First National Bank (FNB) — one of the country’s so-called “big four” banks and a wholly-owned subsidiary of FirstRand — has quietly been undergoing a makeover.
The group is realigning its retail and corporate divisions in a move that newly appointed CEO Michael Jordaan says is aimed primarily at growth.
The bank is striving for one FNB business model.
“It’s all about growth. Cost-cutting is important for us. But this is not the reason for this alignment,” he says.
“We’re aligning the businesses to leverage and build our brand, and to maximise efficiencies and optimise segment focus,” he adds, explaining that until now FNB’s businesses have operated under multiple brands, which has served to dilute the “mother” brand strength and has indubitably sown some confusion among customers.
The realignment will also eliminate any “us and them” sentiments within the group, says Jordaan, a former naval officer turned banker.
“Whenever you have a group of people lumped together in, say, corporate versus retail, or in product houses versus channels, you get the ‘us and them’. We hope to remove those divisions.
“What we’re doing in effect is removing organisational fault lines,” he explains.
One area at which the bank will be looking very closely is the mass market.
“FNB is very strongly positioned in the mass market. But, despite having some 1,5-million customers in this segment, it is largely a break-even business — and it shouldn’t be.”
Jordaan says to address this, the bank envisages, among other steps, a mobile banking unit, using automatic teller machines as a sales channel and concentrating on personal and affordable home loans.
In the consumer market segment, the bank sees its opportunities for growth in direct channels, the newly launched Discovery Card, enhancing its bancassurance business and focusing on sub-segments of the market.
“In the wealth end of the market, we have until now competed with RMB Private Bank. But now we plan to collaborate a lot more closely, instead of duplicating infrastructure.
“We will also be looking at stockbroking and offshore banking opportunities,” Jordaan says.
Turning to commercial banking, Jordaan says that historically FNB has always been very successful in this market.
“If you look at our profitability, FNB is actually a commercial bank.”
But the bank is hoping to grow its business in the “farming” market and also in new emerging economies.
On the corporate side, Jordaan feels there is insufficient penetration of FNB products in the RMB customer base, which the bank plans to address.
It also aims to capitalise on electronic banking to address the profitability of transactional banking.
One area the bank really plans to get its teeth into, however, is the public sector. Jordaan concedes that in the past the bank’s share of the public sector has been “light” and that it has traditionally been viewed as a strategic marketing function.
“But now we hope to win a lot more business in this sector.”
It is particularly hoping to garner the business of municipalities, which are now allowed to borrow. There is also a new tendering cycle on the horizon for provincial governments, a potential business of which FNB hopes to get a decent slice.
In conclusion, Jordaan is very bullish about the growth aspects of both the bank and the South African economy.
“We’re very bullish about economic growth. We actually think the economy is growing much faster than people give it credit,” he says. — I-Net Bridge