Two-thirds of South Africans expect the country’s banks to make a full transition to digital banking within five years, a new report titled ‘The Future of Retail Banking in South Africa’ states.
The report was introduced at an event held in Sandton by Boston Consulting Group (BCG) in partnership with Discovery Bank.
The entities aver that, unlike other reports of this nature, it looks at the future of digitisation and retail banking from a customer and not a banking perspective.
The report analyses the views of 1 000 South Africans from all walks of life, 400 businesses and experts from across the globe to understand what customers expect, where banks need to potentially catch up and how it can be done.
Key findings include that South African retail banking has the potential to become fully digital in just five years if banks provide easy-to-use, secure channels and make human assistance accessible when needed.
Moreover, it notes that South Africans are further ahead of the technology curve than their banks.
The vast majority – over 86% – of South Africans across income bands, prefer conducting banking digitally.
More than 50% of customers over the age of 60 years are comfortable using a fully digital bank, the report notes.
It finds that only 40% of customers believe there will be a need for bank branches in five years’ time.
Nearly a third (31%) of customers – particularly those older than 35 – still prefer some human interaction, especially when resolving complex account problems or completing high-value service transactions, and 51% of South Africans say their top reason for visiting a bank branch is that they “prefer talking to a person”.
“Consumers are ready for a fully digital experience. While Covid-19 initially forced many to change their banking behaviour, they have now adopted digital servicing as the norm.
“Due to customer behaviours, however, such as preferring in-person service and still placing reliance on cash, it may take time for people to interact more virtually or to use other transaction types over cash.
“Banks will need to deliver an ecosystem of trusted and secure services that add value and guide people to adopt certain behaviours over time,” says BCG partner and MD Tijsbert Creemers, who co-authored the report.
Creemers indicates that to win in the future, banks should consider which, out of a number of viable business models, best suits them.
“The digital and traditional banking models will exist together and there is a space for all of these. How banks act, depends on their starting position. For example, incumbent banks need to digitise existing processes and services that their customer are used to and expect from them, in addition to delivering new digital interaction and service.
“On the other hand, a new entrant or challenger bank can create a completely new digital experience from the start.”