Home Banking Interview with Mr. Ciko Thomas, Group Managing Executive, Retail & Business Banking; Mr. Mike Brown, Group Chief Executive; and Mr. Mfundo Nkuhlu, Chief Operating Officer of Nedbank

Interview with Mr. Ciko Thomas, Group Managing Executive, Retail & Business Banking; Mr. Mike Brown, Group Chief Executive; and Mr. Mfundo Nkuhlu, Chief Operating Officer of Nedbank

by internationalbanker

Today we are very fortunate to be joined by three of Nedbank’s top executives, Ciko Thomas (Group Managing Executive: Retail & Business Banking), Mike Brown (Group Chief Executive) and Mfundo Nkuhlu (Chief Operating Officer). Nedbank, headquartered in Sandton, South Africa, is one of the nation’s largest banks, with more than 30,000 employees. At the helm, these three senior managers are acutely aware of the challenges involved with keeping pace as a unified group with the many changes impacting banking today, especially on the digital front. The bank acknowledges that “how we achieve our vision is just as important as what we achieve”.

Gentlemen, thank you for being with us today. 

What specifically differentiates Nedbank’s retail-banking business strategy from its competitors’?

Ciko Thomas: It’s the human element. With everyone moving towards digital, and the client demanding the same digital experience across all service providers regardless of the service offered, most organisations are focusing less on the human elements of compassion, responsiveness, attentiveness. Our digital strategy is world class without a doubt. But even digital experiences will require human intervention at some point. At Nedbank we pride ourselves on having the best employees to service our clients.

As the bank continues to change to become more digital, how do you see your roles changing/evolving in response?

Mike Brown: Winning in digital is an important strategic dimension for us, and the accelerating shift to digital means that there is a significant change underway in our operating environment. While I view my core responsibilities as CE largely remaining the same, I certainly have a larger focus on leading change and building the required culture for the bank to be more digital, more innovative, more client focussed and more agile. Getting this strategic shift right and delivering on it will energise our staff, keep our clients engaged and excited in how they experience Nedbank, and ensure shareholders are informed on how we are seeking to generate long-term, sustainable returns as our digital journey translates into both improved client experiences and operating efficiencies.

How disruptive a role do you expect artificial intelligence and machine learning to play? Do you see such technology posing a threat to employment?

Mfundo Nkuhlu: It is expected that AI and machine learning will play a disruptive role, very rapidly. There is much innovative change taking place in our organisation. But the litmus test is whether the speed of change is in keeping with changes in the market. AI and machine learning are likely to impact client experience and revenue pools, as well as generate opportunities for operational efficiencies. At Nedbank, we are providing opportunities for our employees to up-skill, so that they can fulfil more value-adding roles. Already we are seeing how the use of robotic-process automation within Nedbank is providing efficiencies in the automation of repetitive and manual tasks. This frees up our employees to focus on more value-adding tasks. AI and machine learning should not, as a general rule, replace customer-service professionals but should free up capacity to focus on improving customer service. Our People 2020 programme will assist our staff in transitioning and gaining the new skills that are required.

How important is social media, especially for trying to attract new retail-banking customers?

Ciko Thomas: I have heard young people say that if it’s not on social media, it didn’t happen. There is a lot of truth in that. Social media drives the news you hear, and a number of purchasing decisions are based on it. Hashtags have become powerful instruments in client acquisition and retention. We understand and appreciate the importance of social media and its power to inform our clients’ choices.

Would you say that Africa leads the world in mobile banking? Has Nedbank positioned itself well enough to service the continent’s mobile-banking boom?

Mike Brown: I would say that Africa leads the world in terms of mobile-banking potential, and with an increasing focus on mobile banking by not only banks but also fintech and mobile operators. At Nedbank, we are investing in our Digital Fast Lane initiative to develop, test and land exciting mobile client solutions at an accelerating pace. Our new mobile-banking applications have won international awards, and there are many exciting developments still to come as we digitise our products and services. Our investment in Ecobank Transnational Incorporated (ETI) also provides us with access to more than 30 markets, and opportunities to collaborate on digital. As an example, we recently integrated our payment solutions into ETI’s market-leading remittance product that has been launched in over 30 countries. This allows Nedbank to provide a low-cost, fast and convenient remittance solution to 2.7 million African migrants.

Do you expect to utilise big data and analytics more, such as in changing the way the bank approaches areas such as risk management and compliance?

Mfundo Nkuhlu: Absolutely, and yes! Big data is central to developing deep client insights and to improving wholesomely the client experience, understanding in a scientific way client behaviour patterns and choices made. Certainly big data combined with machine learning will be a basic requirement in the future of risk management and compliance, assisting in proactive and early identification of risks and potential compliance breaches. Again, this plays a core role in providing our employees with the right information at the right time to be able to make more judgement-based decisions in risk management and compliance.

In terms of the bank’s digital offerings, is there a significant difference between the products/services provided to retail-banking versus business-banking customers?

Ciko Thomas: Yes, the needs of the two are different, and thus require different product offerings. But they both demand and expect delightful client experiences. We also acknowledge that a retail client could also be a business client, and we have to make sure that the client experience from the two perspectives are largely similar, but catering for nuances here and there.

Given the rapidly changing environment of the banking industry, what do you consider to be your biggest single challenge in terms of ensuring that Nedbank can successfully adapt?

Mfundo Nkuhlu: There is no easy answer to this question. For those with an existing legacy business like ours, there is the need to invest in our digital future while leveraging the current business for delivery in the short run, and for revenues to invest for the future. Our ability to respond to our clients’ changing expectations and the evolution of our business model to ensure we remain relevant to our clients’ changing needs in the light of digital disruption will be key. Those who can keep their proximity to clients deepen client insights and consistently deliver a client experience ahead of expectations will be winners. This requires total and absolute obsession about the client. As such, our approach has been to create much greater levels of agility and flexibility within our operating environment, while ensuring client experience and outcome is the centre of our business practices.

What approach do you think Nedbank will take towards the growing fintech sector: competitive, collaborative or combined?

Mfundo Nkuhlu: We recognise that it is difficult to predict who the winners could be in the fintech sector. We are, therefore, taking a combined approach. Internally, we have the Digital Fast Lane programme that focuses our innovation efforts, leveraging the “New Ways of Work” agility principles. At the same time, we have set up partnerships with innovation-scouting think tanks and set up an internal innovation business incubator, as well as taking equity stakes in innovation businesses that we believe could be disruptive to the relevant industry they operate in. We believe that this approach gives us a diverse set of options to learn and potentially benefit from. Ultimately, we see banking transforming from a pipeline to a platform business, with banks having to secure a future for themselves by providing the payment rails. The winners will be those who can get to scale fast enough to achieve the tipping point.

How important is the SME customer segment to Nedbank’s overall business-banking strategy?

Ciko Thomas: The development of this sector is a key objective not only for national government, but for most South African corporates as well. For Nedbank, this has been a traditional stronghold, with positive perceptions created over many years and a steady growth in market share. We would like to not just maintain but improve the perceptions and market share in this segment, and we will do so by developing and delivering client-centred solutions.

With so much banking moving online, what are your thoughts about the survival of the traditional bank branch?

Ciko Thomas: We think that there is a continuing need for face-to-face interactions but that the nature of these interactions will change over time, as clients adopt digital self-service alternatives. Amazon began as an online retailer, and we thought it was the end of book stores. We still have book stores, admittedly not as many, but what is different is the experience of the bookstore. The same will apply to bank branches.

How has the recent political fallout in South Africa impacted operations at Nedbank? Has it affected your particular roles within the bank?

Mfundo Nkuhlu: Our operations have not been impacted directly, but indirectly it has provided a practical reference experience (if any were required) of the dangers of poor governance—and the danger to society when key institutions are attacked, hollowed out and lose credibility. I have undertaken to ensure that our position against corruption and unethical conduct is amplified within Nedbank, in alignment with Mike and the entire executive management team. This also guides some of my efforts in my role as a board member within ETI.

How would you describe the current level of business confidence in South Africa? Do you see it improving during the coming year?

Ciko Thomas: Our new president, Cyril Ramaphosa, has ushered in a new wave of optimism. In the first quarter of 2018, business confidence rose by 11 points. The market is excited over the prospect of industry-friendly policies.

Have the recent political events in South Africa demanded any major special one-off decisions to be taken by you as banking leaders at Nedbank?

Mike Brown: The key decision I took was to become much more actively involved and vocal about what was needed to improve the lives of the citizens of our country and impacts of the cancer of “state capture” on our young democracy. Nedbank has played, and continues to play, a leading role in the proactive engagement between government, labour and the private sector. We were one of the founding members of the CEO Initiative in South Africa—with other business leaders and organised labour—which supports government with several interventions to address the most urgent challenges in our economy. I am proud of the leading role Nedbank continues to play in supporting the economy and enhancing governance through bodies such as the CEO Initiative. Through this initiative, we have worked with others in setting up the Youth Employment Scheme (YES Initiative) aimed at getting one million youths into internship programmes over three years. We also contributed to the R1.5-billion SME fund to drive job creation in a segment of the economy that has been identified by government for growth.

What is the single biggest way in which additional banking regulation (such as King IV) has affected the way you approach your roles?

Mfundo Nkuhlu: We seek to implement the changes to satisfy client needs and meet compliance requirements as an outcome, rather than a goal in itself. That is the commercial rationale for us. We have sought to ensure that we look at regulation in an integrated manner and embed both the letter and spirit of new regulation within our enterprise-operating principles.We have also sought to ensure that we create a more simplified and flexible technology and operating landscape to spur greater adaptability in terms of how we can respond to the ever-evolving regulatory environment. We see change as the only constant. So our operating strategy has been to create greater levels of simplification and integration across our complex operating landscape to ensure we have the resilience to respond and adjust to external changes, regulatory or market competition.

Do you expect that much of your work going forward will be with the government? If so, in what specific areas will there be the most collaboration?

Mike Brown: Working with the new leadership in government to rebuild the social compact, continuing to address the pressing needs facing our society and meeting the legitimate aspirations of all South Africans continue to be the core focus for us. Funding infrastructure (such as the recent renewable-energy projects) as well as working with state-owned enterprises, municipalities and metropolises have been and continue to be key client areas of focus.

By the end of this year, what is the biggest challenge you hope Nedbank will have achieved?

Mike Brown: Ongoing growth in our primary-banked client numbers, as a health measure that will demonstrate that clients are recognising Nedbank as a truly client-centred financial-services provider with market-leading digital products—and are actively choosing to bank with us. To support this, we have some exciting client on-boarding and loyalty and rewards programs that will launch shortly.

Given Nedbank’s presence across numerous African countries, are there significant differences between your approaches to retail and business banking for each country?

Ciko Thomas: We look to meet client needs in whatever market we are serving. The needs for businesses are different from individuals, and we seek to develop and deliver solutions that fit these different needs. Applying an “outside in” approach to designing products and solutions would be applied across the board as consistently as possible.

I expect Nedbank will continue to be a winning model for all others in the African sphere for years to come. Thank you very much for your time today, gentlemen.


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