‘Mortal Combat’ Faces Standard Bank in Pursuit of Rich Africans Big

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JOHANNESBURG (Capital Martkets in Africa) – Standard Bank Group Ltd.’s goal of adding at least 10 millioncustomers ahead of a 2025 deadline has set the stage for a tug-of-war over Africa’s wealthiest clients.

The biggest lender in Africa, with a 160-year history on the continent and a presence in 20 countries, has the advantage of scale over its peers as it looks to grow its customer base to more than 25 million. But persuading the most affluent patrons to leave rival banks will be a hard-fought contest.“At the apex of the pyramid, clearly you are going to be in mortal combat with your competitor,” Chief Executive Officer Sim Tshabalala said in an interview. “As you go further down, it’s going to be about bringing many new entrants into the system.”

The competition among banks and multinational firms venturing into financial services in Africa is heating up. In a measure of the challenge facing Standard Bank, a report this year found that South Africans stick with their main bank for nearly three decades before switching, roughly double the time it takes Americans to move and 70% longer than U.K. citizens.

The Johannesburg-based firm is targeting more of the continent’s population of about 1.3 billion, which includes younger people that are growing wealthier and becoming more digitally active. 

The number of internet users in Africa has shot up more than 260% since 2010 and total consumer spending is expected to exceed $5 trillion by 2030, according to research compiled by Standard Bank.

Away From Home
To boost revenue by between 7% and 9% by 2025, Standard Bank has a few levers to pull. 

Among the wealthy — in both its business and retail-banking offering — it will be gunning for the clients of its competitors. But the biggest gains will likely come from the mass market, where it plans to focus on previously underbanked individuals through a mobile-money offering. 

“Previously they were not doing such a good job in the mass market but now they are gaining momentum,” Nolwandle Mthombeni, a banking analyst at research firm Intellidex, said by phone. “But the numbers are very ambitious and one good year doesn’t make a season. They still have to show momentum for a few more periods to reap revenue.”

Rates, Fintechs
The lender is also anticipating an income boost from interest-rate hikes in South Africa, partnerships with fintech players and sales of non-bank products such as lotto tickets and airtime.

While operations on the continent have offered Standard Bank protection from low growth in South Africa, its footprint presents other challenges. 

In Mozambique, the lender is fighting allegations of exchange-rate manipulation and part of its Angolan unit was seized by authorities after partner Carlos Sao Vicente was arrested amid fraud charges. 

Its continental rivals are also growing — Nigeria’s biggest lender Access Bank Plc has entered South Africa and is planning an offering targeting foreigners.

“It’s a good thing that they enter the South African market,” Tshabalala said. “Frankly, why should South African-headquartered institutions be able to enter other jurisdictions and not vice versa?”

Source: Bloomberg Business News

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