Banker SA - Edition 21

Edition 21

the land
issue

ARE WE MOVING AHEAD?







27

35

47

Contents Edition 21

04 Editor's note 16 Land ownership 41 Analysis
A walk on the bright A close look at What does being the best mean?
side of life restoring balance in
land ownership 45 Expert corner
07 MD's message Expect the unexpected
The other side 30 Strategy
of the coin Teaching consumers 47 Communication
how to manage money Is social media a vehicle
09 In short for banking?
A heads-up on 35 Technology
local and international Is blockchain technology 48 Guest column
developments the future of banking? Etiquette in business

Edition 21 | BANKERSA 3

B EDITOR’S NOTE

On the bright BANKING ASSOCIATION SOUTH
side of life AFRICA EDITORIAL BOARD

Cas Coovadia, Wisahl Jappie,
Cheryl Naidoo, Abdul Waheed Patel

C abinet reshu es, allegations Continuing with our positive and proactive Unit 1, Central Park, IMAGE: SVEN KRISTIAN
of state capture, downgrades, theme, Sungula Nkabinde looks at the Black River Park
recession, drought, storms and current state of nancial literacy in South
res; indeed, the rst half of 2017 Africa and asks what banks can do to Fir Street, Observatory 7925
has been a rough ride for South Africa. advance this among their clients. As was Cape Town 8001, South Africa
But, as Jon Gordon, author of e Power concluded in the article about land reform,
of Positive Leadership says, “Being positive he nds a great deal more can be done in Tel: +27 21 469 2400
won’t guarantee you’ll succeed. But being this regard. But again, there are, he reports, Fax: +27 86 682 2926
negative will guarantee you won’t.” at’s numerous success stories to be told. www.businessmediamags.co.za
why we elected to take the positive road in
this edition of Banker SA. In her article about blockchain EDITORIAL
technology, Patricia McCracken not only
In the rst article of our main feature, found that South African companies and Editor
which looks at the issue of land ownership experts are at the forefront of development, Penny Haw
and redistribution, Caryn Gootkin closely but also that they believe that the crypto
examines what the Constitution says about banking system will help improve economic Content Manager
property ownership, how the law protects insight and contribute to combatting Raina Julies – [email protected]
it and the question of land expropriation. corruption. Like many things, it will take
She also provides information on who the time to integrate, but it seems blockchain Managing Editor
owners of land in South Africa are and will have a positive impact for consumers Yolande du Preez
looks at the emotional issues behind land and businesses alike.
ownership. e rst article provides an Contributors
overview and introduction to the second At the pinnacle of positivity, Susan Angus Brown, Caryn Gootkin, Koos Jérard Louw,
feature, where we examine land ownership Reynard investigates what makes a bank the Patricia McCracken, Sungula Nkabinde, Susan Reynard
and redistribution. In particular, we best. She consulted local and international
focus on land reform initiatives driven rating and service experts to unpack the Copy Editor
by government, the private sector and criteria for measurement and evaluation. Suna Ester Snyman
non-governmental organisations. As the It’s an interesting insider’s view into how to
article shows, while the challenges are improve quantitative and qualitative ratings. Head of Design Studio
multiple and ongoing, initiatives are being Jayne Macé-Ferguson
undertaken to address the situation. Indeed, there are many things for South
Africans to be concerned about at present Designers
and, as much as I wish it wasn’t so, it is Editorial Design: Anja Hagenbuch
impossible to ignore our problems. I hope, Advert Design: Nichole Liedeman, Mfundo Ndzo
however, that this issue of Banker SA will Cover Image credit
provide constructive reading and help you South African Tourism
move ahead with positive energy.
Production Editor
Happy reading Shamiela Brenner
Editor
Advertising Co-ordinator
Merle Baatjes – [email protected]

Advertising Co-ordinator Intern
Ameer Allie

SALES

Project Manager
Andrew Green – [email protected]

Sales Consultants
Alec Rompelman, Stephen Crawford

Subscriptions and Distribution
Shihaam Adams – [email protected]
Tel: +27 21 469 2523

MANAGEMENT

Senior Bookkeeper
Deidre Musha

Business Manager
Lodewyk van der Walt – [email protected]

General Manager, Magazines
Jocelyne Bayer

Copyright: Picasso Headline and The Banking Association
South Africa. No portion of this magazine may be

reproduced in any form without written consent of the
publishers. The publishers are not responsible for unsolicited

material. Banker SA is published quarterly by Picasso
Headline Reg: 59/01754/07. The opinions expressed are not
necessarily those of Picasso Headline. All advertisements/
advertorials and promotions have been paid for and do not

carry any endorsement by the publishers.

4 BANKERSA | Edition 0210





MESSAGE FROM THE MD B

Looking at the other
side of the coin

IMAGE: SUPPLIED This has been the year when Cas Coovadia and civil society to work jointly in
awareness of the credit ratings the national interest. Furthermore,
industry entered the mainstream banks soon followed suit, as is usual in the absence of policy leadership,
in South African popular culture. a er a sovereign debt downgrade. con dence wanes and investment
Unfortunately, it took a triple sovereign stagnates, at home and abroad. is has
ratings downgrade for this to happen. As far as we are concerned, this was no pushed the South African economy into
real re ection on the soundness of South recession. Our growing debt burden
Junk status has become the term Africa’s banks, but more of a procedural will limit our scal ability to alleviate
of the day, bandied about in everyday formality due to the government debt the e ects of the slowdown and the poor
conversations. But when it comes to securities held as part of our liquid will su er most.
understanding the real impact of the assets requirement. e world-leading
downgrades by Standard & Poor’s and quality of our banking institutions, It thus becomes crucial for the private
Fitch and the ever slightly less disastrous their sustainability, their management sector to build solidarity, to share strategic
downgrades by Moody’s, the banking excellence and the good customer service insights and to share these with government
industry has been the rst port of call. they o er is constantly reinforced in in the interests of stabilising policy, growing
international surveys. e World Economic con dence and encouraging investment.
e downgrades re ect a loss of Forum and the La erty Group, rated ve
con dence in South Africa’s leaders. South African banks in the top seven in e other question of national importance
the world in their annual Global Bank enjoying prominence in news and social
In the absence of clear Quality Benchmark. media is the emotive issue of land. Most
political leadership and of this issue of Banker SA is dedicated to
policy certainty, we e downgrades, though, come with looking at this through various lenses.
remain convinced that grim rami cations for our local bond
it is incumbent for market as they cause South Africa to be One of the issues around land is access
business, labour and civil removed from global indexes. If all three to housing. Principle to this challenge,
society to work jointly in agencies downgrade us to sub-investment in the banking context, is improving the
the national interest. grade, the sell-o could amount to a ordability of housing.
US$17-billion (or R221-billion at
When Moody’s placed the country on approximately R13 to the dollar). Last year, BASA signed a memorandum
review for downgrade in April this year, it of understanding with the Department
did so to determine “whether the ongoing In the absence of clear political leadership of Human Settlements, which followed
tensions within the ANC weakens the and policy certainty, we remain convinced the Social Contract for Rapid Housing
credibility and e ectiveness of South that it is incumbent for business, labour Delivery, a framework for partnerships
Africa’s policymaking, the e ectiveness and targeted resource mobilisation.
and independence of the public service
and ultimately the strength of the country’s e goal is to work together to provide
institutions”. ey subsequently 1.5 million housing opportunities, to
proceeded to downgrade our sovereign eradicate the backlog of title deeds, to
bonds, con rming that they believe this develop this commercially viable and
is indeed the case. e debt of our major sustainable market segment and to accelerate
the delivery of a ordable housing.

As an e ective, respected business sector,
we are doing what we can to share our
expertise and to build alliances to bring
about change in society. We will continue
to do so at every opportunity.

Edition 21 | BANKERSA 7



IN SHORT: LOCAL B

Western Cape Government awards
commercial banking tender to Nedbank

White paper Nedbank has been appointed to We look forward to cementing a
digs deep into continue providing commercial business relationship that will benefit
digital disruption banking services to the Western Cape the citizens of the Western Cape.”
Government for the next five years.
Digitisation and disruption are Nedbank Corporate and Investment
rewriting the way business is done On making the announcement in Banking (CIB) managing executive:
across various industries, including March, head o cial of the Western client coverage, Dr Terence G Sibiya,
banking. Under increasing pressure Cape Provincial Treasury, Zakariya said he was pleased that Nedbank has
to fully digitise and self-disrupt or be Hoosain said, “We are delighted to been given the opportunity to retain
disrupted and left behind, banks are have Nedbank on board after following its primary banker status for a third
driving financial technology (fintech) a very competitive tender process. five-year term.
systems and collaborating with
innovative partners to stay ahead. In a Root assists fintech
white paper entitled Digital Disruption entry barrier

– New Imperatives For Leadership Designed by developer recruitment company,
O erZen in partnership with Standard Bank, Root
and Innovation (Perspectives From is a programmable, lightweight bank account, which
The Banking Industry), First National is designed to be accessible to so ware developers.
Bank (FNB) and the Gordon Institute
of Business Science (GIBS) examine e idea, says Louw Hopley, founder of O erZen,
strategic imperatives to ensure that is to eliminate the barrier to entry and to create
banks are prepared for the latest wave opportunities for innovation in the nancial sector.
of disruption. “A Root account enables any so ware developer to
build a fully functional nancial technology ( ntech)
Co-authored by CIO of FNB product without any special access to the banking
Business, Peter Alkema and full-time world,” he says, adding that each account comes with
faculty member of GIBS, Dr Je a programmable credit card, online banking, a mobile
Yu-Jen Chen, the 60-page paper application and application programming interfaces
examines blockchain and bitcoin, (APIs). Malan Joubert, co-founder of O erZen, explains the rationale behind
how it works and why it is a threat; the innovation, “Developers are able to create solutions to problems in almost
customer-centric design thinking and any industry, but are severely limited in the ntech space.”
why banks need it; the rise of digital John Campbell, head of Standard Bank EDGE, elaborates, “Root is like a 24-
customers; the decline of branch 7-365 hackathon that allows any developer to build life-enabling applications
networks; virtual reality; artificial or solutions. Instead of relying on people who work for Standard Bank, we are
intelligence; cloud computing; and giving any developer the power to create opportunities and solve problems.”
the internet of things. The paper
covers: models of exponential Standard Bank Shyft app facilitates forex
growth and technology adoption; Launched recently by Standard Bank, the Shyft app allows
incubators, accelerators and the customers to conduct foreign exchange transactions using
start-up ecosystem; authentic their mobile devices. Awarded bronze in the Most Disruptive
leadership in an increasingly digital Innovation category of the Efma–Accenture Distribution &
world; and digital natives, millennials Marketing Innovation Awards in 2016, Shyft allows customers
and their bank of the future. to buy and store four di erent currencies at a time. The app
Download it at https://blog.fnb. also facilitates online purchases, and lets users send money to
co.za/wp-content/uploads/2017/02/ and pay international beneficiaries. Customers can also use the
Digital-Disruption.pdf Shyft card to swipe or withdraw cash when travelling overseas.

Edition 21 | BANKERSA 9

B IN SHORT: INTERNATIONAL

Fintech festival Agricultural regulations under
scheduled for World Bank spotlight
November
According to the recently released World Bank Group’s
Following the Enabling the Business of Agriculture 2017 (EBA) report,
inaugural event improving regulations regarding agriculture in low and
that was held in middle income countries could go a long way towards
2016 and underscoring Singapore’s feeding the world’s growing population. e report suggests lowering the costs
drive to become a major player in of transactions for farmers and companies engaged in domestic trade and
the financial technology (fintech) exports, improving water permit systems for irrigation, and providing better
space, the 2017 Singapore FinTech conditions for micro nance institutions. Other regulations that ensure safety
Festival will take place from and quality control while avoiding burdensome and ine cient requirements
13 to 17 November 2017. There will are also highlighted as good practices, which governments could consider as
be discussions, demonstrations part of their e orts to reform industry regulations.
and debates about fintech aimed at
start-ups, technology companies, e latest EBA report – the third in an annual series – presents data on legal
investors, financial institutions, barriers for farmers, entrepreneurs and businesses operating in agriculture
research institutes and innovation in 62 countries. It covers the topics of land, seed, fertilizer, machinery, water,
professionals. Singapore has been livestock, nance, markets, transport, and information and communication
described as a fintech city due to technology. e 2017 edition also expands its survey of laws and regulations
the relaxation of some regulatory that impact environmental sustainability and gender. e EBA report can be
requirements to give small scale downloaded at http://eba.worldbank.org/.
ventures opportunities.

IBM launches financial model on cloud platform

The IBM Cloud for The aim of IBM Cloud is to create The technology will provide
Financial Services, an opportunity for financial services developers with the ability to include
which o ers building to increase access to application customer insights, regulatory
blocks for the creation of programme interfaces. compliance analytics, security, privacy
financial services apps, was and compliance. It will reduce time
launched in March this year. More than This will enable developers to build needed for software development,
100 000 individual and corporate and monetise financial services apps simplify tasks of selection, mapping
developers from the financial services for financial technology companies, and data integration and further allow
industry access insight and support banks, wealth management developers to use IBM services or
from IBM on a monthly basis. enterprises and companies in the combine them with their own data.
insurance industry.

Technology expedites savings

e ndings of a survey held by Azimo, a money transfer service, found that
consumers are saving billions in bank charges by only using digital and mobile
banking. Answers to the survey were returned by more than 4 000 people from
the United Kingdom and from across Europe and according to the results,
banking applications and online services give customers greater opportunity
to take control of their accounts as well as manage their spending and
saving. e three most prevalent reasons for realising savings were the
ability to move money instantly between accounts to avoid overdra
charges, the instant visibility of what you’re spending and being
able to budget more accurately. Banking applications also allow
customers to manage direct debits and debit orders more e ciently.

10 BANKERSA | Edition 21





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Edition 21 | BANKERSA 13



ADVERTORIAL

Blockchain –

Fad or Future?

By Ashwin Goolab, Financial Services Africa Director at EY

I t is incredible to think that the DLT and the trough of being decentral and collaborating with actors
first website was launched by Tim disillusionment outside traditional boundaries. This requires
Berners-Lee, on 6 August 1991. We a complete top down and bottom up rethink
have come a long way from that first If we look at the Gartner Hype Cycle for 2016 of traditional value chains, and inevitably
basic website, with the World Wide – DLT (as blockchain), has been positioned involves strategic collaboration with industry
Web (www) evolving into what we have at the top of the Hype Cycle slowly sliding counterparts outside of an organisation.
today. We are now ready for the third into the trough of disillusionment. So
evolution of the internet, which may be why is there such incredible interest and Key considerations when
characterised by the Internet of Things excitement about this technology? Why are embarking on the DLT journey
(IoT) and possibly Distributed Ledger organisations ploughing millions of dollars
Technology (DLT), often called into investigating DLT? Can this be a case • Start the conversation in the boardroom.
blockchain technology. of being caught up in the hype and fear • DLT should not be regarded as a silver
of being left behind perhaps?
The growth and early adoption of bullet for everything.
the internet was fuelled by those who DLT is complex; it essentially gives us a • It’s not about the technology only –
recognised its potential as a business synchronised shared ledger that multiple
channel, which in turn led to the parties believe represents the single truth. it is but one part of the bigger agenda.
development of online payment DLT relies heavily on complex encryption • Embrace a paradigm shift – DLT requires
mechanisms to support this e-commerce. technology to render it immutable and
because it is decentral, it is further secured. a fundamental shift in thinking –
Today, we once again face a similarly This engenders trust in the contents of the moving on from centralised processes
revolutionary technology made ledger from participants. How it works to decentral processes – outside of
famous by the Bitcoin cryptocurrency. technically is probably less important than organisational boundaries.
The public Bitcoin blockchain runs on the problems its use solves or the • Have a short - medium- and long-
the internet, and again one can argue new opportunities it creates. term strategy.
that the internet enabled the invention • Start with a deliberate business case.
of Bitcoin blockchain technology. DLT is widely regarded as transformational • Don’t go it alone – collaborate.
Since its first launch in 2009 there have in nature (as the internet was) and therefore When it comes to DLT the central theme
been many variations on the DLT only one component of a much broader is indeed all about decentralising.
application. It has been touted as the agenda, not an application by itself but rather
technology to solve everything, from a foundational platform for building specific Ashwin Goolab
world hunger to eradicating traditional applications such as smart contracts. Financial Services Africa Director, EY
banks and financial institutions. It is Twitter: @Ashwingoolab
no surprise that DLT start-ups are The conversation is less about the actual LinkedIn: Ashwin Goolab
mushrooming everywhere, with billions technology and should be more around
of dollars being ploughed into this the paradigm shift that this new platform
area by big business, governments and enables. Fundamentally DLT has the
venture capitalists alike. potential to remove the middleman, since
most organisations today are process centric
within their own realms. DLT is all about

Edition 21 | BANKERSA 15

The
case for

refolarmndinSouth Africa
Land restitution is critical to
the successful transformation
of the country and, after more
than 20 years, it still remains a
challenge, writes Caryn Gootkin

16 BANKERSA | Edition 21

LAND OWNERSHIP B

T he question of land in South Johan van der Merwe, a Stellenbosch this year, President Zuma referred the Bill
Africa is fraught with tension attorney points out that the Constitutional back to Parliament, explaining that it would
and is highly polarised. is Court con rmed that section 25 both be “di cult, if not impossible” to achieve
is inevitable in a country with protects private property rights and true reconciliation until the land question
our particular history. A relatively small serves the public interest as per First was resolved. At a meeting of the National
percentage of land owners (largely white) National Bank of SA Ltd t/a Wesbank v Executive Committee (NEC) of the African
want to entrench their ownership while Commissioner, South African Revenue National Congress (ANC) in March, he
the large landless majority – who were Service and Another; and First National reiterated his commitment to expropriation
historically prohibited from owning land Bank of SA Ltd t/a Wesbank v Minister without compensation.
and are currently nancially unable to of Finance 2002 (4) SA 768. “ e court
buy land – are tired of waiting. found that Section 25 must be interpreted to “But if the state chooses to pursue land
strike a balance between these two opposing redistribution in a way that violates section
How does the Constitution interests,” says Van der Merwe. “But, in 2016, 25 by expropriating without compensation,
deal with land ownership? the same court put an end to the common it must still do so in accordance with
law notion of absolute private property Section 36(1), the general public interest
Section 25 of the Constitution seeks both rights (Molusi and Others v Voges NO and limitation clause,” explains Henk Smith, an
to protect private ownership and allow the Others 2016 (3) SA 370 (CC)), describing attorney from the Legal Resources Centre
state to implement land reform, however a balancing exercise that con rms the (LRC) in Cape Town.
another balancing act was required for relativity of constitutional property rights.
section 26, which guarantees the right He further adds, “As things stand,
to adequate housing. Professor Hans P “ is paves the way for interpreting and and in full compliance with section 25,
Binswanger-Mkhize, an independent balancing property rights in future.” expropriation without compensation is
consultant and honorary professor at justi able under certain circumstances.
the Institute for Economic Research on “Land is very spiritual. It One example is where a parastatal
Innovation at Tshwane University of is in land that we bury our acquires land without consideration or
Technology, wrote in the African Journal of people and connect and comes into ownership by paying only a
Agricultural and Resource Economics that speak to our ancestors. It nominal amount. What is crucial is that
our constitutional and policy framework is land on which churches, our society debates and decides how
is one of the most favourable in the world temples and mosques are important it is to transform power relations
– it lends itself to successful and rapid built and it is from land and address inequality. Successful land
implementation of land distribution and that we eat and survive.” reform for poor people lies at the heart
land reform. Understandably, as is the case of transformation.”
with most negotiated outcomes, both sides Chief Justice Dikgang Moseneke
argue that the constitutional provisions do Who owns land in South Africa?
not advance their case su ciently. The question of expropriation
In the public debate around land reform,
Mohamed Valli Moosa, the former Section 25 gives the state the right to many statistics are thrown about. Writing
Minister of Constitutional Development, promulgate legislation providing for in e Distribution of Land in South Africa:
explains that at the time of dra ing the expropriation with compensation. In 2015, An Overview for the Institute for Poverty,
Constitution, the property clause was of the Expropriation Bill was introduced into Land and Agrarian Studies (PLAAS) at the
great importance to both white and black Parliament, which passed it in 2016 but University of the Western Cape, Cherryl
people. “Sometimes people think only the President didn’t sign it into law. A er Walker and Alex Dubb say, “White people
white people wanted their property rights vowing to expedite land reform in his State as a social category still own most of
protected,” Moosa says. “But it’s a much of the Nation Address (SONA) in February the country’s land and redressing racial
bigger issue for black people. Can you imbalances in land ownership is land
imagine what it would feel like to nally reform’s most urgent priority.”
own property again and then live with the
fear that it could be taken from you again?” is is one of two general claims that are
o en made about land ownership in
South Africa. ›

Edition 21 | BANKERSA 17







LAND OWNERSHIP B

IMAGES: ALIX CARMICHELE Why is the question of land “In South Africa, the question of whether it is morally,
ownership so loaded? land question goes to politically and economically just
the very heart of the to pay any compensation for land that
Dikgang Moseneke, retired Chief Justice history of colonialism was stolen from black people? is is
told the Mail & Guardian, “Land is not and apartheid – both an important question because the
just an issue of economic or commercial of which systematically Constitution is clear that any
importance – it has meaning on many deprived black people expropriation must be accompanied
levels. Land is very spiritual. It is in land of the property by just and equitable compensation.”
that we bury our people, we connect and they occupied.” Mngxitama further says, “ e only
speak to our ancestors. It is land on which real solution to the land question is
churches, temples and mosques are built Chief Justice Dikgang Moseneke not nice legalism, but the forceful
and it is from land that we eat and survive.” taking back of the land without
“ e fact is that we have land inequity, paying a cent for it so as to end the
In South Africa, the land question and land injustice in this country, and more than 350 years of humiliation
goes to the very heart of the history of we have to look it in the face and nd and landlessness.”
colonialism and apartheid – both of practical steps to make sure that there is
which systematically deprived black people a greater spread, access and use of land Julius Malema, leader of the EFF,
of the property they occupied. in a sensible and smart way,” he said. continues to call for the amendment of
the Constitution to allow for
In 2015, while still Chief Justice, #GiveBackTheLand expropriation of land without
Moseneke spoke publicly about the compensation, even going
centrality of the land question against e BLF’s Mngxitama has a di erent so far as o ering the EFF’s 6% of the
apartheid; he argued that the Constitution view. “ ere is no argument whether national vote to the ANC if they do
does allow for expropriation and does the Constitution provides for this. But many within the ANC
not make land reform impossible. A er expropriation, because it does,” he (including Gwede Mantashe and
retiring, he gave a Helen Suzman lecture says. “ e argument turns on the Zweli Mkhize) agree with Dr Purchase
during which he admitted that more should that food security is paramount and the
have been done to solve the land problem, expropriation of commercial farms
within the limits of the Constitution – would threaten this.
which, he noted, does not encapsulate the
philosophy of “willing buyer, willing seller”.

What are the components of land reform?

Land reform in South Africa takes on three forms.

First: restitution to pre-1913 owners, Second: (this and the third component Third: the process is overshadowed
by many complications such as the
redistribution (providing the are discussed in detail in Getting to cost of redistribution and the lack of
comprehensive agribusiness support,
disadvantaged and the poor with the roots of land reform on page 24.) favourable commodity pricing, access
to finance and the provision of technical
land for housing and small scale Restitution claims remain unresolved, expertise, mentorship and new markets.

farming); and tenure security for while the extension of the period within

farmworkers and those living on which to lodge claims has produced

communal land. hundreds of thousands of claims.

Edition 21 | BANKERSA 21





oGf elattningdtorethfeororomt

Caryn Gootkin looks at the pressing need for e Proactive Land Acquisition Strategy
transformation in ownership of rural land and what (PLAS) was introduced following
is being done to overcome the hurdles disappointment with the Settlement/
Land Acquisition Grant and the
President Jacob Zuma said in his reform statistics. e National Development Land Redistribution for Agricultural
State of the Nation address (SONA Plan (NDP), released in 2013, set a target Development, both of which involved grants
2017) that arable land needed to to transfer another 20% of rural land to to individual farmers. But, in the PLAS
be returned to black people. “Only black bene ciaries by 2030. Against this model, the state buys land and leases it to
eight million hectares of arable land backdrop, Gugile Nkwinti, Minister of bene ciaries, who only take ownership of
have been transferred to black people, Rural Development and Land Reform the land at the end of three years and only
and this translates into only 9.8% of the recently published the Regulation of if certain stringent conditions are met.
82 million hectares of arable land in Agricultural Land Holdings Bill.
South Africa,” he said. The Proactive Land Acquisition
e aims, as set out in its memorandum, Strategy was introduced following
Hans P Binswanger-Mkhize, an include reversing the legacy of colonialism the disappointment with the
independent consultant and honorary and apartheid; and ensuring a just and Settlement/Land Acquisition Grant
professor at the Institute for Economic equitable distribution of agricultural land for individual farmers.
Research on Innovation at Tshwane to black South Africans.
University of Technology, noted in “Without security of tenure, bene ciaries
the African Journal of Agricultural Two of the more contentious provisions don’t have security to underpin
and Resources Economics in 2014, that include restrictions on foreign ownership of infrastructure/asset or production loans,
redistributed rural land equals roughly a land in South Africa and the establishment which lenders rely on. Access to nance
third of the government’s 1994 promise of of a limit on the size of land that can be is therefore very problematic,” says Pierre
24.5 million hectares. But he adds: “ e owned by one person. Venter, general manager of the human
large volume of private transactions in settlements market conduct division of the
which black individuals have bought farm What is government doing Banking Association South Africa (BASA).
land from white farmers has to be taken to increase the pace of
into account. ese transactions take land reform? e Re-capitalisation and Agricultural
place without assistance from the state Development Programme, created to
and therefore are not recorded in the land e Department of Rural Development
and Land Reform (DRDLR) has set up many
land reform projects since 1994.

24 BANKERSA | Edition 21

LAND OWNERSHIP B

IMAGE: SOUTH AFRICAN TOURISM recapitalise failed or poorly performing land 30 potential projects are to follow), both Delaying
reform projects, is administered by DRDLR. awaiting o cial endorsement from the gratification
It supports bene ciaries who must work with DRDLR, although Minister Nkwinti has
a strategic partner or mentor. e President approved the plan in principle. Having the Department of
indicated in his SONA that government Agriculture Forestry and Fisheries
would continue to implement other “Commercial farmers will pro-actively responsible for post-settlement
programmes, such as the Strengthening initiate land reform initiatives and partner support to beneficiaries while the
of the Relatives Rights of People Working with bene ciaries (typically workers or Department of Rural Development
the Land (or 50-50) programme. “In this local communities),” says Venter. “ ey’ll and Land Reform is responsible
programme, the farm workers join together sell o a big part of their land or operation for implementing land policy
into a legal entity and, together with the or buy neighbouring property for the is a fragmented constitutional
farm owner, a new company is established bene ciaries. e debt is expunged through arrangement, according to Rural
and the workers and the owner become joint a mixture of commercial loans and capital Development and Land Reform
owners,” said the President. grant funds from the state.” Minister, Gugile Nkwinti.

Private sector land The involvement of Issues holding up the pace of land
reform initiatives non-governmental reform include:
organisations in land reform • transferred land inactive or
“Because of the pressing need for
transformation within this sector and given Many programmes involve Communal commercially unprofitable;
the backlog in dealing with land restitution Property Associations (CPAs), landholding • bad corporate governance in
claims, funding, upskilling and capacity institutions established under the CPAs
issues with land redistribution, it is critical Act, in which bene ciaries of land reform Communal Property Associations;
that the private sector involves itself in land programmes can hold and manage land as a • lack of post transfer support;
reform initiatives,” says Venter. group. But CPAs are o en under-resourced • slow pace of transfers; and
and badly supported by government. • exorbitant cost.
In 2015, BASA and the Agricultural Transfers are o en delayed and there have
Business Chamber (Agbiz) developed a been many examples of abuse of power by is project is one of the few that has been
CPA committees. successful, largely due to the CPA’s buy-in
nancing model for land reform aligned to to Vumelana’s strict corporate governance
the objectives of the NDP and providing a Also, traditional leaders interfere with requirements, winning the 2014 national
commercial alternative to, among others, the functioning of the CPAs, seeing them Vumelana Governance Award for the most
the 50-50 programme. ere are two pilot as undermining their authority. It should e ciently managed CPA in the country.
projects in the pipeline (and an additional be noted that the state tends to favour the
Congress of Traditional Leaders of South The way forward?
Africa’s (Contralesa’s) claim that traditional
leaders are custodians of the land, which A 2016 Finance and Fiscal Commission
others think means land reform is being report on national land reform reveals that
used to entrench traditional authority. despite the R60-billion spent on land reform
initiatives, economic development in rural
For these reasons, non-governmental areas has not been stimulated, unemployment
organisation (NGO) Vumelana Advisory and poverty levels have risen, and food
Fund sets up and advises on public private security has not increased. Venter says,
partnerships for CPAs, like the Moletele “Perhaps the time has come for the state and
Communal Property Association in private sector to hold an agriculture and land
Limpopo. Vumelana arranged for an investor convention for a democratic South Africa
to provide funding to the community to (Codesa) to create a joint transformational
develop an integrated fruit-farming unit on strategy to respond to the increasing levels
land they received as restitution. of frustration and discontent.”

The National Development Plan, released in 2013,
set a target to transfer another 20% of rural land
to black beneficiaries by 2030.

Edition 21 | BANKERSA 25



LAND OWNERSHIP B

bAsetaourytiful

By starting small and focussing on the
details, Tshilidzi Matshidzula turned a land
reform project into an award-winning
farm, writes Penny Haw

H ome to a herd of more than 1000
Holsteins, Jerseys and Jersey-
Holstein crosses in the Alexandria
region of the Eastern Cape,
Little Barnet dairy farm became the rst
black-owned farm to ever win the 60-year-
old Mangold Trophy from the Bathurst
Conservation Committee for “conservation
of natural resources, improvement in
resource utilisation and vast improvement
of e ciencies and nancial pro tability”
late last year. ›

Edition 21 | BANKERSA 27

B LAND OWNERSHIP

Shortly therea er, the farm’s manager land reform project into a successful dairy which, at the time, was a partnership
and part owner, Tshilidzi Matshidzula was farm that employs about 15 people, has between local dairy farmer Walter Biggs
named the Eastern Cape’s Agri SA Toyota an annual turnover of more than R14,5- and 17 land reform bene ciaries comprising
Young Farmer of the Year. Most recently, million and continues to grow rapidly. the Longvale Trust.
Matshidzula was featured in a Beautiful
News video created by Ginkgo Agency. Originally from Limpopo, Matshidzula Awarded the 532-hectare farm and
Beautiful News is a multimedia platform was a second year student at the Tshwane its title deeds in 1998 as part of the
dedicated “to delivering inspiring and University of Technology, where he was Land Redistribution for Agricultural
upli ing stories that celebrate the spirit and studying Animal Science and Production, Development programme, Longvale Trust
community of the South African people in when he arrived in the Eastern Cape for had established a beef herd. e venture
an authentic way.” the rst time. He’d been appointed to however, didn’t prosper. In 2007, Longvale
work on a dairy farm near Cookhouse Trust’s managing trustee, embile
Indeed, there are several reasons to by Amadlelo Agri, which helps develop Bhete, asked Biggs to help him and his
describe Matshidzula and Little Barnet as pro table black empowered agri-businesses. colleagues recover a derelict dairy on the
beautiful news. Most notably though, it is a Shortly therea er, Matshidzula was o ered farm so they could sell milk in the local
story of a young man who turned a failing a management position at Little Barnet, township to help improve the cash ow.
It was at this point that Matshidzula was
“We started small, appointed to help establish and manage
which gave me the the revived dairy, which began with
opportunity to focus just 49 cows.

on the details. When Bhete died shortly therea er
Today, we are and several bene ciaries sold their interests
competing with in the trust, Matshidzula bought into the
the big boys.” business with a loan from the Land Bank.
He worked alongside Biggs until 2010,
Tshilidzi Matshidzula when his mentor transferred full
management of the farm to him.
IMAGES: BEAUTIFUL NEWS
Today, Little Barnet is a major
commercial enterprise. Matshidzula
owns 40% and the other 60% of the
business shares are owned by two former
bene ciaries of Longvale Trust, Mzwandile
Leyele (30%) and the TC Bethe Family
Trust (30%).

“When I started at Little Barnet, there
was no dairy and the project was failing,”
says Matshidzula, who recently built a high-
tech new dairy on the farm. “We started
small, which gave me the opportunity
to focus on the details. Today, we are
competing with the big boys.”

It’s been a decade of hard work, during
which Matshidzula has continued the
learning process. He is an active member of
several agriculture organisations, including
the Alexandria Dairy Study Group. One
of his proudest moments, he says, was
winning the Tommy ompson trophy
for being the best member of the study
group. It means a great deal, he says, to be
recognised by your peers and to be able to
pass on what you learn to others.

28 BANKERSA | Edition 21



B STRATEGY

Power Banks invest signi cant sums of
money in the nancial education
ptoetoheple of consumers, says the Banking
Association of South Africa
Should banks play a greater role in advancing the financial (BASA). ese organisations not only
aptitude of their clients? Sungula Nkabinde looks for answers educate their clients about their products
and services through their marketing
activities, but are also obliged to spend
0.4% of their net pro t a er tax on
consumer education, in accordance
with the nancial sector charter. is
requirement excludes the punting of
services and products and is speci cally
focused on teaching consumers how to
better manage their nances.

30 BANKERSA | Edition 21

STRATEGY B

BASA’s ato Chikane says the industry “Our country's saving
understands that better educated culture leaves a lot to
customers are good for their businesses be desired with ample
and the economy, which is why the room for improvement;
country’s major banks have specialised and to make matters
divisions dedicated to nancial education. worse, our household-
savings rate is among
Monitoring and evaluation the lowest in the world.”

Our country’s saving culture leaves a Thato Chikane
lot to be desired with ample room for
improvement; and to make matters Current incentives are centred on sales
worse, South Africa’s household-savings and revenue rather than on customer
rate is among the lowest in the world. retention. By adopting longer-term
According to economic indicator website, strategies with a customer-needs focus,
Trading Economics, the country’s savings banks would be better placed to assist
rate was -0.50% for the fourth quarter customers achieve their nancial goals.
of 2016. Even now, he continues, at a time when
economic growth is constrained and sales
“An area for improvement,” says are under pressure, banks are increasingly
Chikane, “would be the monitoring and focusing on customer retention and their
evaluation of the expended e ort (towards primary aim is to grow pro ts.
consumer nancial education).”
To help customers make better nancial
Client engagement and strategy decisions, banks need to change their
executive for consulting and technology perception of success. “ is may be di cult
company, Business Systems Group (Africa) to measure, but looking at customer
(BSG), Jurie Schoeman does not think relationships with regards to lifetime value
the banking sector is doing enough to or a longer term view of customer retention,
encourage customers to make better would be preferable to only looking at
monthly or quarterly sales gures,”
nancial decisions. is, he says, is says Schoeman. ›
because banks neither fully understand
what their customers need nor are their
internal incentive structures aligned
to meet these needs. Banks, says Schoeman,
concentrate mainly on selling products
and reducing costs.

What is the state of financial literacy?

An overview of the findings from the while 34% reported no budget, • Despite these positive messages,
Financial Services Board’s 2015 and 6% were uncertain or refrained slightly more than a third of South
Financial Literacy Survey gave an from responding. Africans (37%) report that they
interesting insight into the status quo. • A majority (57%) always carefully always pay their bills on time.
National interviews with 2 940 randomly consider whether they can a ord
selected respondents of 16 and above a purchase before doing so, with a • Nearly half (48%) personally
were conducted. further quarter (24%) saying they experienced income shortfalls
• 66% have some personal involvement do this often. This means that eight and the two most common
in 10 South Africans (81%) exhibit a coping responses were borrowing
in household daily money considered approach to spending. from family/friends (55%); and
management (26% solely and • Almost two thirds (64%) stated cutting back on spending or
40% jointly). they always or often keep a close making do with existing resources;
• More than half (58%) of South watch on their personal finances. (47%) with nominal reliance on
Africans have a household budget financial products.

Edition 21 | BANKERSA 31

B STRATEGY

Indebted consumers According to BASA, banks invest helps promote savings and achieve
significant sums of money in the financial long-term goals. However, Schoeman says it
ere are those who perceive banks as education of consumers. lacks a wider and more detailed set of
exploitative. Some, for example, believe objectives to evaluate and measure
the organisations would rather bombard “Low-income participants typically progress against.
customers with o ers to take out loans felt they didn’t have a parent who was
and credit cards than o er investments According to BASA, all retail banks
or saving opportunities. Prem Govender, nancially literate to pass on basic run their own national nancial
chairperson of the South African Savings teachings,” he said. e formality of literacy programmes. Collaboratively,
Institute, is among those who believe contracts, interest rate uctuations and most nancial institutions are part of
customers are too frequently encouraged sliding scale bank fees are not easy to grasp the association’s StarSaver programme,
to take on more debt, which can mean for all South Africans. which seeks to empower youth with
getting sucked into a spiral of debt they
can’t manage or a ord. e institute’s 2016 Aspirations Report nancial skills.
highlights the growing awareness of “BASA and the BankSETA have also
“Banks de nitely need to be more good debt as an enabler for asset growth developed material to educate consumers
discerning when lending. As an accountant, and entrepreneurship. “But,” says who make use of credit, and who need
I have o en found that banks are negligent Lappeman, “whether consumers always support regarding the risks and bene ts
in that they allow consumers to be know where to get credit and how to associated with credit. is is freely
overburdened with debt,” says Govender. use it wisely is another story.” available to the industry and has been
“In as much as I know that consumers embraced by the banks,” says Chikane.
need to take equal responsibility, I believe Financial literacy
that banks do fail them – especially “The industry understands
when the organisations constantly o er Campaigns like Sanlam’s One Rand Man that better educated
increasingly larger facilities based on and One Rand Family, which made people customers are good for
how well one manages debt.” conscious of how they spent each rand of their businesses and the
their personal and household incomes, economy.” Thato Chikane
James Lappeman, part-time lecturer are good examples of how companies
at the Unilever Institute of Strategic can encourage nancial wellness. KwaZulu-Natal Financial Literacy
Marketing, University of Cape Town, Association has been running a nancial
says the institute’s research into both high Budgeting and investing personal literacy speech competition. e initiative
and low-income markets shows a stark nancial management application, encourages grade 11 learners to become
contrast between those who have grown 22seven (now owned by Old Mutual) more nancially literate by conducting
up being comfortable with formal research on one of three topics and
banking and those who haven’t. presenting their ndings in a well-cra ed,

Improving the quality of ve-minute speech. Going from strength
access to banked individuals to strength, more than 1 500 learners
from KwaZulu-Natal have been part of
According to FinMark Trust’s most recent FinScope survey, access to banking has the project during the past 20 years.

increased across all social boundaries, especially for those who fall into LSM 1 to 5. e Financial Services Board is now on
board and has rolled out a similar model
Quality access remains a challenge as 38% (about 14.5 million) of these accounts in Gauteng.

constitutes of banked adults withdrawing all money as soon as it is deposited. ere are other opportunities to nurture
nancial wellness, says senior information
About 29% of those remitting money on a monthly base still remit via relatives and/ and research specialist at the FinMark
Trust, Jabulani Khumalo. South Africa
or friends. Development credit could, for example, learn from Lesotho IMAGE: FIZKES/SHUTTERSTOCK.COM
and Rwanda, which have National Finance
85% 75% 80% 83% from the bank is minimum. Week programmes designed to provide
66% 75% 74% This indicates a need to nancial education for all.
77% 61%
66% change credit behaviour

45% and advocate for more
32% developmental borrowing.

2016 2014 2013 2004 ■ LSM 1-5 (% BANKED)
■ LSM 6-10 (% BANKED)

TOTAL MARKET (% BANKED)

Source: FinScope survey (Finmark Trust)

32 BANKERSA | Edition 21





TECHNOLOGY B

Surfing the

blockchainThe wave of blockchain technology is looming over
wave the banking sector globally. Patricia McCracken

asks whether it is possible for banks to survive and
emerge revitalised

W ith the global nancial crisis a fully edged blockchain product in • 2026. Adoption will be iterative, asset
still being mopped up and operation this year – IBM. class by asset class over the next ve to
mulled over in many quarters, • 2019. Two-thirds of major global banks ten years – Morgan Stanley.
bankers are eyeing the next will use blockchain technology – IBM.
big game changer, blockchain technology. • 2021. Blockchain solutions could reach • 2027. General public reaches their tipping
Early waves of blockchain are already their full potential in the next ve years point for using bitcoin-type currencies
breaking on South African shores. ose – McKinsey & Co report to a US Federal and blockchain technologies – McKinsey.
at the forefront include Rand Merchant Advisory Committee.
Bank (RMB), which has South Africa’s • 2023. Governments reach their tipping Hitting the shore
point for using blockchain technology
rst fulltime blockchain banking team, – McKinsey. Both Andrew Baker, CIO for corporate
and Barclays Africa, which as part of • 2025. Blockchain adoption [will be] and investment banking at Barclays Africa,
the Barclays group was the rst to use considered mainstream and integral and RMB’s Farzam Ehsani, who heads
blockchain technology to transfer to the capital markets ecosystem the blockchain team and chairs the SA
original bills of lading internationally – Accenture. Financial Blockchain Consortium, remain
in September last year. sceptical about timeframes, although for
rather di erent reasons. ›
Predictions vary internationally as to
when blockchain will have its disruptive “The role of commercial banks could change from
impact, according to an overview by custodians of funds to custodians of private keys –
bravenewcoin.com the following could like passwords – that authorise activity within the
be possible: blockchain.” Farzam Ehsani
• 2017. Of 200 institutions surveyed, one

in six global banks planned to have

Edition 21 | BANKERSA 35

B TECHNOLOGY

“The blockchain wave's Beyond the 700 or so crypto currencies Your blockchain
initial impact will probably such as bitcoin, early blockchain interest has starter pack
differ internationally tended to focus on ‘pain points’, as McKinsey
because the structure & Co categorised them, these include cost- “Blockchain is much more than
and conditions of each cutting and making processes like Know bitcoin or one of the other 700 or
country's financial sector Your Customer (KYC) more e cient. so crypto currencies out there and
differ.” Andrew Baker it’s not simply a better way to run a
“South African banks are spending database,” says RMB’s Farzam Ehsani.
F words such as ‘forgery’ and ‘fraud’ billions of rand on KYC, but don’t always “It can allow for instantaneous,
make bankers shudder. But employing get it right,” says Baker. “It’s brutal – yet verifiable and confidential updating
blockchain technology addresses both consenting to your identity on a blockchain of ledgers, as well as slashing the
the authentication and privacy of could be empowering to customers, freeing time needed to process everything
data. “Distributed ledger technology is them from having to update in multiple from interbank payments and foreign
progressing rapidly to make sure that locations separately.” exchange to the transfer of real
only the right people in the network have estate, cutting it down from months
access to the appropriate information while Reimagining the or days, to minutes or seconds.”
ensuring that transactions are valid,” says financial landscape
Ehsani. “ e blockchain wave’s initial allows would go a long way to
impact will probably di er internationally Meanwhile, RMB has been reimagining combatting corruption,” says Ehsani.
because the structure and conditions of the nancial landscape in South Africa A mind shi might be easier at this
each country’s nancial sector di er,” and beyond. Although regulators in South stage for customers than banks. “Already
says Baker. “Retail banking is less likely Africa and internationally are in the early 93% of the rand is digital and just 7%
to be immediately a ected in the UK, for stages of bringing crypto assets from exists as physical notes and coins –
instance, where current accounts have been blockchains into regulatory frameworks, which makes you wonder why we don’t
free for decades, making it hard to disrupt. Ehsani and the team look at blockchain have a folder marked money on our
technology as the foundation of a new computers,” says Ehsani. He believes
“In South Africa, where retail banking system of crypto banking that also improves banks need to re ect how their core
is de nitely not free and the cost of economic insight. ey see a central bank services revolve around value, be that
infrastructure is shared across a small issuing its own currency onto a blockchain, value storage in deposits, value transfer
section of the population, there is more with everything from instant Pay As You in payments, value provision through
potential for disruption through both new Earn (PAYE) transfers to the exchequer debt and equity or value protection
technologies and new entrants.” to bond- and equity trading, possible on a through insurance and derivatives.
single yet distributed network, allowing an
economy’s health to be tracked in real time. “ e role of commercial banks could
change from custodians of funds to
“ e combination of the codi cation of custodians of private keys – like passwords –
money and the transparency that blockchain that authorise activity within the blockchain,”
says Ehsani. “Most of all, historical
Information resources competitors need to become collaborators.” IMAGE: ZAPP2PHOTO/SHUTTERSTOCK.COM

• Overview of blockchain technology by RMB’s Farzam Ehsani https://www. Baker agrees South African banking
youtube.com/watch?v=mAdSwN5T6Mc must take blockchain more seriously:
“If you’re not talking to at least one other
• FNB white paper Digital disruption https://blog.fnb.co.za/wp-content/ bank through blockchain, you don’t
uploads/2017/02/Digital-Disruption.pdf have a distributed ledger. You need to
communicate and have developers, not
• RMB white paper The advent of crypto banking http://www.foundery.co.za/ just one person issuing the institution’s
download/files_1/The_Advent_of_Crypto_Banking.pdf media statements about blockchain.”

• IBM white paper Leading the pack in blockchain banking https://www-01.ibm. Ehsani, though, believes that we’ll
com/common/ssi/cgi-bin/ssialias?htmlfid=GBP03467USEN& solve the technological challenges well
before the cultural ones: “because the
• IBM white paper Blockchain rewires financial markets https://www-01.ibm.com/ educational element takes time.”
common/ssi/cgi-bin/ssialias?htmlfid=GBP03469USEN&

• McKinsey report Blockchain technology in the insurance sector https://www.
treasury.gov/initiatives/fio/Documents/McKinsey_FACI_Blockchain_in_
Insurance.pdf

36 BANKERSA | Edition 21









ANALYSIS B

Why your
score matters

Evaluating a bank's qualitative and quantitative ratings can help predict its future success
as well as measure its past performance. Susan Reynard investigates

IMAGE: PICHETW/SHUTTERSTOCK.COM T he ability of a bank to sustain itself research among senior bankers, investors, However, banking changed more in the
for the longer term depends on and regulators, with a high level of past decade than it did in the previous
the information that ratings and agreement among them. “Interestingly, century, and those who have enjoyed rapid
rankings divulge. During 2016 emerging market banks tend to score growth inevitably come up against their
Capitec received the top ranking by the highest on the quantitative side, with the own success a few years down the line if
South African Customer Satisfaction Index opposite in developed markets,” he notes. the institution does not grow its products
(SAcsi) and Deutsche Bank ING was named and services in parallel. Schreuder says that
Global Bank of the Year by the United “We know that customer satisfaction is while the banking industry in South Africa
Kingdom-based magazine, e Banker. one of the major nancial drivers of future is doing well and rates highly, when it
cash ow, performance and growth,” comes to complaints resolution the country
In both cases, the banks together states Professor Adré Schreuder, CEO of lags behind the rest of the world.
with their highly ranked competitors, Consulta and founder and chair of SAcsi.
displayed an understanding of their SAcsi’s model uses a combination of three e international benchmark for
customers’ needs, business health, indices measuring customer expectations, complaints is 10% and locally the average is
and sustainability obligations. perceived quality and perceived value. in the mid-twenties. Repetitive complaints
are on the increase which is a major
“All the evidence indicates that smaller, “The great banks of the concern for the local industry.
focused banks serving retail and corporate future will be focused
clients tend to be of far higher quality than businesses dedicated to e Treating Customers Fairly (TCF)
so-called universal banks,” says Michael operating in their clients' regulation that came into e ect on
La erty, chairman of the London-based best interests.” Michael Lafferty 1 May will cause some interesting scu es,
La erty Group. Characteristics that make says Schreuder. ere is no such thing as
banks successful, measured over a full credit “Customer satisfaction is driven by too-big-to-fail: highly rated and poorly
cycle by La erty Bank Quality Ratings, customer experience rather than product rated banks seek to benchmark themselves
include 15 separate criteria. One-third innovation. As soon as one bank brings against their competitors within the local
are ratios found in the banks’ nancial out a product, it’s a matter of time before and international banking industries.
statements while two-thirds are qualitative competitors follow suit,” he notes. When
and forward-looking criteria that are found clients are happy with their bank, they’ll La erty says, “We are now in the
elsewhere in the bank’s annual report, says remain loyal and become promoters of process of establishing an International
La erty. “On the quantitative side, I would the brand. Expectations di er according Bank Quality Council where banks can
say that the loans-to-deposits ratio and to sophistication of banking clientele and come together to discuss these issues in a
the equity-to-assets ratio are the two most services. Entry-level clientele may initially con dential environment. I am delighted
important criteria. On the qualitative side, have lower expectations and, just by that Absa/Barclays Africa is one of the
strategy, culture, management experience, meeting their basic needs, they’re satis ed, founder members.”
and customer loyalty are among the most Schreuder notes.
important metrics,” he explains. “ e great banks of the future will be
focused businesses dedicated to operating
e ratings criteria used by the La erty in their clients’ best interests. e days of
Group were arrived at a er extensive wheeler-dealer bank CEOs are coming to
an end,” forecasts La erty.

Edition 21 | BANKERSA 41







EXPERT CORNER B

Expect the research found that adoption and use
unexpected for payments is widespread across age
groups, increasing with income.
Angus Brown contemplates the complexities of what
we can expect from banking in the future Banks are merely organisations
licensed to hold our deposits, grant
W ill our children be bankers? Advances in banking will re ect the credit and settle obligations. e license
Will they have the changing needs and social patterns of essentially allows them to operate the
opportunity to work for a society. Changing attitudes towards technology. ey operate according to rules
bank? I am con dent that owning assets could have a big impact on and practices set down by regulators and
they will bank – but will they see banks as things like vehicle nance. Income is more agreed amongst the major banks. ey
physical places with people working there likely to come from several sources in have di erent ways of protecting their
as we do? Or will our children’s banks be addition to traditional salaries, including business from new competitors. I recently
service providers and/or platforms like freelancing, AirBnB rentals and stock saw a bank that operates in East Africa
WhatsApp or Google? Banking has been trading. is will challenge current loan present its strategy to “resist the tide of
part of our personal and business lives a ordability models. Increased purchases mobile money”.
for centuries and will persist. What will will be made from global companies,
continue to change is the way we do our which will have implications for settlement e success of M-PESA in Kenya and
banking and the organisations we choose and fraud risk. In an ‘always on’ world, the subsequent rise in mobile money
to do it with. customers will increasingly expect systems across emerging markets have
immediate and knowledgeable responses led to a long-running and divisive
Because we are creatures of habit and to their queries – perhaps from banking debate about the respective roles of
only adopt new behaviours when the chat-bots. telecommunications companies and banks.
bene t exceeds the pain of change, payment
behaviours change infrequently. Typically, Banking Acumen recently conducted a ere is no doubt that their corporate
new technologies do not immediately market survey to nd out how pervasive the culture and operating models are very
improve the payment experience. It takes adoption of mobile phones is for banking. di erent and yet they are engaged in a
many small iterations before the total Despite the perceptions of this being a
bene t is compelling. service for teenagers and millennials, the erce struggle with each other for
customers. Given the size, complexity
at’s not to say we never embrace Do you use banking and cultural di erences, any ‘merger-
change. e hype around nancial via a Mobile App? of-equals’ is unlikely.
technology illustrates our desire to
simplistically attribute change to a ‘thing’ Age comparison (Value %) e ‘black-swan’ event that could
(in this case, technology) rather than disrupt the retail banking market
change our behaviour. Digital cameras ■ UNDER 35 worldwide is the provision of person-
were around for many years before we ■ OVER 35 to-person payments by the social media
started taking sel es. We were able to giants. Facebook Messenger and Snapchat’s
use a phone to call a taxi-company long YES NO Snapcash are the early experiments.
before Uber was launched. It is the change Imagine if WhatsApp enables its 10-million
in behaviour enabled by innovative use South African customers to add a payment
of technology that creates new business to their messages. Fortunately for the
models and disruption. banks, they control the source of funds
and banking here is quite highly regulated.
Unlike instant messaging, banking is
intensely localised and these technology
giants would have to select carefully which
markets they would want to enter.

So, what is the future of banking?
Probably the most accurate way to describe
it is to borrow a phrase by Yogi Berra,
“ e future ain’t what it used to be.”

Angus Brown heads up advisory practice Banking
Acumen, which helps large financial services
companies integrate fintech ventures and replace
core-banking systems. He also founded and
operates Centbee and Cygnet

Edition 21 | BANKERSA 45





B GUEST COLUMN

Manners

maketh good business sense

Etiquette – the set of manners and behaviours viewed as acceptable to people in a particular culture
– has arguably never been more important to business than it now is writes, Koos Jérard Louw

The more automated and Koos Jérard Louw is a licensed corporate with a simple Sir, Ma’am, Ntate, etc. IMAGE: SUPPLIED
technology-driven business gets, etiquette and international protocol trainer Such acknowledgements illustrate respect
the more important etiquette and advisor who teaches and advises corporate and humbleness.
becomes. It is no longer enough
to consider etiquette and protocol as so teams about business and social skills O er and receive business cards with
skills. ey are a speci c set of hard skills respect. e print on your card should face
that need to be mastered and correctly facial expressions and eye contact, dress the receiver and shouldn’t be obstructed
applied for e ective interaction with code, body language and posture, and tone by your ngers when you o er it. Treat
customers and colleagues. and manner of communication (including others’ cards with respect. Don’t stu them
written communication). into your pocket or write on them in the
A good command of etiquette helps you presence of the other person.
present yourself as a credible, trustworthy, How do you do?
authoritative and appealing person with How do you master etiquette?
whom to conduct business. Moreover, Good initial etiquette includes establishing
the skills enable you to hold your own in and maintaining three to four seconds eye From my experience, humbleness and
competitive business environments and contact when you meet someone. Register friendliness are the cornerstones of
provide you with the tools to manage the colour of the other person’s eyes and mastering etiquette. I am always amazed
your personal brand. do not look over his or her shoulder while to see how humble the most powerful and
speaking to him or her. A simple smile successful people are in comparison to
At first glance has the power to relax other people, which ‘wannabe’ tycoons, celebrities and the like.
means friendliness is key in etiquette – but
Sad as it may seem, when it comes to be authentic when you smile. ink of humble and friendly leaders such
assessing one another, the idiom “judge a as our own Nelson Mandela, Canada’s
book by its cover” applies to people. We are A rm handshake, executed from a Justin Trudeau, Prince Harry and some
judged daily by others, whether they are standing position (do not remain seated of the South African business tycoons,
clients, colleagues, friends or family. Being when shaking hands) is essential for both including Patrice Motsepe, Maria Ramos,
subject to judgement – and judging others men and women. Use people’s names Sim Tshabalala and Wendy Luhabe.
in return – is not a conscious decision; it correctly and address them by name or by
happens unconsciously. It takes just ve title. Most people like to be acknowledged Advertising and communication guru,
seconds to form a rst impression on every Reg Lascaris taught me another important
occasion you come in contact with others – etiquette lesson when he pointed out that
whether physically or remotely, via digital ‘silent’ and ‘listen’ have the same letters and
or printed communication. that you cannot listen without becoming silent.

An important aspect of business etiquette How do you get etiquette?
is to know how to create a favourable rst
impression. e good news is that you can e good news is that anyone can learn
in uence the impression you make on etiquette and protocol. One way of learning
others by focussing on four main business it is by observing people who clearly displays
etiquette skills and competencies. ese are this in their behaviour.

One of my business etiquette skills
mantras is, ‘Show, don’t tell’.

48 BANKERSA | Edition 21