicate Standard Bank’s success on the continent, while Capitec is moving rapidly into business banking for small to medium-sized enterprises as a complement to its retail bank offering.
Newer, more digitally focused entrants, such as Bank Zero, TymeBank and Discovery Bank, are also positioning themselves as niche players looking to steal market share.
However, Samujh said Investec’s “high tech, high touch” service levels, which provide quick and easy access to private bankers, will insulate the 41-year-old upmarket bank from its competitors, which largely target the mass market.
“We’re not a mass market bank,” he said. “We compete in a very specific manner, in a very specific selected market. Our distinctiveness is effectively the manner in which we have a holistic offering around our client base.”
Given that many of its corporate clients in SA and UK are active in the rest of Africa, Samujh said Investec will continue to service them by having “boots on the ground” rather than by opening more offices on the continent beyond those in SA and Mauritius. Nevertheless, he sees a lot of scope for growth in green financing in Africa, particularly for renewable energy projects given the pressure banks are facing with regard to funding carbon-intensive activities such as coal mining.
“Is the next big market a green market? I think the answer is yes,” said Samujh.
He also said Investec is in no hurry to reduce its remaining 25% stake in Ninety One, the asset manager it spun off in 2020. “We will continue to look at the optionality, depending on markets and depending on timing. But that time will come, we’re not there yet.”