Big South African bank shrinking branches

Standard Bank is cutting its branch space and changing how clients interact with its services as transactions increasingly shift to digital channels. 

South Africa’s incumbent banks have rapidly developed their digital capabilities in recent years in response to greater competition from fintechs and digital-only banks. 

Clients have also increasingly turned to digital channels to conduct transactions due to ease of use and safety. 

Standard Bank noted that transactions conducted at its branches decreased by 13% in the first half of 2024 to around 2.5 million transactions as clients shifted to digital channels.

Over the same period, online transactions increased by 30% to 1.5 billion transactions, with Standard Bank clients performing an average of 10,400 digital transactions per month. 

ATM transactions have also increased by 8% to 104 million transactions as those still needing to conduct cash transactions turn away from branches. 

“Our customers’ preferences are changing rapidly, and we are committed to meeting their needs in the most efficient and effective ways possible,” Kabelo Makeke, head of Personal & Private Banking at Standard Bank South Africa, said.

Standard Bank has over the last five years actively planned the way it adapts to the rapidly changing digital environment but also to reduce the impact on staff and customers. 

This has been necessitated by the changing nature of banking. In this time the bank has actively reduced the average square meter size of its branches each year with a minimal impact on jobs.

The bank has reduced its branch square meters by 4% to 239,000 square meters in the last year, equivalent to about eight Ellis Park Rugby stadiums, without reducing the number of points of representation.

The number of points of representation in South Africa now stands at 654.

“Our goal is to provide our customers with the best possible banking experience, whether they choose to engage with us digitally or in person,” Makeke said. 

“By adapting our branch network and enhancing our digital capabilities, we are ensuring that we remain responsive to our customers’ needs and preferences.”

Apart from slashing the size and number of its branches, Standard Bank has also been reducing the number of ATMs it operates in South Africa. 

While the shift to digital channels has been the major driver behind the decline in ATM numbers, robberies and crime around the machines have also pushed banks to close them down. 

Makeke told Daily Investor earlier this year that pandemic-era restrictions on in-person interactions accelerated these trends. 

Makeke said demand for cash withdrawals has not fully recovered to pre-pandemic levels, leaving the bank with little choice but to shutter underutilised ATMs. 

“In recent years, we have seen a significant increase in ATM cash deposits driven by branch cash migration.” 

“ATM cash withdrawals remain largely flat whilst there is continued decline in utilisation of non-cash ATM services due to digital migration.”

Thus, Standard Bank has begun adjusting its ATM network in response to these trends and as part of its efforts to better serve client needs.  

“In some cases, this will result in the removal or relocation of low transacting ATMs to areas that are more convenient and accessible to clients.”

Standard Bank has slashed its ATMs from 9,321 to 6,232 over the last five years. However, its branch points of representations has risen by 58 in the past two years. 

It has also been renewing its ATM network by introducing more advanced devices with improved transaction speed and the ability to offer additional services. 

These new ATMs have several key improvements in their technology infrastructure to handle a greater capacity of transactions and complete them more quickly. 

While this is not a complete revolution of ATM services, it enables Standard Bank to offer more features and handle more clients with fewer machines.

“The new ATMs have higher capacity and offer more client services, including real-time acceptance, validation, and recycling of bulk cash,” Makeke said. 

“This is part of a five-year journey which will also result in either removal or relocation of low-transacting ATMs to areas that are more convenient and accessible to clients.”