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    TechCentralTechCentral
    Home » Banking » Standard Bank branch cuts are long overdue

    Standard Bank branch cuts are long overdue

    By Hilton Tarrant16 April 2019
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    Every conceivable transaction or engagement with a bank can be done digitally, except for when you need to physically sign something. Even card collection is fast being removed from branches. At the upper end of the market, branches died with the proliferation of private banking.

    The way we bank changed years ago.

    This makes the decision by Standard Bank to close 91 branches and cut 1 200 jobs not at all surprising (the only surprises were that the bank announced it publicly and that it did so before elections in May).

    In many ways, Standard Bank and Absa are behind the curve. Nedbank has been cutting branch space since 2014 and FNB is fast catching up with the “recalibration” of its branch network.

    New-format FNB and Nedbank branches are almost wholly focused on getting customers up and running on their digital platforms

    Originally, Nedbank targeted a reduction in floor space of 30 000sq m by 2020. It surpassed that last year (32 971sq m) and, given this “good progress”, has revised its target to 45 000sq m by the end of next year. The amount “saved” so far equates to 14% of the “total branch floor space (it) occupied in 2014”. By comparison, FNB reduced its branch space by 9% year-on-year to December.

    There are some obvious examples of overlap (or some questionable planning). In northern Johannesburg, Standard Bank has a branch at Bryanston Shopping Centre and another at Nicolway, 3km up the road. There’s a similar situation at Melrose Arch and Rosebank Mall, or at Dainfern Square and Fourways Crossing (each less than 4km from each other).

    Still important

    In outlying areas of the country, (very) small towns near each other often each have a branch of a given bank. Do Alexandria, Kenton-on-Sea and Port Alfred — all three 25km apart — really need a Standard Bank branch each? Does Sedgefield need an Absa branch when there’s one in Knysna 25km away?

    I’m not for a second suggesting that some of these branches are earmarked to close, but is there really a point to having these branches so close together?

    And there is certainly no need for every shopping mall to have branches for all five banks.

    Don’t get me wrong. Branches are still important, especially for certain segments of the population (think lower income customers, and the elderly). But the more innovative banks are already using their outlets to primarily drive digital on-boarding. New-format FNB and Nedbank branches are almost wholly focused on getting customers up and running on their digital platforms.

    The writer, Hilton Tarrant, argues that the big banks need fewer branches thanks to technology

    New competitors TymeBank, Bank Zero and Discovery Bank will have no branches (technically Discovery will have just one, at its head office). Given that the last of these will be targeting the upper end of the market, physical distribution is not an important factor. TymeBank relies on its partnership with Pick n Pay to provide a footprint.

    Standard Bank had 629 branches at the end of December. Remove 91 from that and you get to 530-odd. Expect all banks (excluding Capitec) to settle at the 500-branch mark soon. And then, perhaps, 400. This will happen sooner than we think.

    Branches won’t completely disappear overnight, but they will increasingly become a destination, not something solely for convenience.

    • This column was originally published on Moneyweb and is used here with permission


    Absa Bank Zero Capitec Discovery Discovery Bank FNB Hilton Tarrant Standard Bank top TymeBank
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