The number of customers using the FNB banking app rose by 85% in 2015.
The amount of time the average First National Bank customer spends in a branch will fall to 86 minutes in 2016, from 100 minutes in 2015, a decline of 14% year on year, FNB Business chief information officer Peter Alkema said on Tuesday.
The improvement, he said, means that FNB customers will spend a total of 8 760 fewer days in bank branches during 2016 compared to last year. “That’s a quarter of a century back in their lives [overall].”
The reduction in branch use by customers is part of the bank’s strategy to drive users to digital channels, including online banking and the company’s smartphone app.
Although many people still regard physical branch infrastructure as a way into “financial inclusion”, it’s not a “point of dependency” but rather a place of first contact, Alkema said. “We quickly move them onto our digital platforms [after becoming customers].”
He said FNB has seen a “dramatic” increase in the use of its app and its mobile banking services in the past year. Total internet, mobile and app transaction volumes have risen by 15% over 2015. The number of customers using the FNB banking app rose by 85% in the same period.
The bank’s eWallet is also proving popular. FNB expects R1.5 billion to be sent via its mobile money service by the end of the year.
Alkema said fewer customers are using branches to deposit cash, with four times as much cash being deposited at automated terminals than in branches. However, despite the growing move to digital channels and payment methods, the use of cash in South Africa continues to increase at a rate of about 10%/year.
Meanwhile, Alkema has warned that telecommunications operators, which are keen to expand into financial services, may be underestimating what is required of them to build a serious retail presence.
MTN Group, in particular, has aggressively hired new top executives with extensive experience in the financial services sector. They include incoming CEO Rob Shuter (ex-Nedbank), incoming chief financial officer Ralph Mupita (ex-Old Mutual) and vice-president of strategy and mergers & acquisitions Stephen van Coller (ex-Absa), signalling that financial services is a key future focus area for the company.
“Those companies must go the Discovery route of putting down big money and building a big team to build a retail bank,” said Alkema. “It’s not an overnight thing. [Discovery CEO] Adrian Gore understands this. When you see the telcos putting serious cash reserves aside, then [we’ll know they’re serious].”
Still, the telcos are well positioned to enter financial services, Alkema said.
“Airtime has become a geographically independent store of value. In Africa, people buy airtime for people in other countries — it’s become a cross-border remittance. So, telcos already have a pseudo digital currency. They are already sitting on a digital store of value, which is that data and voice capability. When they can figure out new and innovative business models around that, it will be hugely interesting.”
Alkema said telecoms operators need to find innovative business models that are not simply an add-on to their telco capabilities but a full banking offering. “They need to get out there and say there are building a retail bank, exactly like Discovery has done.”
The problem is the market is already competitive, in an economy that is depressed, making it difficult for new players to break in.
“The only market share available is the market share you can take away from existing banks,” said Alkema. And that will be a tall order given that local banks have a “strong foothold” and are “innovative”. Also, the regulatory environment is “tough”, making it difficult for new players to enter the market successfully.