The economy is pretty shaky right now, business confidence is low, load shedding is starting again, and yet it is reported that there are 6 new banks entering the South African market.
Some of them are completely new, some are revamped and retrofits, but they are competing with the traditional big 4, and there are some jitters in the banking fraternity.
Standard Bank group CEO Sim Tshabalala stated in a BusinessDay report that they were “bracing for the potential disruption Discovery Bank will bring.”
Discovery will be joining Michael Jordaan’s bank Zero, Tyme Digital is Patrice Motsepe and African Rainbow Capitals new entrant, SA Postbank is renewing its offering, Young Women in Business Network is launching a co-operative bank, and African Bank following their bailout are relaunching transactional banking, and Capitec is busy buying Imperial Bank from its Portuguese owners and entering the business banking sector.
The main interest in the new entrants has been those that are offering a completely digital bank, no branches, and operated on a smartphone. They are offering virtually no fees and “reasonable” interest rates on Credit balances, and some are not entering the loans market.
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The existing big four are expected to counter this new onslaught, and FNB, Nedbank Standard bank and ABSA have recently been revamping products and services and marketing and enhancing their loyalty programmes.
They have been transferring money for quite a while, but are set to open as a full financial services provider. In a deal with Australia’s Commonwealth Bank and African Rainbow Capital the new bank is aiming to attract the lower to middle-class market, as well as micro to medium-sized businesses.
Their website offers the ability to open an account now.
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Capitec is buying Imperial bank, the sale, however, remains subject to the prudential authority and the competition commission.
Will be entirely digital and handle all of its services and communications via an app, and all banking can be done on a smartphone. They will not offer credit.They are targeting a younger, more tech savvy market that wants to do their banking the same way they interact with other digital media.
Initially Michael Jordaan planned to launch at the end of 2018, but it now appears on social media that early 2019 is more realistic.
Discovery card, as all good debt counsellors know, is handled by FNB. Discovery is buying back their quarter of a million primary cardholders and will be entering the market as a full financial service provider.
After years of existing through FNB, Discovery Bank is prepared to function independently as a fully-fledged financial services entity. With around a quarter of a million primary cardholders, the bank will launch on a good footing. They have the advantage of an already strong brand through their medical and other products.
African bank after their good bank, bad bank split is set to re-launch transactional services with an account called “My World Account”. This will be managed through the African bank website, an app, or on their cellphone. They are also punting very low fees in competition to the more traditional banks.
This is not really a new bank, as they already do savings accounts and basic transactions, and take term deposits.
They want to enter the full-service banking sector with cards, deposits and other products, but first they need a banking license.
Siyabonga Cwele, the Telecoms and Postal Services minister, has confirmed that the bank is expected to have its fully-functional banking services by March 2019. He also expects the bank to play a more of a development role than compete head-on with the big four.
This women led bank is operating on a type of “stokvel” model and would like to become registered co-operative bank. They expect to attract black entrepreneurs and the informal economy. They need to reach 1 000 members to be registered as a co-operative bank. The public can already apply to be part of the bank and the minimum share capital deposit fee is R10 000. Co-operative banks are wholly owned by their members.
Capitec has been around for a good few years now and has grown into a formidable bank which has weathered the Viceroy credibility storm and emerged to move forward.
Capitec is also set to join the “big” banks and through specialist business bank, Imperial bank, will now be entering the business banking market which is where they fell short in the past.
These disruptions are normally good for the consumer because all banks will be looking at areas where they can offer cheaper and better products more conveniently and I think there is a lot of creative headscratching in many of the marble towers.
So expect to have a lot of options available in the future at better prices for more rewards. The old banks will evolve and change because new entrants are coming and this should provide an option for everyone to find a bank where they feel comfortable; from the permanently connected youth to the informal streetside trader. Everybody needs a bank and those that offer clients convenience at the right price will survive and flourish as our economy grows and improves.
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