Big four bracing for impact
SA’S banks are doing well enough, but three new entrants are poised to change the sector
Banks have certainly come back into favour, with share prices up more than 20% since the beginning of the year.
Both private and corporate investors are expected to borrow again in the “Cyril Spring”. The banking sector is the most liquid in the SA Inc, or nonrand hedge, group of companies, with more reliable earnings streams than domestic industrial sectors such as construction and engineering.
The one challenge is the proliferation of new competitors such as Bank Zero, Tymedigital (whose parent, the Commonwealth Bank of Australia, has a higher market cap than all big four SA banks put together) and Discovery
Bank. All the major banks grossly underestimated the impact of recent newcomer Capitec.
Standard Bank CEO Sim Tshabalala believes that the group will be well-placed to increase its digital business now that it is finishing off its core banking programme, a 10-year programme that involved updating administration systems, some of which dated back 50 years.
“We will be able to open accounts faster, and bring in machine learning and other forms of robotics.” Nedbank is already introducing a way to open an account on a smartphone.
Tshabalala says the bank is not afraid to work with other corporates on its digital development, as it demonstrated two years ago with the introduction of the Snapscan swipe payment system. It is investigating the use of blockchain as an efficient payment backbone — though it steers clear of bitcoin.
Tshabalala prefers to see Standard as a universal financial services organisation rather than a bank. This explains why he allows Liberty, which accounts for barely 5% of group profit, to take up significant management time. “We rely on Liberty and Stanlib to deliver the life