Big four bank First National Bank will spend about R2.3 billion on IT this year, while also wanting to get the most out of its infrastructure and keeping a lid on costs.
Parent company First Rand, in its results announcement for the year to June, released in the middle of this month, cautioned that overall economic conditions remained challenging and uncertainty over the sustainability of the recovery weighed on credit growth.
First Rand says FNB's South African operations produced a strong performance for the year, as profit and return on equity improved. The bank will continue to invest in IT infrastructure as it rolls out more electronic service delivery channels to grow its customer base.
FNB expects IT budgets to come in close to what was spent in the financial year to June 2010 as it aims to “derive greater productivity from our IT investments”, says FNB CIO Raj Makanjee. Last year, IT-related expenditure was R2.3 billion.
Electronic focus
Makanjee says the bank will continue to invest in technology as “we see this as one of our key differentiators as proven by our many market firsts on innovative banking offerings, enabled by technology”. Makanjee points to the bank's initiatives, such as cellphone banking, its recent PayPal launch and its Send Money offering.
The company did not specify where the investments would be made, but it will invest in its ATM network and electronic channels broadly.
During the year, FNB invested in expanding its footprint, particularly electronic channels and cellphone banking. First Rand says the electronic channels have been “particularly” successful in the mass market segment where FNB is building a platform for future growth.
“FNB has historically been under-represented in the lending space in the mass segment and this is being addressed through new strategies such as the rollout of the Easy Plan branches and products,” says First Rand.
The group will continue to invest in its infrastructure in SA, especially where it has identified significant growth opportunities. It is also growing its footprint and client franchise in other selected African markets.
Spokesman Steve Higgins adds that the bank is rolling out ATMs on a continual basis. Two hundred old ATM machines will be replaced by December, and another 200 will be installed in the market by June next year. Revamped branches will also receive new ATMs.
Higgins explains that the project aims to “replace old devices that are coming to the end of their useful life to ensure proper uptime, as well as a reduction in maintenance cost”. The cost of this project along with installation is around R120 million for this year.
However, First Rand expects top line growth to be challenging for the next few years, and is focusing on efficiencies to contain operating expenses, the bank's results announcement states.
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