The future of banking is lightweight and automated on the inside, helpful and digital on the outside.
The South African banking sector has consistently ranked in the top 10 in the world. It employs over 150 000 people, provides a backbone of financing and money management solutions and helps drive inclusion and access to the formal economy. The banking charter and empowerment act ensures commitment to progressive policies across human resources, procurement, financing, ownership, corporate social investment and economic transformation. For example, since 2012 FNB has committed R10bn to mainstream market housing and since 2009 RMB has invested R36bn in black economic empowerment transactions. Our banks manage a combined total of 30 000 access points across the country including branches and ATMs which bring financial inclusion within 15km of more than 80% of the population.
SA’s banking technology is also highly rated in the world, and whenever I travel abroad I am reminded of how advanced our financial systems have already been for many years. Many countries are also making significant progress in fully digitising their money systems - Sweden is almost cashless and by 2023 Turkey will have no notes or coins in circulation. There are three main benefits to driving digital money adoption: more people enter the formal economy, costs are reduced, particularly in public and retail sectors, and innovative businesses gain market share with new products and services. Established banks and startups are using so-called ‘Fintech’ to drive this disruption through new technologies in most lines of business. Locally, newly licensed players are entering the market which will increase competition and consumer choice.
Safety is an important consideration in South Africa where cash heists continue to rise as more than R130bn of hard currency circulates every year on our highways and through our public spaces. A government task force is addressing high value cash crime but the long-term solution remains a continued drive towards digital forms of exchanging or storing value. Education about alternatives is crucial, helpfulness in our FNB branches is a stepping stone from popping in to logging in; of the 10 billion interactions our customers had with us last year, 85% were on digital channels and our year-end results this week stated a 66% volume increase on our app. Digitisation of money increases safety but has changed the nature of trust - for digital natives it’s a swipe left or right, they reward convenience with loyalty.
FNB’s brand promises continue to be powered by innovation which has also seen us add non-banking product lines in recent years. We’ve seen exponential growth in life insurance policies, making us the fastest growing digital self-service insurance provider in the country. FNB smart phones provide good value, high quality devices for nearly a hundred thousand customers while over half a million are connected with voice and data bundles on our virtual network. These are disruptive businesses that are scaling rapidly and have become important parts of our ecosystem.
The next wave of disruption will be driven by exponential growth in frictionless buyer-seller transactions on networked, virtual markets. Our nav>> platform now offers value-adding services to support car and home ownership decision making which uses insights, real time partner information and our secure, digital banking platforms. The nav>> home service has improved lead quality and significantly reduced costs of origination. Our customers can also benefit from useful insights and services during these life-stage decisions which often constitute more than 50% of their household spend. FNB’s nav>> platform is a GPS for financial well-being that goes Over-The-Top of banking to put our customers in the driving seat of their financial decisions - the future of help is to help people help themselves.
For successful companies, the platform revolution will also turn inwards as internal operations benefit from re-usable customer centric innovation. Digital self-service channels can also be adapted for staff; if you need to talk to us, we will help you “do it yourself” on your FNB banking app rather than “do it for you” with a separate process on a different system. Uber already use this model - passengers digitally map their own route, they just need help with a driver and car, which is then optimised with analytics based on that route. The passenger and driver both have a slightly different user experience but they access the same platform to manage their buy / sell role in the transaction. Importantly, the ride payment is invisible but implicitly trusted - customer expectations have shifted and so has banking.
Digitisation also requires inside-out thinking that completely redesigns and disrupts traditional business models - this is true of all industries not just banking. Well adopted new ways of working can ensure that an organisation’s internal cultural evolution also keeps pace with digital migration. Customers want less paper and queues, employees want convenience in work processes that frees them up for better service. Digitisation also drives security - well managed smart authentication is more secure and convenient than passwords or even physical access cards.
The next generation enterprise is intelligent and social - cognitive computing can work faster and better than humans. This will be disruptive in highly manual work areas but technology also creates new jobs so the companies that thrive in disruption will be able to upskill their workforce and redistribute capacity. Self-disruption should be much more than a defence tactic, at FNB it’s a strategic imperative.
Solutions for inclusive growth in South Africa should include a renewed focus on technology and digitisation, not just in banking but all industries and government processes, especially where there is contact with consumers and citizens. Time spent standing in queues and filling in forms costs our economy through lost productivity. Nav>> car will deliver your vehicle license to your door while smart IDs and passports can be collected in our branches after applying online. Over 100,000 businesses have used our online CIPC registration process as well as free accounting and payroll software as a secure service.
Our ecosystem of helpfulness will continue to improve and digitise as the platform revolution drives the next wave of disruption in banking.