Western Cape Business 2017 edition

OVERVIEW Banking and

OVERVIEW Banking and financial services The JSE has opened an Exchange Hub in Cape Town. SECTOR INSIGHT A Stellenbosch bank has expanded the Big Four to Five. • International banks are setting up app development hubs in Cape Town. The finance and insurance sector contributes 10.9% to provincial GDP and grew at a rate of 6.4% between 2000 and 2013. Research done by banking group First National Bank notes how successful the Western Cape has been in attracting financial services companies of every sort. These range from asset managers to hedge funds, venture capitalists and insurers. The sector outperformed most other sectors according to the report, and further growth is anticipated (FNB Chartbook). The decision by the Johannesburg Stock Exchange (JSE) to open a JSE Exchange Hub in Cape Town confirms the city’s importance in the financial world. There are eight Cape Town-based companies in the Top 40 Index of the JSE: Capitec Bank, Mediclinic, Naspers, Woolworths, British American Tobacco, Remgro, Shoprite Holdings and Sanlam. The head offices of financial firms are dotted all over Cape Town. These include Old Mutual (a huge complex in Pinelands), Foord (also in Pinelands), Coronation (Newlands), Prudential (Claremont), Sygnia (Green Point), Sanlam (Bellville) and Allan Gray (Waterfront). PSG has its headquarters in Stellenbosch and is well represented in rural towns in the province. Even the small rural town of Greyton is home to Overberg Asset Management. Insurers such as Santam and Metropolitan Life are based in Bellville. Most of the banking groups also offer a range of services such as asset management or investment advice. Financial services group Old Mutual (which has a 54% stakeholder in Nedbank) is set to create four stand-alone businesses out of the Old Mutual Group. This will allow the UK-based wealth management business and the New York-based asset managers to be free of linkages to the rand, while the South African businesses, Nedbank and Old Mutual Emerging Markets, can focus on their specialities. Fintech is the new buzz word in the world of banking. Barclays has established a worldwide organisation to promote the latest thinking in app development. Rise has seven outlets around the world, including one in Woodstock in Cape Town. A WESTERN CAPE BUSINESS 2017 112

OVERVIEW French-funded fintech operation was launched at Century City in November 2016. In 2015, the Western Cape Provincial Government, the University of Cape Town, Barclays Africa Group, FirstRand and Liberty launched the African Institute of Financial Markets and Risk Management (AIFMRM). One of its aims is to meet the demand for skills by developing local talent. Banking For many decades South Africa had a retail banking Big Four – Standard Bank, Nedbank, Absa/ Barclays and First National Bank. All of them have a strong presence in the Western Cape, but the big news in the sector since 2001 has been the emergence of Stellenbosch-based Capitec Bank. Based on Capitec’s results for 2015/16, BusinessTech published a chart giving Capitec the fourth-most customers, at 7.3-million, just less than Nedbank and slightly more than FNB. Standard Bank (about 11-million) and Absa (about nine-million) are top of the list. With the renewable energy sector being actively pursued in South Africa, a whole new industry in need of funding has opened up for banks. Competition among banks in reaching out to South Africa’s emerging economy is stiff. Finscope’s 2014 survey of South African banking and financial surveys shows that between 2004 and 2014 a remarkable eight-million people were connected to the financial system in some way. Overall, the “financially included” reached 31.4-million (up from 17.7-million in 2004). In a category called “formally served” which includes services other than formal banks with branch networks, the percentage of South Africans so served grew from 50% to 80%; in the “banked” category (more traditional but including new devices), the percentage grew from 46% to 75%. This is partly because South Africa’s formal banking sector has such excellent – and widely spread – infrastructure. Among recent innovations designed to reach the unbanked were Teba Bank’s decision to allow customers to deposit at supermarkets, Pick n Pay Go Banking (a division of Nedbank), 70% of Absa’s new ATMs (400 in one year) in poorer areas and Absa’s launch of two mobile banks. FNB created mobile branches and most of Standard Bank’s new sites were planned for townships (Finscope). Absa’s partnership with Thumbzup allows shops to accept card payments with smartphones and tablets. Absa’s Entry Level and Inclusive Banking (Elib) branches have proved popular, accounting for an increasingly high percentage of the bank’s loan book. Nedbank has Approve-it, which allows customers to accept or reject an Internet transaction by cellphone. FNB offers a range of cellphone-banking options and a Facebook application where cellphone vouchers can be posted on the socialnetworking site. The eWallet application converts the voucher into cash or airtime. Standard Bank’s community-banking initiative offers a low-cost cellphone-banking service. Retailers can act as agents for the bank, even in remote rural areas. Shops such as Shoprite, Pep and Spar are connected, as are certain spazas. The stokvel (savings clubs) market is estimated at R44-billion and developing products for this market could be a lucrative outlet for South African financial services companies. ONLINE RESOURCES Alternative Exchange (AltX): www.altx.co.za Auditor-General South Africa: www.agsa.co.za Banking Association South Africa: www.banking.org.za Financial Services Board: www.fsb.co.za Insurance Institute of South Africa: www.iisa.co.za Insurance South Africa: www.insurance.za.org JSE Limited: www.jse.co.za Post Bank: www.postbank.co.za South African Reserve Bank: www.resbank.co.za South African Institute for Chartered Accountants: www.saica.co.za 113 WESTERN CAPE BUSINESS 2017