Lately, integration has been the buzzword at Johannesburg-based Standard Bank. Senior management has spent much of the last year investing heavily in integrating its African businesses to bring them under one common umbrella. The bold restructuring transformed Africa’s biggest banking group “from a federal group of banks that we’ve acquired over the last decade, to a single group with a common vision, a common systems platform, and a common management structure,” according to the bank’s Africa head, Craig Bond.
Along the way, Standard Bank has expanded its operation to 17 countries on the continent over the last 18 months, issuing over 1.3 million credit cards over the same period. The hard work is paying off: the bank (which operates in 40 countries worldwide including Russia and Argentina) also increased its net earnings by 18% in the first half of this year, to 359 cents a share.
A key impetus of the last year has been a renewed focus on customer needs. The bank implemented a widespread “customer analysis” focusing on both corporate and retail products. On the corporate side, says Bond, the bank wants to “get the basics right”. This means extending the branch network and investing in the electronic systems that allow the bank to process standard products, such as those needed to make global transactions.
For example, Standard Bank is piloting a bespoke internet-banking service that provides internet-banking to UN and international aid workers. Elsewhere, the bank has developed basic cash handling services for retailers in Africa’s cash driven markets.
Standard Bank prides itself on being the only financial institution operating across the continent that is “run by Africans for Africans” – a fact that became a “rallying cry” across the business.
It is difficult to get a handle on country and market risk “sitting in the US, Europe or Asia”, says Bond. Credit risk, the most important consideration for banks, is tricky to assess, as there is little background information available. “Because we’ve been in these markets a while, we’ve built up a profile of who and how to lend.” Next in importance are operational risk, intensified by the high levels of poverty across much of the continent; and legal and compliance risk, where the bank is increasingly playing an advocacy role, working with governments to raise standards in the industry.
Standard’s contingency plans are based on forecasts for a slowdown in the global economy, which would hurt Africa’s commodity export-led growth cycle. “Despite that, we’re pretty bullish. Governments are increasingly using revenues to develop other industries. Oil-producing countries should keep growing strongly even if commodities slow down. Also, the bank has relationships with many international donor agencies, whose project funding and other spending will maintain flows even in an economic downturn.”
So, adds Bond, “Interestingly, there is a lot of momentum right now in terms of political stability and the emergence of an African solution. In my personal view, Africa may well be affected less than the rest of the world in a downturn.” —Maria Ahmed