Banking group Absa has earmarked 25% of the money it plans to spend on IT on innovation and new products, with the rest going to maintaining and improving existing systems. The bank spent R5bn last year on technology.
Christo Vrey, managing executive for digital channels at Absa, says the bank is in the process of overhauling all of its digital channels, starting with its ATMs — one of which is already in operation at the Cresta centre west of Johannesburg.
However, the bank has downplayed the importance of device-specific applications for smartphones and tablets for the time being, saying it’s “rather niche”.
Technology innovation is becoming an important way for some banks to differentiate themselves. First National Bank is using apps for smartphones and tablets as a way to separate itself from the pack. Absa suggests it has a longer-term digital strategy that it will unveil in coming months.
Absa group chief operating officer Alfie Naidoo says the bank has no immediate plans to release device-specific apps for smartphones and tablets.
“We have already deployed an Android app for account-opening procedures in our mass-market, low-end branches,” he says. “It’s not that we don’t have plans for the iPad or similar, but we think that in terms of our priorities that’s rather niche and it won’t help as many customers in the short term.”
Naidoo says although apps “grab attention”, they aren’t the most pressing priority from a commercial perspective. It’s important not to “glamorise tech too much”, particularly in the retail banking market, he adds.
Adrian Vermooten, Absa’s deputy managing executive for digital channels, says the bank uses various “technology bearers” to serve “everything from the entry level to high-end business customers” via its Unstructured Supplementary Service Data platform, as well as with Wireless Application Protocol and Wireless Internet Gateway technologies.
“That positions us very differently,” he says. “You might find some banks have gaps in their offerings and only serve certain market segments. Across our mobile platforms, we have more than 3m customers on mobile banking, and we’re adding just under 100 000 customers a month to our mobile banking channels.”
Vermooten says that smartphone-specific apps are “on the roadmap” but it’s a matter of “timing” and “priorities”.
He says there are various “complications and considerations” when launching apps, including ensuring services like prepaid airtime top-up are available. Absa wants to ensure its services are always available to as many of its customers as possible, he adds.
“We’ve looked at international trends and what the larger players are doing, and we’ve seen that banking apps are essentially online and that there are some attractive alternatives in the browser space, especially with HTML5.”
Vrey supports this sentiment. “As far as apps are concerned, it’s simply about the timing. There’s lots of preparation work required. When we take something to market, we’re really going to make a big change in this space.”
At the same time, Absa says it is focusing big technology investment on efforts to improve its back-end systems. In corporate banking in particular, Naidoo says banks must improve their systems to remain competitive and secure large clients.
“If we want to follow corporate clients into Africa, we have to give them cash and trade platforms, with multi-language and multi-geographical region support,” he says. “We have to be able to offer a global, scalable platform to compete.”
He says Absa intends taking its lead from parent Barclays and will leverage the UK-based company’s technology infrastructure wherever possible.
He says there’s an ongoing drive to reduce IT costs and Absa has kept IT spend in single digits as a percentage of total expenditure. In line with this, he says the bank will continue to outsource some aspects of its business, including outsourcing some application development to India.
Absa has no plans to outsource any of its core banking systems and, in fact, wants to centralise these as much as possible in-house. – Craig Wilson, TechCentral
- See also: FNB launches transactional banking app