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The South African banking landscape since 1994
In 1994, Absa, FirstRand Bank, Investec, Nedcor and Standard Bank dominated the South African banking sector, holding
83.8% of the banking sector’s assets. A decade later (in 2004), the same major bank groups represented a slightly higher
percentage (87.4%) of the banking sector’s assets, while 31 smaller banks held the remaining assets.
When we look at our current banking landscape, it is evident that certain
elements have not changed much over the last 20 years. The big five
banks still dominate, now with an 89% share of the banking sector’s
assets; and, although the way in which banking products and services are
packaged and delivered to the market has changed, the products and
services themselves have fundamentally remained the same.
Even so, some noteworthy changes have transpired since 1994:
• Between 1999 and 2004, a consolidation of banks occurred due to
the liquidity pressures and mergers that saw the demise of 22 small
and medium-sized banks.
• The mid-to-late 2000s saw the rise of niche market banks such as
Capitec and African Bank.
• Between 2010 and 2014, banks expanded into the insurance sector
and international markets.
Changes like these in the South African banking landscape have
not been driven solely by customer behaviour. It is important to
consider the impact that regulatory changes and new technology
developments have had on our banking landscape.
Significant investment had to be made in systems and people in
order to cope with a range of new regulatory requirements, such as
amendments to the Banks Act, the Financial Intelligence Centre Act
(FICA), Basel II, Basel III, the Protection of Personal Information Act
(POPI) and the Treating Customers Fairly (TCF) policy. As a result, only
the largest players in the market had the resources to comply with the
great number of sometimes onerous regulatory requirements.
To remain relevant, banks have also had to invest significantly
in new technologies and innovative ways to interact with their
customers. The explosion of the Internet and the introduction of both
smartphones and, more recently, cloud services have been the most
important technology drivers for banks.
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It is true that the way in which banks view the future is driven
significantly by their view of what their customers want, which
includes concepts such as:
• Inclusive banking
• Increased share of wallet
• Personalised service
• Anywhere-any-time banking
• A better understanding of the customer as an individual, through
data analytics and data mining
Customers will alwa