FNB shaking up South Africa’s asset management industry

FNB, one of South Africa’s largest banks, is making inroads into the country’s fiercely competitive asset management industry by leveraging its existing client base and offering an integrated service across all aspects of a client’s finances. 

This is being driven through FNB Wealth and Investments, which has shown strong growth over the past few financial years. 

FirstRand’s latest interim financial results revealed that its assets under management grew by 21%, while its total assets, including those under administration and execution, grew by 14% compared to the previous period. 

This brought the division’s total assets to R336.15 billion at the end of December 2023. 

It also grew the investment accounts held with FNB Wealth and Investments to 652,000, and its penetration of FNB’s retail banking clients reached 9%. Among private banking clients, this reached 14%. 

Daily Investor spoke to FNB Wealth and Investments CEO Bheki Mkhize to better understand its unique offering, where its future growth will come from, and what investment trends it is noticing in 2024. 

Mkhize explained that the division’s strategy is to cross-sell investment products and solutions to FNB’s retail banking clients, leveraging its position as an integrated financial services provider. 

This strategy is bearing fruit, as seen in their results. Their clients are responding well to the integrated service offered through a single touch point—whether that be the banking app or a private banker. 

“The whole aim is to advise clients on both sides of their personal balance sheet,” Mkhize explained. 

This means that clients will be offered services from transactional banking, lending, insurance, and investment products through a single touchpoint. 

“We want to integrate these into one conversation, and this is resonating well with clients so far,” he said. 

Mkhize noted that South Africans are increasingly using multiple bank accounts and investment managers. FNB’s strategy aims to keep the bank “front of wallet” and the primary institution for individual banking, insurance, and investment. 

Another unique element of FNB’s investment offering is the close relationship it has with Ashburton Investments, which FirstRand also owns. 

FNB’s Wealth and Investments division can leverage the expertise Ashburton has from working closely with institutional clients and its independent financial advice. 

Despite the tough macroeconomic environment and disposable income coming under immense pressure in South Africa, Mkhize is upbeat about the prospects for future growth. 

The initial aim is to increase the penetration of FNB’s retail banking clients, but he was clear that this does not mean the offering is limited to them, with the division looking for growth wherever it can find it. 

Mkhize explained the relatively limited penetration it has made into the bank’s client base as, historically, other asset managers within the FirstRand stable have dominated this space. 

The Wealth and Investments team has had to work hard to convince clients to shift their investment products to FNB. Mkhize says it can take a substantial period of time to convince individuals to switch to long-term products in particular. 

However, he said the division is growing well and is gaining momentum. 

Another area for growth is the performance of investments, which raises the division’s assets under management without relying on additional deposits from clients. 

He expects potential interest rate cuts in the second half of 2024 to further boost investment performance and increase South Africans’ disposable income, enabling them to invest more. 

Mkhize also emphasised the unique investment products the division provides, such as purchasing Krugerrands from the FNB App, which enable it to ride the wave of multiple investment trends in 2024.