South African banking clients have developed new financial habits and preferences in a post-Covid pandemic world.
Accenture’s recent South African Banking Consumer study report revealed four major developments driving reinvention of the banking industry’s business and operating models.
Technology developments, interest rate spikes, new competition from non-banks and the need to meet shifting consumer preferences based on the new realities of their everyday lives – have redesigned the face of SA’s banking sector.
Financial lead for Accenture in Africa, Innocent Dutiro said major shifts were underway in the banking consumer space, driven by interlinked technological human forces.
Driving forces of change in the banking
According to Accenture, various sources have transformed the baking landscape.
- Local banks have invested an estimated R30.5 billion in new IT services in 2022.
- Banks are no longer just competing with other banks – by 2025, non-banking channels will increase their revenue share of traditional banking products.
- Consumer preferences have changed post-Covid: 60% of people have fundamentally changed their values and life purpose.
- Rising interest rates.
“We discovered that customers want to feel understood – especially in these tough times. They want personalised attention and thoughtful user experiences. An interesting aspect to this is the enduring popularity of bank branches for that human experience, and generative AI’s (artificial intelligence) role in infusing natural language into digital interactions,” said Dutiro.
Giving the people what they want
According to Accenture, banks often invest in user experience, without truly understanding the customer.
“For banks to increase their relevance and effectiveness, they must shift from simply knowing basic demographic and financial information about a customer to comprehending their daily life, aspirations and their intent behind obtaining certain financial products,” Dutiro said.
“Customers might have traditional bank accounts, but will [choose] other providers for buy now, pay later (BNPL), loans, or crypto currency trading,” explained Dutiro.
Data is key
SA banks are moving towards more data-driven finance offerings to meet customers’ real-time needs.
“Banks must become ‘life centric’ instead of utility focused, continuously earning customer loyalty that drives advocacy for the bank.
“SA banks could see a revenue increase of up to 12% from primary customers by unlocking the multiplier effect between products,” Dutiro said.