New era for Standard Bank

Standard Bank wants to use its sprawling presence across Africa and major international finance hubs to give its clients a one-stop banking. 

This comes as the bank increasingly searches for the Holy Grail – an integrated financial services provider that stretches across banking, insurance, and investment management. 

The bank wants all of these experiences to be connected and increasingly wants that to be the same across its African operations. 

Standard Bank South Africa CEO David Hodnett refers to this as experiencing “one Standard Bank” wherever you are and whatever you are doing. 

Speaking at the bank’s Business and Commercial Banking Africa Unlocked conference, Hodnett outlined the bank’s longer-term vision for operating on the continent. 

The bank has spent the better part of 50 years building operations across 21 African markets and four international hubs. 

This enables it to service governments, corporates, businesses, and individuals in these diverse markets and, increasingly, across them. 

“The reality is that many of our clients do not simply operate in South Africa – they grow into the rest of the African continent or elsewhere,” Hodnett said. 

A growing market for the bank has been the increased trade and investment flows between Africa and the Middle East, with it opening offices in Egypt to facilitate these deals. 

“These are markets that operate under entirely different regulatory environments, with different currencies, different compliance requirements, and different banking infrastructure,” Hodnett said. 

“What I want you to know is that we are working hard every day to make sure that when you cross a border, Standard Bank crosses with you.” 

Hodnett said the bank wants the experience of banking with them in Lagos to be connected to the experience in Johannesburg or Nairobi. 

“You will not be arriving in a new market and finding yourself starting from scratch with a bank that does not know who you are or what you have built,” Hodnett said. 

“We are completely aligned on this. Our clients need to experience one Standard Bank, not a series of country-by-country interactions that are disconnected.” 

The Holy Grail

The creation of one Standard Bank across Africa is being coupled with the bank’s search for the Holy Grail in the form of integrated financial services. 

This has required a significant restructuring of the bank’s business over the past decade to create the correct building blocks. 

Standard Bank Group CEO Sim Tshabalala told Daily Investor that the bank, prior to 2020, was not serving its clients in the best way possible. 

The bank’s structure at the time had clumped together personal and business banking on a scale created drove significant efficiencies. 

However, this came at the expense of client experience, with Tshabalala spearheading the split into personal and private banking and business and commercial banking. 

“The work necessary to create those value propositions, to create the products, the pricing, the relationships, the distribution channels, and the technology is very different from that for personal banking,” Tshabalala said. 

“We are now laser-focused on what we need to do in these divisions. Laser-focused on what must be done in PPB, how to deal with the credit card division, how to deal with vehicle finance, for example.”

The main beneficiary of this has been the business banking arm, which can now focus solely on servicing businesses across Africa. 

Standard Bank retains a dominant position in the commercial banking sector, which is made up of relatively large businesses that are privately owned. 

It has historically struggled in the small business space, where its age-old competitor, FNB, has had the upper hand. 

A key part of creating an integrated financial services provider for the bank has been the reintegration of Liberty into the group. 

The reintegration naturally created efficiencies within the insurance business, but it also crucially gave Liberty the ability to sell its products into the bank’s client base. 

For the bank, having a significant insurance and asset management business gives it a significant source of annuity-type income that is highly profitable. 

“What we did was to take all the insurance businesses and all the asset management businesses which were scattered throughout the group and put them under one umbrella,” Tshabalala explained. 

Now, Standard Bank has the blocks for an integrated financial services provider that can serve all of a client’s needs, from lending through to retirement. 

This enables the bank to be the first to hit the Holy Grail, with insurance and asset management CEO Yuresh Maharaj believing it to be imminent. 

“It is imminent, but on a serious note, I think it is always a journey because it is easier to speak about the Holy Grail than to deliver it,” Maharaj told Daily Investor.

“If you look in South Africa, none of our traditional banking competitors has the capability that we do to manufacture insurance products at scale across the spectrum,” Maharaj said. 

“We can sell the most simplistic products from funeral insurance through to the most complex life and business assurance of up to R200 million per single life.” 

These capabilities are now fully integrated within Standard Bank’s group operations following the buyout of Liberty’s minority shareholders in 2022.