“How can we help you?” seems to be the question on every South African bank’s lips as local financial service providers compete for their share of the new digital customer’s wallet.

While a line-up of usual suspects has dominated the local banking industry for a considerable length of time, incumbents are experiencing the early onset of digital disruption from various sources.

Not least of which from a local market chomping at the bit for financial services that are aligned to its digital world view.

Internet penetration amongst South African consumers is the highest on the African continent with 65% of over 16’s accessing the web daily, followed by Nigeria at 61% and Kenya at 53%. And while Digital Subscriber Lines (DSL) may have had a slow uptake due to geographical and other challenges (mobile connectivity is the medium of choice amongst most Africans in general) fibre connectivity to the home is set to further boost demand for more digital conveniences amongst the country’s internet users.

Big Banks’ Growing Concern Over Competition in the Digital Space

With cheap, fast and reliable internet no longer a stumbling block to realising new digital opportunities, the stage is set for a showdown between incumbent big banks and new players for digital dominance in the banking sector. At a recent event in Johannesburg, First National Bank (FNB) Chief Executive, Jacques Celliers, was asked about industry developments that had him most concerned. Unsurprisingly, Celliers mentioned the rise of new payers in the retail finance space that seems to be popping up everywhere.

Amongst them are Bank Zero (headed up by former FNB CEO, Michael Jordaan) and Tyme Digital who are positioning themselves as “digital-only” banks aimed at consumers looking to avoid long queues and paperwork associated with traditional banking services. Others are Discovery Bank, an initiative of the Discovery Health Group, and the soon-to-be-relaunched African Bank and PostBank. The latter two will have some ground to make up considering their less-than-stellar performances as service providers in the past.

“The real message is that we are on this exponential helpfulness journey. And now, with the help of technology, we can do so much more than we used to do. That’s our purpose.” ~ Jacques Celliers, CEO, First National Bank

As for the rest, it’s a world of possibilities thanks to South Africans’ readiness to warm to brands that go beyond simply delivering cookie-cutter products. Local consumers are demanding digital experiences that speak to their individual lifestyles and preferences and aren’t shy to move away from traditional brands if the grass appears greener on the other side.

However, stewards like FNB and others haven’t exactly been asleep behind the wheel. FNB is by far leading the way in product and service innovations with a plethora of digital tools and conveniences at the fingertips of its nearly 8 million customers. The bank just recently took honours as the first to launch biometric ID verification at selected ATMs in a pilot programme and is making it possible for consumers to open an account by taking a selfie on their phones.

Also, FNB is constantly expanding its mobile app and popular eBucks programme to include various lifestyle products and services. These efforts have paid dividends which shows in the bank’s standing as an innovation leader with a brand value estimated to be worth R20 billion.

Keeping Up With a Growing Digital Market

Research on South African internet penetration reveals that nearly 70% of the country’s online users connect to the web from their smart devices, with a significant decline in basic mobile usage in recent years. Surprisingly, usage amongst the +55 age group shows that the country’s older generations aren’t allowing themselves to be excluded from the conveniences and entertainment to be found in the digital space.

Further, with a local eCommerce industry that’s snowballing and millions of online shoppers ready to transact, it would appear that a digital financial ecosystem is forming in which brave explorers such as FNB and its procession of hot-on-the-heels competitors might flourish. However, it will be those who build their digital vision around the needs of their customers, instead of producing generic products, who will withstand the pressures that come with playing in the digital big leagues.