FNB, Standard Bank, Nedbank, Absa shrinking branches in South Africa
South Africa’s ‘Big Four’ banks – FNB, Standard Bank, Nedbank, and Absa – are shrinking their branch footprint in their country despite opening new points of presence in the past year.
This is reflective of a strategy shift from these banks in recent years, with them spending billions to enhance their digital offerings and reduce higher-cost client channels.
The shift has also been driven by increased competition from local digital-only banks such as Discovery Bank, TymeBank, and Bank Zero, which do not have any branches or ATMs.
This has forced the big, traditional banks to reconsider their points of presence across the country and meet the changing demand for their services.
Apart from meeting increased usage of digital channels to conduct transactions, these banks have also looked to reduce their operating costs and increase their capital efficiency.
The Covid-19 pandemic and the associated lockdowns also accelerated this trend, with limited in-person interactions forcing clients and banks to conduct business over digital channels.
This has largely reduced the need for full-service branches, with banks instead looking to minimise their footprint and focus on offering services that cannot be conducted digitally.
In particular, these banks have been closing down ATMs as the number of transactions conducted via these devices has not recovered to their pre-pandemic levels.
This makes them inefficient to operate, and with the associated security risks of moving cash around the country, they are increasingly difficult to service.
While there has been a clear decline in the number of ATMs around the country, the Big Four banks – besides Absa – have actually increased their branch number in recent years.
While these banks have increased their number of branches, the size of these facilities is actually declining as they are no longer seen as central to a bank’s offering but as complementary to digital services.
The reasons the individual banks give for reducing their branch footprint are outlined below, alongside the changes in overall branch numbers in the past financial year.
FirstRand (FNB)
FNB currently has a total of 624 branches in South Africa as of the end of its financial year in June 2024. This is up from the 614 branches it had at the end of its previous financial year.
FNB Points of Presence CEO Zibu Nqala told Daily Investor that the bank’s strategy is to continue growing its branch footprint in the coming years.
However, it has a strong focus on ensuring these branches are highly efficient, optimally sized for its clients, and are located in the right areas.
This has resulted in FNB branch space declining, on average, by 10% over the past two financial years. Overall branch presence (represented by the number of branches) has increased from 606 to 624 over the same period.
Nqala explained that this may result in the bank closing some branches that do not meet requirements or are no longer efficient. FNB looks at the below criteria in opening or closing one of its branches –
- The market requirements.
- The need and usage of the branch by the community.
- The viability and sustainability of the branch.
An ongoing initiative at present is the Branch Community Project, which commenced in May 2021, with the objective of building 50 new branches in township communities in the next few years.
This is to ensure adequate representation of FNB in previously underserviced communities. Since the inception of this project, 31 community branches have been opened.
Through a wide distribution network and competitive value offerings, FNB aims to increase financial inclusion, reach the unbanked and improve customer access to financial services.
The bank’s overall number of branch representation points is forecasted to grow continually in the future to ensure convenient and optimal accessibility to all customers.
Standard Bank
Standard Bank opened 33 new branches in South Africa during the 2023 financial year, with one more joining the network in the first half of 2024.
Similar to FNB, Standard Bank told Daily Investor that it is increasing the number of its branches to be closer to its customers.
However, the bank is also reconfiguring its branches to ensure they remain efficient and meet client demand.
This means that some of its old and ‘traditional’ branches are being repurposed and reduced according to customer usage and space requirements.
It pointed out that transactions conducted at its branches decreased by 13% in the first half of 2024 to around 2.5 million transactions. Over the same period, online transactions increased by 30% to 1.5 billion transactions.
Standard Bank has significantly cut the average square meter size of its branches in the past few years as a result.
Standard Bank’s head of personal and private banking, Kabelo Makeke, said it has reduced its branch square meters by 4% to 239,000 square meters in the last year, without reducing the number of points of representation.
It said it continues to optimise its infrastructure by, for instance, reducing branch square meterage and ATM numbers.
This is balanced by the fact that many of its clients still need to access and process cash, and the bank said it understands there is no substitute for in-person meetings when dealing with complex issues.
Makeke told Daily Investor earlier this year that demand for cash withdrawals has not fully recovered to pre-pandemic levels, leaving the bank with little choice but to shutter underutilised ATMs.
Nedbank
Nedbank has grown its branch footprint more moderately than FNB and Standard Bank, opening two new branches in the past financial year – taking its overall number to 547.
Nedbank attributed in its integrated annual report its reduction in ATMs and branch sizes to enhanced online service capabilities.
Over recent years, Nedbank has automated many services that were previously only accessible in branches or required personal assistance.
Today, over 200 retail services (up from 170 in 2022) and more than 400 business-related services (up from 200 in 2022) are available on its digital platforms.
This shift has significantly decreased branch visits and ATM usage, allowing the bank to operate more efficiently.
Through Project Imagine, Nedbank’s initiative to enhance its digital presence, the bank has reduced its branch floor space by 27,000m² in 2023. Since 2014, floor space has been reduced by 111,000m², now totaling 137,000m².
In 2023 alone, Nedbank decreased its branch and head office space by 62,000m². During the year, 386 new Imagine branches were opened, making up 71% of its total branches.
The Imagine branch concept emphasises convenience and digital self-service, including an app-based appointment booking feature.
Through the Nedbank Money app or Nedbank Online Banking, clients can schedule appointments with branch consultants, bypassing queues for personalised financial guidance.
“A reduction in employee numbers and activities dependent on staff and physical branches (mainly in terms of branch size) brings cost savings,” Nedbank stated.
These savings are partly offset by ongoing IT investments, skill-building to remain competitive in a digital landscape, and increased fee pressures as customers shift to more affordable digital options.
Nedbank reported that its move towards a new Target Operating Model, focused on optimising physical assets and organisational structure, has generated R2.2 billion in savings.
Absa
Absa was the only one of the Big Four banks to close branches in the 2023 financial year, reducing its footprint to 618 branches from 621.
As with Nedbank, in its latest integrated annual report, Absa attributed the reduction in its ATMs and branch locations to the enhanced capabilities of its app.
With an expanded range of services now available on the app, clients no longer need to visit branches or ATMs for transactions or document access.
This transition was made possible by successfully moving the Absa website and app to Amazon Web Services, allowing it to manage higher demand and more complex services.
The app now offers a full range of lending and deposit products, including credit cards, overdrafts, personal loans, Depositor Plus, Cash Investment Tracker, and client switching features.
Additionally, credit card management tools have been added to digital channels, enabling clients to adjust credit limits, activate and freeze cards, reset PINs, and request replacement cards.
According to Absa, these self-service features have reduced the need for calls and branch visits, lowering the use of more costly service channels.
The bank noted that it still maintains a strong branch network across major South African cities, and its ATMs serve a wide customer base nationwide.
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