Banking and financial services

Digital services are expanding and improving.

Credit: Walmer Park Shopping Centre

The growing use of smartphones is creating new opportunities for banks and other financial service providers to bring banking services to a bigger proportion of the population.

A recent addition to the market is Standard Bank’s low-cost MyMo account. With free electronic transactions, unlimited card swipes and a low monthly fee, the MyMo account is ideal for low-income earners, micro-entrepreneurs and the poor. Customers do not have to visit branches to sign up for the account. They can take a selfie on the mobile app.

Standard Bank, which is Africa’s biggest bank, made its start in Gqeberha. Entrepreneur John Paterson launched Standard Bank in London in 1862 and opened its first branch in what was then Port Elizabeth in 1863. The initial spark was the discovery of diamonds in Kimberley but gold prospectors soon needed financing too, so 1866 saw the opening of a branch in Johannesburg. The bank continues to have a presence in Govan Mbeki Avenue.

Two new licences for mutual banking have been approved nationally, despite the collapse of VBS, a Limpopo-based mutual bank. The nature of the South African market lends itself to mutual banking. Both the Young Women in Business Network (YWBN) and Bank Zero will use the mutual model. Naspers Foundry is one of several investment funds looking for opportunities in the financial sector. Insurance technology is of particular interest, together with credit services and payment systems. Capital Appreciation, which is partowned by the Public Investment Corporation, is already invested in a software developer, a credit card payment terminal provider and has R500-million available for further investments.

African Rainbow Capital has a stake in the investment company and is the owner of TymeBank, which received a banking licence in 2017 and is expanding rapidly. Discovery Bank officially launched in March 2019 and is experiencing rapid growth with deposits of R3.7-billion. Discovery Bank is applying the behavioural model it uses in its health business to reward good financial behaviour.

Another relatively new bank is Capitec. Investment holding company PSG has reduced its holding in Capitec Bank from 32% to 4%, earning about R4-billion by selling those shares.

The financial and business services sector is responsible of 19.2% of the Eastern Cape’s Gross Domestic Product (StatsSA). The sector provides employment for 141 000 people. Agricultural finance is an important factor in the Eastern Cape. Production loans, vehicle financing and revolving credit plans all play an important role in keeping farmers and agroprocessors in business. ■

ONLINE RESOURCES

Auditor-General of South Africa: www.agsa.co.za Financial Sector Conduct Authority: www.fsca.co.za South African Institute for Chartered Accountants: www.saica.co.za SECTOR INSIGHT Two mutual banking licences have been approved.