South Africans predict retail banking will go fully digital

The majority of South Africans surveyed expect the country’s banks to fully transition to digital banking within five years, a new report reveals.

The The future of retail banking in South Africa report, released yesterday by the Boston Consulting Group (BCG) in partnership with Discovery Bank, indicates that hardly anyone today would doubt that at some point in the future, retail banking will be fully digital.

The report sampled 1,000 consumers and 400 businesses, with the majority considering the possibility of retail banking going fully digital in the near future.

The BCG and Discovery report comes as the retail banking industry in South Africa evolves, as evidenced by the rise of digital-only banks.

Over the past three years, SA has seen the launch of TymeBank, Discovery Bank and Bank Zero. This has forced traditional banks to accelerate their digital strategies and aggressively reposition their platform-based models to offer their customers innovative financial products and services.

A key finding is that South Africans are further ahead of the tech curve than their banks.

The report says the vast majority – over 86% – of South Africans across all income brackets prefer to do their banking digitally.

More than 50% of customers over 60 are comfortable with a fully digital bank, while only 40% of customers think there will be a need for bank branches in five years.

Nearly a third (31%) of customers in the sample – particularly those over the age of 35 – still prefer some human interaction, especially when resolving complex account issues or completing transactions valuable service.

Some 51% of South Africans say their main reason for going to a bank branch is that they “prefer to talk to a person”.

“Consumers are ready for an all-digital experience. While COVID-19 initially forced many people to change their banking behavior, they have now embraced digital services as the norm,” says Tijsbert Creemers, Managing Director and Partner at BCG Johannesburg and co-author of the report.

“However, due to customer behaviors such as preferring in-person service and continuing to rely on cash, it may take time for people to interact more virtually or use other types of transactions. rather than cash.

“Banks will need to provide an ecosystem of reliable and secure services that add value and guide people to adopt certain behaviors over time.”

Hylton Kallner, CEO of Discovery Bank, said: “We are essentially powering the future of retail banking and we are now at the starting point of building complete ecosystems for customers.

“This research is an exciting confirmation of where the future of banking is heading, and it has been a pleasure to work with BCG not only to understand consumers, but also to highlight the ways the banking industry can adapt in a digital world.

“Customers are no longer restricted by ‘hours of operation’ or geography, and joining a bank or opening an account is no longer dependent on the location of banks.

“In fact, we’ve seen that almost 50% of accounts are opened after business hours or on weekends. With 30 to 40 clicks on a mobile device, the technology enables the whole process in minutes and without the need to visit a branch. »

Hylton Kallner, CEO of Discovery Bank.

Hylton Kallner, CEO of Discovery Bank.

According to Kallner, in a digital banking environment, technology enhances convenience and quality of service.

“With the increased level of sophistication built into modern banking applications, we are seeing customers accessing their accounts almost daily to monitor activity, manage money and make payments. Call centers, enabled by videoconferencing and other live chat technologies are becoming the human interface for banks as we use technology to deliver strong front-end banking capabilities and build end-to-end service models in a virtual environment.

Creemers explained that to win going forward, banks would need to determine which of a number of viable business models suits them best.

“Digital and traditional banking models will co-exist and there is space for each. How banks act depends on their starting position.

“For example, incumbent banks need to digitize existing processes and services that their customers are used to and expect from them, in addition to providing new digital interactions and services.

“On the other hand, a new entrant or challenger bank can create a whole new digital experience from the start.”

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