Even though South African banks are significantly investing in digital banking platforms and capacity, FirstRand, which controls FNB and RMB among other banks, believes that physical bank branches will continue to be key distribution channels over the next 15 years, according to CEO Alan Pullinger.
The Covid-19 pandemic, which restricted movement of people, fast-tracked uptake of digital banking platforms, with other use cases such as application and online banking also gaining momentum.
This coincided with some banks across South Africa and in the rest of Africa market also streamlining brick-and-mortar branches as a way of containing costs while banks without branches also mushroomed.
For FirstRand though, the physical bank branches will remain a key feature for its FNB division over the next 15 years. However, the financial services holding company is seeking to make the brick-and-mortar branches cost-effective.
“We see branches being an important aspect of our distribution channel for the next 15 years. We have however shrank the size of branches. We have also brought the digital story into our branches; where we are trying to use the customers’ device but if the customer does not have we use in branch device,” Pullinger said exclusively in a recent interview.
For FNB, the retail banking brand for FirstRand, more cash was now being put into ATMs and deposit terminals, with some branches “going cashless” and “operating without tellers”. Pullinger reckons that cash and tellers have been a major cost driver for the physical branches.
“Some branches have no teller while those that had 3 now have 1 teller. So some of the branches have gone cashless.”
Despite this, digital transactional volumes and values have been growing for FNB. In its financials released recently, FirstRand said transaction volumes through digital interfaces had surged 16% to 551 million for the banking app and 28 million for mobile banking through USSD platform.
Across the rest of Africa market, card transactions under FNB increased 21% from 80.3 million to 96.9 million while its digital penetration increased from 39.3% to 45.5%.
Digitally active customers, or those transacting on the FNB banking app, online and mobile banking, grew to 6.89 million over the year to June 2023, compared to 6.48 million a year earlier.
Active transacting users on the banking app had exceeded 5.2 million as at June 2023 against the backdrop of 110 million logins for the month of May 2023, the company reported.
“We talk much about people and digital banking; once our users login and get used to banking on the app, we are finding that they are not going back to the branch and this is driving usage and take up,” Pullinger explained.
He added that FNB was heavily investing in its tech and digital spheres as well as in IT support platforms.
“Although it’s not all into mobile banking but into all tech and IT aspects, what I can tell you now is that we are spending a total of R14 billion in tech and IT per year,” added Pullinger.
BUSINESS REPORT