Banking On Digital

Digital banks trying to overcome what Bettr CEO Tobie van Zyl describes as “40 years of oligarchy”, which saw South Africa’s banking industry monopolised by the Big Four, have a tough road ahead. It is not only the longstanding legacies of well-entrenched brands that pose potential barriers to these industry newcomers, but also the loyalty factor: South African consumers are typically reluctant to change banks.

However, Van Zyl is confident that consumers will soon recognise the advantages offered by digital-only banks, from lowered costs (made possible because they don’t need to support the same infrastructure as their physical peers) to being geared to meeting client needs in a world that increasingly eschews the traditional linear progression of study loan, car loan, home loan. “Traditional banks are still trying to be all things to all people, but we can leverage data to deliver simple products that match a consumer’s experience,” explains Van Zyl.

He believes that banking is set to take on a different shape in the future, especially now that cryptocurrency has established itself as a legitimate currency, giving credence to digital banks in turn.

Consumers need not fret about security, thanks to the stringency of South Africa’s banking regulatory environment, and the requirement that fintechs are expected to adhere to capital requirements and ally with a banking sponsor.

Andre Hugo, CEO of Spot Money, points to another innovation gathering pace: open banking. He describes this as a banking platform that is unaligned to a specific bank, meaning that it can partner with a range of financial service providers. “It’s a marketplace where highly personalised financial services such as banking, loans and insurance can be coupled with lifestyle services, rewards and a range of intuitive services,” Hugo explains.