South Africa’s big banks are giant brands in their own right. As it turns out, that may not be enough for customers, says Nathalie Schooling. 

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I was intrigued to read about a recent national brand study that rated two of South Africa’s biggest banks as the top two most valuable brands in the country – with a total of four banks making the top 10 list.

Certainly, our big banks spend a lot of money on advertising, marketing, sponsorships and corporate social responsibility. So just about everyone knows their brand and recognises their logo and corporate colours.

But do we actually like them in the same way that we like, say, drinking a beer (a popular beer brand ranks 5^th in the same survey) or having a fast-food meal (6^th in the survey)? The answer is unquestionably “no”.

For most people, the prospect of having to interact with a bank – whether it’s going into a branch or doing it digitally – brings out that same sense of foreboding as dealing with the local municipality or a government department. If things don’t go pear-shaped, you’re both surprised and delighted!

Not all their fault

Why is this so? To be fair to the banks, it’s not all their fault. They’re heavily regulated because they’re in a risky business and mostly taking this risk with other people’s money. So they’re going to ask a lot of awkward questions and demand that you back up everything with mountains of paperwork. That sort of thing doesn’t make you popular with the public.

One business columnist I read suggested that part of the problem is that banks want to give you an umbrella when it’s sunny (i.e., the economy’s good and you’re flush with cash), but take it away again as soon as it rains (i.e., times are tight). Funny. But true.

And, as South Africans, we know that our big banks are very big indeed, with perhaps millions of customer accounts. Therefore, when their marketing tells us “You matter” we find it hard to believe, knowing we’re just a tiny cog in a giant wheel.

So, while the banks put huge money into marketing and branding – which is why we all know them – it’s not the same thing as “liking” or “trusting” them.

What can banks do?

What can banks do to improve the situation, given their regulated environment and the need to minimise risk and maintain security of assets? Better customer service is one strategy; the other is improving customer trust.

In-house research among our customer base shows that 50% of those people who did move banks, despite the onerous administration involved, did so for a better client experience. Another 50% did so for trust reasons. Lower banking fees and better products – the two other categories listed in our research – played no part in the decision to switch banks.

The results tie in with another snap poll we did this year, which found that only 24% of respondents were happy with their current bank.

Similarly, if you browse any of the social media platforms and complaints websites you will also see a huge number of grievances about the customer experience received from the traditional banks.

This comes at a time when the Edelman Trust Barometer 2023 shows that South Africans are increasingly turning to businesses, rather than the state, as trusted partners in addressing our society’s challenges.

Among those challenges, of course, are much-publicised cybersecurity concerns. For example, the Reserve Bank was hacked in late 2022, and, in March 2021, the South African branch of the TransUnion credit organisation lost four terabytes of customer data, putting millions of clients at risk of identity theft.

It also received a ransomware demand of US$15 million. TransUnion is a registered credit bureau and a repository of credit information on consumers and businesses.

Younger, leaner digital competitors

What’s in store for the big banks if they can’t ensure better customer service and greater public trust? They are certainly lagging behind many other industry sectors when it comes to service, and what they cannot afford to forget is that once customer trust and goodwill is lost it’s incredibly hard to get back.

In addition, there are many digital-only banks that have now become credible industry players. They are young, lean, enthusiastic, more easily accessible, cheaper and have cut the bureaucracy to a minimum. They are a real threat to the established order, especially among the growing cohort of younger consumers.

The PwC Major Banks Analysis published in March 2023 agrees with this assessment, noting in part that: “Competition in South African retail and business banking remained intense, amplified by niche lenders with more agile tech stacks and new product offerings…the risk outlook remains dynamic and evolutionary.”

In other words, the big banks are in a rapidly changing market where tech advances are quickly changing the face of the business, and younger people are happy to ditch the legacy players in favour of a newer and more agile banking brand – irrespective of how well known and recognisable the old brand may be.

Nathalie Schooling is CEO of nlightencx, a customer experience company. 

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