South Africans are not happy with their banks and now even the banks can’t ignore it.
The Ombudsman for Banking Services has just published its Annual Report and there is a ‘35% increase’ in customer complaints.
In 2017, 22,943 complaints were received by the Ombudsman’s call centre. With Standard Bank, FNB, Capitec Bank, ABSA and Nedbank receiving a more than substantial share of the formal cases that were actually submitted to the Ombudsman, it is clear that something is going terribly wrong with traditional South African banking institutions.
In 2017, 1,669 formal cases were held against Standard Bank, 1,422 against FNB, 1,225 against Capitec Bank, 1,125 against ABSA and 1,393 against Nedbank, a notable increase for all five since the previous year.
The rise of South Africa’s ‘future-fit’ financial alternatives
So, what is wrong with the traditional banking institutions in South Africa? And what are the alternatives to traditional banking?
According to Reana Steyn, the current Ombudsman for Banking Services, “the last couple of years must have been a trial for the banks due to the rapid movement from traditional banking to a wider basket of financial services”.
As Steyn acknowledges, industries, including banking, are forced to change rapidly in modern times. Customers have different lifestyles, brand expectations, consumer habits and attitudes towards spending. For example, the global growth in the number of people using flexible short-term lending from online companies like Wonga, is a perfect example of our changing financial preferences. The convenience of instant one-off cash deposits, arranged without having to go anywhere or talk to anyone is a dream for any customer in the smartphone era.
Steyn says that there is “a very dynamic change from product focus to customer focus”, traditional South African banking now faces a challenge “to not only meet the expectations of customers, but to retain them, to remain relevant and to be future fit”.
The deteriorating relationship between South Africa and its banks has been long-documented in the media. Fin24 featured an article in May 2017, detailing South Africa’s widespread distrust for its banks. The feeling amongst disillusioned South Africans is that they are being taken advantage of. With banking fees much higher than those in other countries, as well as the recent Ombudsman report, there is definitely some truth to the matter.
An eye off the banking ball one time too many
The internet, mobile banking, mobile apps and greater customer choice have opened up a wide range of options for our financial services. In the past, we would have used our local bank because that was all we knew. Now, there are so many different choices, with services that are far more convenient, quick and flexible to our changing financial needs.
Traditional banking, it would seem, has simply not kept up, and as any good business knows, you have to always look forwards and be responsive to the changing needs of your customers, because there’s usually something ready to take your place if you don’t.
The revealing statistics in the Ombudsman’s recent report might suggest that the view from the top of our biggest banking institutions has been too inward-looking for too long, let’s hope they begin to look forward.