An FNB branch in Rosebank, Johannesburg. Picture: SUNDAY TIMES
An FNB branch in Rosebank, Johannesburg. Picture: SUNDAY TIMES

FNB is repositioning itself as a diversified financial services company in anticipation of fee pressure as new banks enter the market.

The bank, which already offers life insurance to about 3.7-million policyholders, has rolled out robo-advice tablets to 500 branches to allow its staff to sell comprehensive underwritten life cover and investment products. FNB retail CEO Raj Makanjee said the bank expects to have robo-advice at all branches by the end of 2019.

“We want to move from being a bank to an integrated financial services organisation. The combination of being a leading transactional bank and being able to help our customers manage money through the lend, invest and insure pillars, we think will help us continue to sustain the strategy that made us successful,” said Makanjee. 

“To keep sustaining the returns and profit growth, we had no choice but to look at alternative revenue streams.”

The new offering will see FNB start to compete with companies such as Discovery, which has also launched a bank. Until now most of FNB’s life insurance revenues came mostly from credit life and funeral cover sales, but with artificial intelligence-enabled tablets, the bank will have about 10,000 agents consisting of bankers and call-centre staff that will help it sell comprehensive risk cover and investment products.

The bank also wants to branch into financial planning and is upskilling some of its bankers with financial planning and investment management qualifications, said Makanjee.

“The power that our business model presents is the ability to take clients’ rich transactional information and use it to advise them on how they can manage their money better,” he said.

FNB will tap into transactional records of about 8.2-million of its customers and will use digital platforms and 628 branches to roll out its new services. This will give it one of the richest footprints among traditional integrated financial services companies in SA — the likes of Old Mutual had 348 branches at the end of 2018. FNB’s branch network is only surpassed by banks such as Capitec, which through a partnership with Sanlam started selling insurance in 2018.

FNB will use synergies with Rand Merchant Bank (RMB) and Ashburton, who are in the same FirstRand stable, to offer offshore banking and investment capabilities to its clients. But Makanjee said their investment team will also offer products where clients can invest in funds not owned by RMB or Ashburton.

At the same time the bank is working on a platform that will allow it to sell short-term insurance in about 18-24 months’ time.

Makanjee said while wary of new competition, FNB will continue gaining new customers, especially high-income earners as they usually want more than a transactional account. “If you look at most of the competition coming, it’s either focused on niche markets or only digital transactional offerings.”

Wessel Badenhorst, analyst at 36ONE Asset Management, said there appeared to be a heightened strategic consensus among industry executives about merits of an integrated financial services business model. However, to build one is not simple and requires a strong brand, he said.

“FNB has been more successful than most in selling more than just banking to their customers and already has substantial market share in insurance. To succeed in their ambition to capture more of the insurance market, FNB will require a lot of investment in attracting and developing its staff.”

He said time will tell whether FNB will be more successful than other banks that have attempted to enter this market.