If FirstRand is in some ways starting to look like any other bank, its competitors are looking — or at least sounding — more like FirstRand.
Nedbank, after killing its brands such as UAL, Syfrets and BoE during decades of centralisation, is now talking about creating "agile squads and tribes", which mimics the owner-manager approach at FirstRand.
Standard Bank always had a top-down culture, particularly in the 13 years it was run by the charismatic Jacko Maree. Hardly any decision was made until the question "What would Jacko think?" had been asked. But even Standard Bank now sees a measure of its strategic progress as "shaping a future-ready workforce", accepting that it’s probably time that staff thought for themselves.
Perhaps the most shameless imitator of FirstRand has been Absa — the bank with the most catching up to do. Absa has decided to give end-to-end responsibility for strategy and the bottom line to its three big business units. Retail and business banking under Arrie Rautenbach is effectively a clone of FNB (plus WesBank); corporate and investment banking is a clone of RMB — or at least aspires to be; and the rest-of-Africa unit, like FirstRand’s, has a separate reporting line: at Absa it reports to Peter Matlare.
Herman Bosman, CEO of RMB Holdings, FirstRand’s largest shareholder, says it will not be easy for these banks to change their cultures after years of command and control. He says the old Standard Corporate & Merchant Bank in the 1990s under Maree was a powerful, entrepreneurial business with talented executives such as Rob Shuter, Phuthuma Nhleko, Mark Barnes and Bruce Hemphill. But Bosman argues a lot of this energy dissipated after it was absorbed back into the greater Standard Bank group.
"I am not sure that kind of talent is attracted to investment banking anymore. Many now prefer asset management and particularly hedge funds," says Bosman.
But because of the large African footprint, Standard Bank’s corporate profits of R6.2bn are almost double RMB’s half-year earnings.
Still, Standard Bank has battled to bring its return on equity anywhere near FirstRand’s ROE of 22.3% at any time over the past decade. At the half-year stage, Standard Bank’s ROE had even slipped by 60 basis points to 16.2%.
But FirstRand can’t afford to be complacent about its historic rival, which, at one stage, was considered SA’s top bank. Standard Bank is throwing a large marketing budget behind new products such as the MyMo online account, and it is trying to play catch-up with eBucks, through its UCount rewards programme.
Nedbank is much smaller, with earnings barely half those of Standard Bank’s, but under CEO Mike Brown it has proved it can roll out a competitive suite of products. Nedbank is taking on the new digital banks, as well as the established competitors, through a new pay-as-you-use, zero-monthly-fee account. It also has HeyNed, a digital concierge to search for services. (It can’t walk the dog just yet.)
While FirstRand’s asset manager Ashburton still struggles to find a role in the market, Nedgroup Asset Management, headed by Nic Andrew, is a good example of a successful virtually autonomous business in an otherwise centralised bank. It has gathered R322bn under four units — the Best of Breed active management, the Core or passive funds, the cash funds and the multimanager funds.
Absa had little chance of running as an entrepreneurial business when it was controlled by Barclays. It has now increased its risk appetite and is clawing back market share. Its new mortgages grew 16% for the six months to June, when the market was growing 7%. It also increased its vehicle finance loans by 2%, while the market fell 4%.
Rautenbach, who says he is detail orientated but not autocratic, has been allowed to choose his own team, and there is new blood in the executive suites.
Nor is Absa standing still on digital. It recently added a tie-up with fintech outfit Western Union, which ran telegraph offices in the Wild West. But it is also opening fixed deposit and transactional accounts directly on its app.
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