More downside than up to any banking foray, says Sanlam
● In its century of existence Sanlam has built strong relationships with many large banks across Africa, and it has no intention of undoing that work by launching a bank of its own.
This is according to Sanlam CEO Ian Kirk, who said this week that launching a bank would be suicidal for the insurer as it would threaten existing relationships it has with big banks and would be difficult to attract talent.
Kirk’s comments were made against the backdrop of growing competition in the financial services sector. Discovery is gearing up to launch its own bank later this year, while Absa and FNB chase growth in their insurance divisions.
Kirk, explaining the dynamics in the industry, said Sanlam had relationships across the continent with Standard Chartered, Barclays Africa and one or two others, and sold products to the client bases of these banks.
“If it comes that our high-net-worth clients insist on a Sanlam [banking] offering, which they don’t at the moment . . . we’ll do it with one of our partners,” he said.
Sanlam has positioned itself as No 2 in the private wealth market after Investec.
According to Kirk, its clients are happy to have an Investec banking account while Sanlam looks after their investments and insurance.
The company is also developing products for the middle- to low-income market.
Last month Capitec announced the launch of its funeral policy, the first product in its new insurance line, in partnership with Sanlam.
Top talent
But Kirk’s resistance extends beyond the risk of souring Sanlam’s relationships.
“My view is if you’re not going to get the best people into the business, you have to think very carefully about doing the business. Our job here is to ensure that we have the best businesses and the best talent in every one of the countries [we operate in]. And I can’t do it in banking.”
Discovery Bank will be headed by Barry Hore, who revamped Nedbank’s IT systems in the early 2000s, but the company has not hinted that it has any other ace bankers in its arsenal.
With other soon-to-launch disruptors — such as TymeDigital by Commonwealth Bank of Australia and former FNB CEO Michael Jordaan’s Bank Zero — also in the race, it is becoming harder to snatch top talent from the traditional big four.
If our high-networth clients insist on a Sanlam offering . . . we’ll do it with one of our partners Ian Kirk Sanlam CEO
But Warwick Bam, an insurance analyst at Avior Capital Markets, said insurers would find it easier to attract top banking talent as financial services integrate over time.
This new breed of financial services competitors may soon be joined by telecommunications companies like MTN and Vodacom, which are diversifying their businesses with insurance and banking products.
MTN this week announced its deal with Nedbank’s pan-African associate Ecobank to launch affordable lending, saving and payment services.
As barriers to entry for opening a bank decrease through technological advances, mobile giants like MTN can easily offer simple banking products. But what cannot be built as easily is a trusted financial services name.
That is where established banks and insurers have the upper hand, Kirk said.
Bam added: “For a telecommunications company to sell insurance or banking products has been challenging in South Africa.
“What appears to work better is for the bank to sell cellphone contracts on behalf of the telco as the instalment sale on the device can be facilitated by the bank.”