Partnerships between banks and non-financial
institutions, such as retailers and telecom
companies are expected to become more prevalent
as banks aim to broaden distribution and reach
unbanked populations in South Africa and Africa.
INTERNAL RESPONSES
To date, banks have been successful in implementing costcontainment strategies as a means to maintain profitability. This
is expected to continue over the medium term as cost containment
is now regarded as the most important driver facilitating
improvements in ROE and return on assets (ROA), up from third
place in the 2011 survey.
Internal efficiency drives, automation and optimisation of staff
levels are key mechanisms for containing costs.
Overall staff numbers are predicted to grow marginally from
150 768 to 154 354 by 2016, which equates to growth of 2%. Based
on these modest increases, rapid adoption and implementation
of automation will be critical if banks are to achieve their
growth aspirations.
The Big Four banks are also evaluating their current branch
network. They currently operate 2 877 traditional branches; this
number is forecast to reduce by 21% to 2 285 by 2016. This is
consistent with their stated intention to transition more customers
to electronic distribution channels. This does not necessarily
mean that their distribution networks will be negatively affected.
Instead, banks are reaching out to customers through new selfservice touch points and smaller lower-cost branches which have
been increasing.
As the speed of technological innovation increases, banks are
facing immense challenges as to where to focus their investment
and what technology to use. Most banks say they will invest
significantly to upgrade IT platforms over the next three to five
years. The Big Four banks are forecast to invest R3 - R5 billion each
in the next three years.
KEY OBSERVATIONS
• Corporate banking, flow businesses (foreign exchange and rates) and business banking are the most important wholesale
market segments.
• Traditional retail banking (deposit taking and transactional banking), electronic banking and personal banking are the most
important retail market segments.
• Traditional retail banking (deposit taking and transactional banking) is viewed as the most intensely competitive market segment
and banks believe a fundamental change in strategy and positioning is required to compete aggressively in this segment.
• Rapid expansion in unsecured lending is the second-most important development in the South African banking industry.
Interestingly it was also considered to be the second-biggest weakness of the industry.
Edition 6
Subbed Banker 6 Industry Survey.indd 59
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