Standard steps on digital gas to keep up with new era
More branches likely to close, with impact on jobs, as clients choose online options
● Standard Bank is rejigging its bricks and mortar footprint as clients increasingly migrate to online services, and has started talks with trade unions about what the slimmer, fitter branch network means for jobs.
“Footflow [to branches] has fallen off a cliff,” Standard Bank CEO Sim Tshabalala told Business Times this week. And though he would not give details about the plan with the bank’s branches, he did say that eventually they would look very different and employ a different mix of people.
Empty branches are a serious problem for the big banks. Renting space in shopping centres and staffing it has cost implications. All the while, digital newcomers such as TymeBank and Discovery are making a play for clients without the historical baggage of a paper-based banking system.
Tshabalala’s bank now has 76 fewer branches in SA than eight years ago. And the remaining 629 branches are on average a fifth smaller than in 2011. The volume of transactions in branches is also dropping — down 13% on a year ago.
“We are of the view that over time, as customers transact more in a digital way, that trend is going to continue,” he said.
Standard Bank shed 900 jobs in the past year with digital efficiencies and management actions playing a role alongside natural attrition, the company said in its annual financial statements.
Rival Absa, which reports its financial results tomorrow, is restructuring its retail banking division, Bloomberg reported. The process could affect about 800 jobs as the bank battles to regain market share after performing poorly in the retail sector during a decade under the control of British parent Barclays.
SA has one of the highest unemployment rates in the world, with the bulk of the workforce unskilled and historically employed in primary industries such as mining and agriculture. Digitisation of the economy means more highly skilled staff are needed.
Standard Bank has started consultations with Sasbo, the finance union, about restructuring branches, a source with knowledge of the matter told Business Times. It is not clear how many jobs will be affected or how long the process will take.
But Standard Bank will need to cut costs to maintain profits from personal banking. It earns higher fees from traditional sources than from the digital platforms to which its clients are shifting.
The result is that in future branches will be smaller and simpler, and will focus on more complex needs.
Tshabalala said the amount of processing activity that happens in branches, like balance inquiries and cash handling, will decline. But other financial services such as the drafting of wills and wealth management could increase.
His bank is repositioning itself to be more than a “utility” in the digital age, and to grab a larger share of the value chain.
Nedbank has also been “refreshing” its branches, CEO Mike Brown said this week.
And though the bank does not see its overall network declining, the new-look branches — about 60% of the total — are smaller and more focused on the sales of banking products than on simple services.
Last year FNB said it would cut the size of
Over time, as customers transact more in a digital way, that trend is going to continue Sim Tshabalala
Standard Bank CEO
its branches by 10% a year.
SA’s big financial institutions have been revamping to look more like the bank that has been pilfering clients from everyone in the business — Capitec.
The Stellenbosch-based lender grew from zero to 800 branches in less than two decades and has been accelerating the rollout of outlets as its rivals have been slamming on the brakes.
A Capitec branch is more like a retail outlet than the traditional model followed by the established banks. Capitec mostly avoided the banking courts, setting up shop next to supermarkets instead.
The traditional big four banks have all suffered because of being stuck with legacy systems — the remnant of the laborious paper-based way of banking in previous decades. But Standard Bank has had some of the biggest problems. It has spent billions of rand in recent years on a digital overhaul to replace its core banking system.
That has now been completed and the bank is diverting resources to the “front end”, Tshabalala said. This means creating a better customer experience, he added. Transactions on the bank’s digital platforms have increased 36% over the past year. And the plan is for that to continue.