Digitisation sees Capitec remove cashiers from 122 branches
While labour unions fight banks over job losses, Capitec has announced it has converted some of its branches by removing cashiers and replacing them with self-service technology.
In its financial results released this morning, Capitec said it increased its headline profit by 20% to R2.9 billion for the six months to August.
However, unlike some of its competitors, Capitec says it still sees value in branches.
Standard Bank recently faced backlash after it closed 104 branches countrywide within a short space of time. To date, one in every five Standard Bank branches has been closed down.
In March, Absa Group announced it was restructuring its South African retail and business banking unit within months, which would affect 870 jobs.
Nedbank in August said it had also been in consultations with the unions, noting fewer of its people would be affected.
Meanwhile, FNB CEO Jacques Celliers recently told ITWeb there will be no branch closures at the big four bank.
The job losses caused finance union, the South African Society of Bank Officials (Sasbo), to threaten a massive strike that was set to cripple the local banking sector tomorrow.
However, reports say Sasbo been interdicted by the courts from proceeding with its planned strike.
In a statement, Capitec says its philosophy is to offer equal access to affordable banking that is simple to understand, transparent and that helps clients improve their financial lives.
“We make no distinction between our clients and give everyone the opportunity to bank where and when they want, whether digital or in a branch,” the bank says.
It points out the South African banking landscape has evolved rapidly over the past couple of years.
According to Capitec, digitalisation has resulted in approximately 6.8 million clients now making use of the bank’s digital channels (banking app and USSD primarily for feature phones) up from 4.7 million at the end of August 2018.
“Our dedication to satisfying our clients’ digital banking needs was affirmed when we were voted as South Africa’s best digital bank of 2019 by Columinate’s SITEisfaction survey.”
Branches are essential and are relevant to clients, the bank says.
“We have 834 branches across the country in convenient locations and approximately six million clients visit our branches every month. We have converted 122 branches where we have removed the cashier and implemented a full self-help functionality.”
On 1 March 2019, transaction fees for payments made via the banking app, Internet banking or USSD and the monthly administration fee on Capitec’s Global One account were reduced.
“Our philosophy is to give back to clients as digital channel usage increases efficiency,” the bank says.
Despite decreasing the transaction fees to clients, it notes that the net transaction fee income grew by 12% due to a switch from branch to digital transacting and an increased use of cards as opposed to cash.
“This behaviour shift towards digital banking is in line with our strategy, and created capacity in our branch network to accommodate the strong growth in clients, credit applications and the issue of Capitec funeral plans.”
It points out that total net transaction fee income increased from R3.15 billion to R3.53 billion due to the change in client behaviour.
“The net fee income from our digital channels has increased by 10% from R344 million to R380 million. Approximately 2.9 million clients actively use the banking app (August 2018: 1.8 million). An increase in the volume of banking app transactions by 99% to 290 million for the period under review (August 2018: 146 million) confirms our app’s capability to help our clients bank better. USSD users increased to 4.7 million for the current period from 3.9 million for the same period in the prior year.”
The bank notes that the transaction volume of self-service solutions (including the banking app, Internet banking, USSD, in-branch self-service terminals and dual note recyclers) has increased by 40% to 628 million at the end of August 2019 (August 2018: 450 million).
The net transaction fee income from branch-related transactions has increased by 4% to R1.40 billion (August 2018: R1.35 billion). This is a contribution of 20.4% to the total net transaction fee income.