Nedbank is paying price for 'exclusive' customer tag

Ingrid Johnson, Nedbank's group managing executive of retail and business banking, is trying hard to change consumers' perceptions of the bank as being exclusively for the elite and well-to-do people.

SA's fourth-largest bank's advertising aims to attract people in the low-income bracket - a far cry from yesteryear's "Who are those people?" campaign.

At that time, the Nedbank board decided it needed "the right customer", said Johnson. She recalled that 20% of the clients generated 80% of the revenue, while the majority of the customers were costly to the bank.

"In their maths they didn't figure out about marginal costs, and actually you need big numbers to contribute to scale," she said.

Nedbank holds the second-largest Mzansi account client base after Post Bank, which next year will be a fully registered bank and is currently preparing to fight for market share.

Johnson would ideally like to see Mzansi accounts become Ke Yona accounts, with some clients upgrading to the Nedbank Savvy bracket, an offer for middle-income earners.

The bank's strategy includes signing up a high number of customers at the Nedbank Ke Yona soccer tournaments.

The Ke Yona offering is available through more than 1000 staffed outlets as Nedbank expands into communities that were previously not served. These include far-flung places such as Ngqeleni, Idutywa and Centane in the Eastern Cape, Acornhoek in Mpumalanga and Thohoyandou in Limpopo.A branch was recently opened in Kuruman in the Northern Cape.

Ke Yona is Nedbank's answer to Standard Bank's bank shops, to FNB's EasyPlan, and to Capitec. With Ke Yona, a client can open a pay-as-you-use transaction account for R5, and with that comes funeral cover worth about R2000. Clients can withdraw cash for R1, the same price Capitec Bank clients are charged.

Johnson said Nedbank was the first bank to enable cash withdrawal at the point of sale - via Nedbank Go Banking in partnership with Pick n Pay.

Nedbank decided to absorb Go Banking in 2008 after it realised that the facility's customer base of about 90000 clients was not enough to sustain it as a separate business.

Clive van Horen, MD of Nedbank retail banking services at the time, said Go Banking was not profitable despite being in operation for seven years.

Nedbank was also the first bank in SA to pay interest on current accounts. It then had a multi-brand strategy which also controlled Permanent Bank and Peoples Bank.

Johnson reckoned it was a "mistake" to choose for customers which bank they belonged to and forcibly move them to other banks. "Don't put somebody in a box," she stressed.

Capitec Bank saw an opportunity and capitalised on being a champion for the low-income market.

According to Carl Fischer, Capitec Bank's head of marketing and corporate affairs, it has rapidly gone past Nedbank to become the country's third-largest bank in client numbers.

The Stellenbosch-based bank has about 3.2 million active clients from the 4.6 million clients registered on its books.

Nedbank added about 94000 net new clients year on year and a 14.6% increase in overall client base to five million, assisted by the acquisition of Imperial Bank. It has signed about 170000 Vodacom M-Pesa clients since the launch of the facility.

THEKISO ANTHONY LEFIFI
BUSINESS TIMES
http://www.businesslive.co.za/