Thu. Jun 20th, 2019

Nedbank invests M2 billion in tech

NEO SENOKO

MASERU – In a move to keep up with the latest technologies, Nedbank group is investing heavily in technology with the commercial banker currently spending an estimated M2 billion each year on new technologies.

This was revealed yesterday by the Nedbank group Chief Executive Officer (CEO) Mike Brown who is on an official visit to Lesotho.

With the head office in South Africa, the bank has spread its wings to different countries on the continent, including Eswatini, Namibia, Zimbabwe, Malawi, Mozambique and here in Lesotho, just to mention a few.

Brown outlined the focus of the bank going forward despite ongoing economic challenges across the globe and regionally.

He said the bank is spending that much in order to improve customer experience, while building new digital systems to take the friction out of banking.

“That is not the technology that we spend to run and manage our business on a day to day basis. Pretty much wherever you go, banking still has too much paper and too many points of friction in its processes.

“But all of that is starting to change and we want to make sure that we are at the forefront of that investment, particularly here in Lesotho,” Brown said yesterday in an event held at a hotel in Maseru.

The CEO went on to corroborate his statements by citing that over the last few years the company upgraded their entire banking platform in Lesotho both from the retail point of view and the corporate point of view.

“More recently in Lesotho we have begun to roll out our mobile apps and coming soon you will see Nedbank wallets starting to roll out in Lesotho,” he added.

With the ongoing economic struggles in South Africa, the bank is hoping to continue to manage the business in a very difficult macro-economic environment. Banks, probably more than any other entities, reflect the macro economic environment within which they operate, he noted.

“We are the custodians at the one hand of the nation’s savings; our job is to transform those savings into productive loans and investments. So the underlying activities of a country are effectively the volumes that drive banking activity and right now those volumes in South Africa are relatively slow, given the weak GDP environment,” he added.

He made a brave exposé that businesses that they have outside of South Africa, including Lesotho and in the rest of Africa, are growing slightly faster than South Africa. These include their operations in Eswatini, Namibia, Zimbabwe, Malawi and Mozambique.

This worrying factor, he said, can be attributed to the vulnerable economic situation in South Africa with Eskom as a key risk facing the economy in that country and therefore the entire economy of the region.

He said the ongoing problem is that Eskom is too big to fail.

Failure of Eskom and its inability to provide electricity to the South African economy is too scary to contemplate, according to Brown who further noted that the main challenge for both the management of Eskom and the SA government is that the situation is now at a stage where there are not easy solutions.

“I am sure lots of people have done a huge amount of work, putting together business plans for Eskom, including financial plans and what they need to do in terms of managing growth and tariff increases and what they should do in terms of cutting costs. But the challenge is that most of these plans are not considered by government.

“I think we are going to reach a point where we can no longer kick the can down the road and my sense is that the end point is going to be somewhere around July this year when Eskom has to produce its financial statements because its bonds are listed and need to have financial statements to maintain the listing of its bond in the various bond exchanges,” the Nedbank CEO added.

For Nedbank, 2018 was a historic year with the company coming out as the best performing of the big four South African banks on the Johannesburg Stock Exchange.

Since the mid-1980s Nedbank was 50 percent owned by Old Mutual PLC in London and a few years ago Old Mutual PLC decided they wanted to go through a process they call management separation which effectively involved cutting down their London head office and coming back to South Africa.

In so doing they reduced their shareholding in Nedbank from just over 50 percent to just under 20 percent.

And in the second half of last year, the CEO said they did what is called unbundling, effectively giving their shareholders the Nedbank shares to reduce their shareholding in the company from just over 50 percent to 19.9 percent.

That process it meant about M40 billion of Nedbank shares were unbundled into the market. And in that environment Nedbank was the best performing of the big four South African banks at the Johannesburg stock exchange.

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