Personal indebtedness at
worryingly high levels and a reduced demand for credit and fears
over job security in South Africa meant Absa could not escape the
global financial crisis unscathed. But as the bank’s group
executive for retail banking, Gavin Opperman, tells Douglas Blakey, 2010 will bring
exciting opportunities.
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The
statement from Absa to the Johannesburg stock exchange on 4
December that its profits for the 12 months to 31 December will
fall by as much as 35 percent year-on-year attracted much publicity
and removed any notion that the bank could escape unscathed from
the global economic crisis.
With proportionately more exposure to the
retail market than its rivals – such as its market-leading mortgage
share of more than 30 percent – the resultant pressure the domestic
downturn has placed on its lending book ought to come as no
surprise.
But from a retail banking viewpoint, the 4
December statement contained no fresh bad news.
While the bank said its investment-banking
unit “has been particularly impacted by the effect of adverse
market conditions,” it added that “the remainder of the business
clusters have performed in line with the guidance communicated at
the group’s interim results.”
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By GlobalDataAnd looking back at the past 12 months, Absa
group executive for retail banking Gavin Opperman is by no means
downbeat.
Opperman told RBI: “All banks have
been challenged and we have had to focus on the distressed customer
to see how one can continue to act as a responsible lender but we
will show good retail results – and that can be attributed to the
bank managing its delinquent book incredibly well.”
Nor was 2009 without some major successes. Its
multi-channel service CashSend, allowing Absa customers to transfer
cash from their own cheque or savings accounts to anyone in the
country, with recipients able to withdraw cash at ATMs without
needing a bank card or account – has won awards around the world
and been one of the most successful retail launches of the
year.
Though channel and product investment has paid
off, Absa CEO Maria Ramos’ drive to promote a culture of excellence
(see RBI 618) is one Opperman
is at pains to articulate.
He rattles off the Absa service mantra:
listening to and understanding client needs, meeting customers’
basic banking needs, making banking easier and being competent and
trustworthy as key to its retail ambitions.
There is however much more to the bank’s
retail plans for 2010 than a determination to exceed customer
expectations.
New pricing model by mid
year
He revealed plans are underway to
boost cross-sell metrics by re-evaluating the bank’s pricing
model.
“I want to make a move towards pricing at the
customer level as opposed to the product level and incentivise
customers to have more than one product,” Opperman said.
“This has to be looked at from the customers’
perspective. Banks have generally been good at pricing at the
product level but not at the customer level.
“I want to have something up and running by
the middle of 2010 – and this change has to involve giving
something back to the customer. Yes, we have bundled accounts
already, but that is not enough,” Opperman continued.
He is also insistent that pricing must take
account of and promote channel choice.
And on the subject of distribution, 2009 could
scarcely have been more of a success for a bank which has been one
of the leading evangelists of mobile banking. In February, Absa
become the first South African bank to announce it had signed up
one million m-banking customers (see RBI 607); by the end
of November the number had reached 1.6 million.
That is, however, just for starters with
Opperman promising further innovation in the year ahead.
“I maintain you need to be a leader in the
digital space in order to be a leader in the retail banking space,”
he added. “Mobile is part of everyday lifestyle and the technology
enhancements being made by mobile operators are extremely
encouraging for a bank.
“Next year, we will make further enhancements
to our m-banking platform. The physical footprint will also expand
further in the New Year and I am planning 14 new branches as well
as 550 new self service terminals, incorporating ATMs, cash
centres, cheque deposit machines and self-service kiosks.”
Locations for the new terminals will include
“fuel stations, shopping malls, sports stadiums – anywhere where
you find the consumer, where you see feet moving. We have to bring
convenience to the consumer”.
He added: “2010 is a time to grow and will
bring exciting opportunities.”
The FIFA World Cup taking place in South
Africa in June has also occasioned channel and product investment
including: upgraded multi-language ATMs, additional foreign
exchange outlets and a new travel card introduced ahead of the
biggest sporting event of 2010.
The new year will also witness an acceleration
of Absa’s drive to streamline its back-end systems in a major
integration project as part of an effort to rid the bank of
duplicated processes.
“The drive to streamline the middle and back
office offer a great opportunity for us, for any bank that gets
this right… it will be very advantageous,” Opperman said.
Other priorities in 2010 include a ramping up
of its private banking ambitions, an area in which the bank has
invested heavily in time and money.
“We have done a lot in this area but next
year, I want to take this to the next level – we want to be
recognised as a leader in the private banking space,” he added.
But of all the bank’s retail ambitions for
2010, driving a savings culture among South Africans is arguably
the most daunting.
“We have to try and make customers understand
the need to save,” he concluded.
