Tech driving new SA banking strategy

2014-04-08 11:32
(Duncan Alfreds, News24)

(Duncan Alfreds, News24)

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Cape Town - The line between financial institutions and retailers is becoming thin as banks go on the charm offensive with technology rewards as a way to appeal to customers.

FNB began offering Apple's iPad as way to grow its customer base, and the bank quickly expanded its product portfolio to include smartphones, laptops and tablets by other manufacturers.

"The benefit for us is that people go from a manual to an electronic world, so the whole system just worked out well. The fact that we outsold any other Apple distributor - that was just a consequence," former FNB CEO Michael Jordaan told News24.

However, competition has increased with Standard Bank following FNB with the launch of an app and recently, an expanded range of technology products.

Standard offers the iPad, Samsung Galaxy Tab, Galaxy S4, among other devices on its banking platform.


Similarly to FNB, the products are offered on 24 month repayment terms at no interest, and it appears that the offer is designed to attract customers - mainly from competitor banks.

SA has around 22.5 million formerly banked adults according to a FinScope South Africa survey and the flat economy means that it is unlikely that there will be a spike in the number of new customers.

The rise of retail banks targeted at lower income earners has also made an impact on the bottom line for major players.

FNB said that competition has had an effect its digital offers.

"There's a lot of competition in the market; there's a lot of players selling smart devices - and I think everybody's feeling it from the exchange rate and that naturally has an effect on the prices in South Africa," said Kim Gibson-Van der Walt, head of dotFNB.

The dotFNB stores is strategy to attract new customers with placement in high traffic areas like shopping malls and where people can play with the latest smartphones and tablets on offer.

However, the banks may not have it all their own way as mobile operator MTN launched the iPhone 5c at R279 per month when the device launched in SA.

Traditional banking

Gibson-Van der Walt said that the purpose of the dotFNB store was to trial new technologies in the finance sector, but also to be of assistance to customers.

"You can come in here and get advice on how to download the app, online banking; cellphone banking. It's not here to replace traditional branches."

Absa recently announced that it was moving to a digital banking platform that will, for example, allow customers to open an account from a tablet.

"Consumers increasingly demand an end-to-end experience and greater consistency when accessing their bank accounts remotely via their mobile, an ATM, their PC or even their iPad," said Arrie Rautenbach, head of Retail Banking at Absa.

Digital banking and technology increasingly blur the line of what is considered a traditional bank and the increased competition between players gives customers more choice in handling their financial affairs.

In particular, the banking by means of an application is seen as one of the primary means for customers to interact with banks.

"It's a model of the future and we see a lot of people moving to banking on an app," said Gibson-Van der Walt.

- Follow Duncan on Twitter
Read more on:    fnb  |  absa  |  standard bank  |  mobile  |  e-commerce

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