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- FNB has launched new Android Speedpoint devices for its business customers.
- It's also going to help them to create online stores.
- The bank is trying to move more transactions to digital channels even in the informal economy where cash remains king.
FNB has launched new Android Speedpoint devices and is prepared to foot part of the bill to help small business clients create online stores with its new FNB WebStore. This forms part of its efforts to digitise more transactions, especially in the informal economy where cash is king.
The FirstRand-owned bank recorded the biggest growth in customer number in its commercial business in the year ended in June, thanks to a myriad of products and system upgrades it launched in the past year. The bank's CEO Jacques Celliers promised that it was far from being done innovating.
"The two areas where we think there's opportunity to still digitise payments are typically your SME [small and medium enterprise] space, particularly in the informal economies in South Africa as well as the public sector," said Raj Makanjee, the CEO of retail and private banking at FNB.
The Android Speedpoint devices suggest that FNB has launched a campaign to take on FinTech players such as Yoco and iKhokha, who've managed to digitise transactions even in the most cash reliant communities when they rolled out payment devices to the informal economy.
FNB increases its presence informal economy
FNB also invested in a fintech called Selpal in 2018 and took it over in March this year.
Since Selpal distributes its point-of-sale devices in townships and rural areas, FNB has gained a better understanding of what it would take to get more businesses and consumers to ditch cash there.
But even before Selpal's insights, FNB said it observed the dynamic shift and the changing competitive landscape in the payments industry over the last decade.
So having worked with Selpal for almost three years, the bank took some of its banking expertise and linked it back to what the fintech startup did best.
The bank borrowed some of Selpal's thinking on Android devices but broadened it for its banking ecosystem and gave small businesses more than just a payment device.
"We've also recognised having spent more time in those markets that we need a broader response than just a digital presence. So, we're working really hard with our retail colleagues in terms of rolling out more presence in those spaces, whether it's through devices, whether it's through branch infrastructure," said Gordon Little, the CEO of FNB Commercial.
Little said FNB recognises that it needs to be more present in the informal economy. Payment devices that work for that market are just one lever it's pulling to expand its presence.
"The trick is to make sure that we arrive and partner with communities, not just arrive thinking that what worked in the high street here is this is going to work in that space. So, there's a lot happening," said Little.
A much bigger "unseen" economy
Little previously told Fin24 that FNB used to call the township economy "an unseen economy" because it did not realise its sheer scale.
There are no reliable statistics on how big the cash-reliant informal economy is in SA. But according to Statistics SA's 2019 report on the informal economy, that sector provides jobs to about 60% of the world's employed population. It is estimated that in SA, the informal sector's contribution to GDP stood around 6% in 2017.
Thokozani Dlamini, the CEO of FNB Merchants Services business, said when the bank went into the predominantly cash-based communities and interacted with the businesses there, many said they needed payment devices that do more than just process transactions. If they could have value-added services, they would have more incentives to adopt machines.
"It's actually moving towards the real needs of the merchants. Definitely, the competitors saw that gap. And we are basically making sure that we close that gap," he said.
Traditionally, the payment devices that FNB and other banks rolled out were purely designed only to accept payments. But they were also not as cheap as those now provided by players like Yoco and iKhoha.
Dlamini said businesses in the "community economy" wanted a longer time to use speed points without charging them. They wanted to connect them to their phones - all the things that Yoco and iKhokha have made that part of the economy used to.
Capitalising on the e-commerce boom
FNB WebStore will provide businesses with a fully functional e-commerce website. The bank said it will help its customers set up their website. It will bring in developers and help facilitate partnerships with courier companies.
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