FNB believes its loyalty programme is superior to what soon-to-be-launched Discovery Bank will be able to offer clients.
This is according to FNB CEO Jacques Celliers, who this week spoke about what his bank was planning to do ahead of the launch of Discovery Bank, which is expected to roll out Discovery’s Vitality loyalty programme – a key part of its offering.
FNB’s competing product is its eBucks loyalty programme.
Investec and FNB are seen as the banks most vulnerable to the launch of Discovery Bank later this year.
FNB used to be in partnership with Discovery with a credit card, and the clients who have been attracted to FNB in recent years are viewed as being in the same target market that Discovery is set to woo.
“We have much better capabilities and data, and we are much better at it than they [Discovery] are. We have been able to deal with much more complexity in their historical execution than they are with a more simplistic product set. There is lots more runway space to do more there,” Celliers said.
“We have been working on the behavioural models and understanding value creation for two decades. We understand what they think they have an angle on,” he added.
An advantage that FNB had in its loyalty programmes was “simplicity”, Celliers said.
“We think we have a massive edge in the market on how we package our programmes.
“An aspect is generosity levels [related to loyalty programmes] – how much can you afford to give people given a certain behaviour? We think the generosity levels that we are able to afford – given our success and our balance sheet – are much more than anyone else in the market,” he said.
“We think we have the angles – we don’t compete with loyalty schemes, we compete with banks and financial services companies. The loyalty scheme is one of the tools we use.”
Celliers said that its loyalty programme was just one of the many ways FNB built relationships with its customers.
“Loyalty programmes only work for some customers,” he said.
Regarding perceptions that FNB is the bank most vulnerable to the entry of Discovery Bank, Celliers said: “We don’t see it that way. Our value propositions are unique. New entrants will take time to build scale and stability. They might come out with a launch theme. In banking, it takes time to build relationships. You need to get maturity in service levels and things like that.
“New competitors have entered this market over the past 180 years [the time that FNB and its predecessors have been in existence] and we are quite used to that experience.”
Celliers said that, while anyone could buy a banking platform, the key was to win the hearts and minds of communities.
“You have to have a value proposition that resonates with society and population,” he said.
“We are fortunate to have enough technical skills to copy what anyone has in a weekend, if we really wanted to.”
Beyond Discovery Bank, there are a number of new competitors that are emerging in the banking sector: TymeBank; African Bank, which will launch its own transactional banking account for the first time; and Bank Zero. Sasfin, together with money transfer service Hello Paisa, is set to launch a digital retail banking offering.
Celliers said: “We don’t take competition lightly. Whether they are the big incumbent ones, which we know a bit more about, or the new entrants – we respond aggressively.
“We are well positioned – our products across the board are selling well. Whether the response is a more complex offering or simple offerings – we have a full range to be able to respond.
“The new entrants will target certain elements here and there, and we would have to respond to them. Overall, we are very comfortable with our strategy. We have great growth prospects and we haven’t seen any need to readjust.