A lot is going on currently across the globe. And in South Africa, a notable trend is the increased number of banks closing branches nationwide.
For instance, Nedbank recently shut down over 50 branches. The impact of this trend is indeed concerning since banks affect every sector, including the top CFD broker in SA, looking to benefit from diversified revenue streams.
Other crucial sectors already suffering from this reality are healthcare facilities and insurance firms, which often rely heavily on banks. So, why are many popular banks shutting down physical branches all over South Africa?
From digital advancements to customer behavior shifts and more, here are the crucial details of why most big brand banks are closing branches across South Africa.
Digital Transformation
One of the major contributors to the current trend that South Africans are witnessing is the rise of digital transformation. Since the advent of online banking in the 90s, most banks have been focusing on digitization.
Why? For starters, going digital allows financial institutions to cut down on expenses often arising from the maintenance of physical branches. Moreover, it is easier for banks to scale up their services without increasing overhead costs while serving clients through online systems.
Having said all that, more and more South African banks are closing physical branches and embracing digital banking services in masse.
So far, many institutions have launched digital branches, encouraging their customers to use them for various purposes, from depositing and withdrawing money to applying for loans and paying bills promptly.
In fact, most providers now offer apps that users can access seamlessly from smartphones, which are incredibly popular in South Africa.
Customer Behavior Shift
For good reasons, most people worldwide, including South Africa, prefer digital banking to visiting a physical branch. First, unlike traditional branches that are strictly open during normal business hours, online banking is accessible 24/7.
That means the latter gives people the unique opportunity to check their accounts, transact, and do much more at any time of the day or night. Moreover, it saves people with busy schedules and those in rural regions from traveling to and from physical bank locations.
Since more South Africans opt for digital banking, banks in this region are now phasing out physical branches and embracing online branches to stay relevant. This is especially true for institutions targeting the younger, tech-savvy generation, currently comprising the biggest bank users.
The Bottom Line
Many, but not all, banks closing some physical branches in South Africa are embracing the digital transformation and trying to maintain relevance while cutting down costs. But is this an excellent idea, and what could it mean for an average banker like yourself?
While most banks claim to be closing branches to embrace more online banking, others face financial difficulties. So, it is advisable to check why your bank is closing physical branches. Otherwise, as you may know, banking with an institution facing financial trouble is a terrible idea.
iafrica.com
