The digital banking race is keeping every CEO up at night – PwC

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PwC says banks are counting on their digital game to remain relevant to customers.
PwC says banks are counting on their digital game to remain relevant to customers.
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  • PwC says the biggest expenditure by banks right now seems to be in technology and digitisation.
  • It says the big four banks are all pouring billions of rands into this from different angles.
  • PwC says banks are counting on their digital game to remain relevant to customers.



Having the best banking app or the most mobile banking customers might have been a nice-to-have value-add to win accolades before. But now, the thought of being a digital laggard feels like committing the worst crime among South African banking CEOs.

"I can assure you; every single CEO is looking at that front end, that customer interaction, that mobile app, that digital wallet, and that marketplace or platform ecosystem," said PwC's financial services industry leader, Costas Natsas.

On Friday, PwC published its 2021 Major Banks Analysis report. The auditing and consulting firm looked at how the financial performance of the Big Four – Absa, FirstRand, Nedbank and Standard Bank – fared against 2020 in the first half of 2021.

PwC said the big four banks are counting on their digital journeys to remain relevant to customers, especially as they face increasing competition from new entrants and industries like mobile network operators and retailers.

The firm surveyed banks about their digitalisation plans and the amounts that they are spending to become the best in the game. It said the biggest spend by banks right now seems to be in technology and digitisation of their operating systems.

Natsas pointed out that an announcement by Standard Bank in August that it is building ten digital platforms; FirstRand's plans to expand FNB's nav» platform; Absa's plans to launch a sovereign digital ID in SA; and Nedbank's development of the Avo "supper app", were just some of the big developments.

He said all the banks are pumping money towards more initiatives of this nature. However, it wasn't easy to compare who is spending the most because they are coming from different angles. But what Natsas could recall on top of mind was that Standard Bank had spent more than R15 billion developing its core banking platform.

Increase in digital customers

As banks improve their digital platforms and apps, their digitally active customers have increased by 25% since 31 December 2019, thanks partly to Covid-19 which forced more people to bank online. 

Francois Prinsloo, the banking and capital markets industry leader at PwC South Africa, said all banks want to become "the bank of the future", a development that will blur the lines between traditional financial services and other industries.

These "bank of the future" models entail expanding banks offerings beyond what they've always done by partnering with other financial and non-financial customers.

So, they are spending a lot of money to attract data scientists, behavioural economists and engineers to build in-house artificial intelligence capabilities. He said a number of the banks have also stated that soft skills will be equally important as banks try to be more human in the digital world.

"So, it's not only the core IT component of it, but it's also the peripheral spend that a number of banks are focused on," said Prinsloo.

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