African Bank confident of its transactional banking offering
CEO Basani Maluleke says the bank is relying on the low-cost, digital product to stop the loss of customers since its 2014 relaunch
African Bank says it’s on track to launch its transactional banking product in the first half of 2019. The bank, which relaunched two-an-a-half-years ago following its 2014 collapse, said the transactional product was being piloted to its staff members with about 3,000 now using it.
“We are going to have the lowest banking fees. The account will be fully digital meaning that people can open it without going to the branch if they don’t want to,” said African Bank group CEO Basani Maluleke during the presentation of the bank’s financial results for the year ended in September.
The bank has also been piloting the African Bank app to its employees and promised a seamless omni-channel experience. While African Bank was traditionally known for unsecured lending, the “good bank” that came out of the relaunch wants to make transactional banking a big part of its operations.
Maluleke said the bank was counting on the transactional banking offering to arrest the decline in customer numbers that the bank had been witnessing since its relaunch. The bank has already seen an increase of more than 200% in retail deposits in the year to September, reaching over R1.1bn.
“People now see African Bank as more than just a loan shop and that is very encouraging,” said Maluleke.
With three new banks entering the transactional banking space next year — Discovery’s behavioural bank, TymeBank and the PostBank — African Bank is entering a tightly contested space. But Maluleke said African Bank was targeting a specific customer profile.
“We are very cognisant of the fact that the other banks are coming onstream and we’ve done an analysis of where we think those banks are going to play. We are comfortable. We do think that our value proposition is a sufficient differentiator,” said Maluleke.
In the year to September, the group recorded a 29% increase in operating profit to R1.45bn which it attributed to reduced impairment charges as the risk profile of its customers improved. Its credit-impairment ratio decreased to 11.7% from 12.7% in 2017.