African Banks are Scaling through Banking as a Service: Evidence from South Africa's Nedbank
Nedbank has been able to achieve giant strides over the years in Africa’s Fintech space. According to Barret Value Centre, their focus on building a strong foundation of values has contributed immensely. However, Nedbank have not been without some challenges. In fact, Nedbank was once considered the lowest of the top banks in South Africa. Their Headline Earnings were down 98% with a Return on Equity of only 0.4% and needed huge cash inflow to continue business.
Nedbank will become a force again thanks to the expertise of then CEO, Tom Boardman. He led a complete overhaul of how Nedbank carried out its operations.
By July, 2020, Nedbank prepared the roll out a new contactless payment solution known as “Tap on Phone”. This service enabled SMEs to use smartphones to accept quick, easy, and secure, payments from their customers. By April last year, the company launched a new feature for customers called Money Message on WhatsApp. This in-chat payment feature will allow users to make payments and get paid through WhatsApp.
Nedbank provides wholesale and retail banking services, and insurance, asset management and wealth management offerings. The Company’s segments include Nedbank Group, Corporate and Investment Banking, Retail and Business Banking, Wealth, Rest of Africa, and Centre. Nedbank Corporate and Investment Banking offers a range of transactional, corporate, investment banking and markets solutions. Nedbank Retail offers a range of banking and assurance products and services. The business banking portfolio offers a range of commercial banking products. The company’s Wealth provides a range of financial services through approximately three divisions of Wealth Management, Asset Management and Insurance.
How Boardman Transformed Nedbank
Tom Boardman understood that support needed to live the company’s vision was in creating a ‘High Performing Culture’. Traditionally processes had stunted the performance of the company. The application of digital processes was needed to ensure that the company stays afloat and meet demands.
Boardman outlined a three-year planning process which sought to address the immediate issues facing Nedbank while establishing measures to track the effectiveness of their initiatives. Priorities included breaking down silos within the organization through restructuring departments and the executive team, fostering transparency by promoting two-way communication between leadership and staff, and developing a fair and equitable environment which went beyond the laws required in South Africa.
In summary, it was Nedbank’s shift in priority that prompted its growth. The bank barely struggled to embrace the global move towards digitization. By offering fintech like services, the company seized the opportunity to expand into innovative and diversified revenue streams.
Market conditions within the financial industry are still marked by instability and on-going uncertainty. However, delving in Fintech services enables banks service Africa’s rapidly developing tech ecosystem, creating a “win-win” situation for both parties.
Nedbank had a change in leadership with a new CEO, while no one can predict the future, they continue to emphasise their culture.