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Johannesburg - South Africa's big four banks may enjoy a relatively captive local market, but there's no such luxury in the rest of Africa.
"FNB is perceived as an expensive brand," said Richard Hudson, CEO of First National Bank (FNB) Zambia at the formal opening of the group's operations in that country on Tuesday.
Faced with 17 competitors vying for a banking population of just two million, the company is forced to literally engage with potential customers in the streets. Even its advanced mobile and internet banking technology platforms fail to drive client acquisition.
"We may even have to start offering boerewors rolls to catch people's attention," Hudson said.
Shaun Naido, a branch manager at one of FNB's three Zambian outlets, said the bank had been forced to review its price structure as other banks either offered favourable monthly once-off charges or were seen as having more transparent fees.
The bank is also struggling to expand its lending activities, as it first has to attract sufficient retail deposits.
"It remains a very cash-based society with a lot of informal traders operating in the small- to medium-sized enterprise segment," said Hudson.
No short-cuts
FNB said it elected not to inject capital beyond infrastructure and setup costs for these operations. One consequence is that it has to attract enough depositor funds before it can start lending.
Hein van Rensburg, head of FNB business and commercial banking in Zambia, said the bank was using only 30% of its depositor funds for lending activities. With about R80m worth of deposits on hand, this implies a loan book no bigger than R24m - a relatively small amount for a bank which is looking to Africa for growth.
Jabu Khethe, CEO of FNB Africa, didn't believe this was a drawback. He told Fin24.com that while 18 banks in Zambia was "a lot", he believed that over time the industry would consolidate.
He pointed to Nigeria, where there had been as many as 86 banks in operation at one stage. These were reduced to 24 over time as the industry consolidated and weaker players collapsed.
- Fin24.com