South Africa’s banking sector is increasingly moving towards a ‘marketplace without boundaries’ with new digital players challenging the status quo, PricewaterhouseCoopers said on Monday.
This year has already seen the announcement of three digital banking contenders.
Discovery Bank was launched on 14 November, offering a completely digital banking service with products designed to improve the money management of clients. It is up against TymeDigital which also has a strong fintech focus. It aims to provide affordable and accessible banking services through a growing network of partners, including Pick n Pay. Targeted client segments include unbanked and under-served clients as well as small and medium enterprises.
Joining the two is Bank Zero co-founded by former FNB CEO, Michael Jordaan, which announced that it had started its first trial runs with two strategic partners, multinational tech company IBM and financial services firm, Mastercard.
Advantages and disadvantages
PwC said the country’s four main banks had the principal advantage of being able to serve a sizeable share of South Africa’s retail and corporate banking customers but would need to develop clear innovation strategies and operating models to maintain this.
“One of the areas where the digital entrants will be able to establish an advantage over the universal banks is in their ability to launch new solutions in time periods of 3-6 months,” it said.
“Successful digital entrants have differentiated themselves from established banks not only in how they deploy innovation, but also in their business and monetisation models.”
The audit firm said one area where digital entrants were at a disadvantage was marketing budgets, with each of the universal banks in South Africa typically spending more than R1 billion a year on marketing alone. (via African News Agency)
