Tag: banks

South Africa can expect at least three big new banking options within the coming months – all of which will be entering a highly competitive market.

A poll conducted in August by BusinessTech, generating over 10,000 responses found that Capitec is far and away the bank most South Africans would switch to, garnering 44% of the votes.

Capitec said recently that it has added 400,000 customers since February 2017 to become the second biggest bank in the country by this metric.

Its success has forced South Africa’s other banks to compete more effectively, and has led to Absa and FNB in particular to launch entry-level accounts that target Capitec’s market approach.

However, Capitec will soon face stiff new competition of its own, through Patrice Motsepe’s Tyme which promises to cause ‘disruption’ of its own through a digital play.

Tyme joins insurance giant Discovery, which also plans to launch a commercial bank, while government has plans for a retail offering of its through the South African Post Office – all of which are expected to launch sometime between now and late 2018.

Each offering brings with it unique features which could entice customers from the current “big five”.

Tyme

Billionaire Patrice Motsepe made headlines last week after he announced that he was set to challenge South Africa’s biggest banks with investment company African Rainbow Capital (ARC) close to securing a banking license.

Tyme was granted a provisional license by the South African Reserve Bank in 2016, with Johan van der Merwe, co- CEO of African Rainbow Capital stating that the company expected a full licence before the end of September.

“The South African banking environment is due for a bit of disruption,” said van der Merwe.

“While Capitec has been able to play that role, the soon-to-be-licensed lender will be a disruption over and above that. This will be a complete game changer.”

“The regulator is looking at the cloud-based system that ARC’s fintech partner is using to make sure it works before granting a full licence,” he said.

Tyme is reportedly signing up 5,000 new customers each week, following the Commonwealth Bank of Australia’s acquisition for a reported AU$40 million.

Arguably, Tyme’s biggest asset is its in-house developed “know your customer” KYC accreditation solutions.

These allow customers to open a simple bank account over their mobile phone, and open an unrestricted bank account from a remote location instead of having to enter a bank branch.

This form of unrestricted account access and cloud-based solutions is likely to tie-in with African Rainbow Capital’s July announcement that it invested in 20% of fixed and mobile data network operator Rain.

Discovery

In March 2017, Discovery said that it had received authorisation from the Registrar of Banks to establish banking operations in South Africa, and is on track to launch its banking products next year.

Discovery CEO, Adrian Gore first announced plans for a retail bank in 2015, and stated that it would act as a direct competitor to Absa, FNB, Nedbank, Capitec, and Standard Bank.

The insurer has reportedly seen great success with its Discovery Card joint venture with FNB, which would provide a launch pad for full banking services.

“We’ve got the capital, we’ve hired bankers, we’re building substantial systems. We want to make an offering that’s relevant and can win market share,” said Gore.

Discovery has an advantage over the big four traditional banks, as it does not have to maintain a country-wide network of branches and ATMs. This means Discovery Bank’s costs have the potential to be lower than its competitors.

Former FNB CEO Michael Jordaan also believes that the technology available to Discovery could make it a major disruptor in the financial sector as it uses its vast resources and lower cost base to offer clients lower banking fees and better interest rates.

The South African Post Office

While not as eye-catching as Tyme or Discovery, the South African Post Office (SAPO) could prove to be a large disruptor in the financial sector because of its ease of accessibility.

Speaking at the World Economic Forum in May, telecommunications minister Siyabonga Cwele said that the Post Office’s transition into a development bank will be government’s first big step in “radically transforming the financial sector and challenging the current banking institutions”.

“It’s not going to be a normal bank like the big four. It’s going to be a developmental bank to deal with the market that is not being served at the moment,” said Cwele.

He added that, despite the higher risks involved, the Post Office will also look at funding entrepreneurs with small loans.

“We are going to need a very strong risk management system. The issue of financial inclusion is part of radical economic transformation. We are not talking about reckless access to finance.”

Current SAPO CEO Mark Barnes will likely head up the new bank, which is expected to become a fully-fledged consumer bank sometime in 2018.

The bank could also be bolstered massively should it acquire the rights to distribute social grants to over 17 million South Africans from SASSA.

Source: BusinessTech

SA banks once again in trouble

Several local and international banks have been slapped with administrative fines by the South African Reserve Bank, for weak anti-money laundering and combating of financing terrorism controls.

The banks include Investec, Absa, Standard Chartered, as well as Habib Overseas Bank.

Overall, banks were fined a total of R46.5-million.

Absa was fined R10-million for weaknesses related to their transaction monitoring. Investec received the largest fine of R20-million. This was due to their failure to implement adequate processes to screen the related parties of customers.

Meanwhile, Habib bank was fined R1-million for “inadequate controls and working methods pertaining to the reporting of suspicious and unusual transactions”, the Reserve Bank said in its banking supervision report released on Friday.

The decision to pose the penalties was not as a result of evidence that any of the banks had facilitated illegal activity the SARB said, but rather because of the weakness of their control measures.

These banks have been issued with a directive to take remedial action.

Habib Overseas Bank was the target of a fraught acquisition bid by a company with links to Gupta family associate Salim Essa.

In March, Vardospan went to court to try and force the Reserve Bank, the registrar of banks and the finance minister to clear its purchase of Habib.

Vardospan accused the regulators and treasury of dragging their feet in authorising the purchase.

The Mail & Guardian has previously reported how Vardospan concluded a share purchase deal to become the majority shareholder in Habib Bank in August last year.

The deal came shortly after the country’s four major banks closed the accounts of the Gupta family and their related companies.

Vardospan is owned by CINQ Holdings and Pearl Capital Holdings. Vardospan director Hamza Farooqui owns 100% of the shares in Pearl Capital, which has a 33.33% stake in Vardospan. Essa owns 100% of CINQ, which holds the other 66.67% in Vardospan.

The court struck down Vardospan’s attempts to force the authorities hand. Incidentally, the court’s decision came hours after President Jacob Zuma axed former finance minister Pravin Gordhan in a major Cabinet reshuffle late on March 30.

The decision on the application now rests with new finance minister Malusi Gigaba.

By Lynley Donnelly for www.mg.co.za

Simple fraud questions MTN and Cell C cannot answer

Many South Africans have lost money through Internet banking fraud, with victims blaming their mobile operator for not protecting them against illegitimate SIM-swaps.

News reports emerged in 2016 that a crime syndicate had infiltrated the mobile operators and was performing SIM-swap and Internet banking fraud.

Continue reading

SA’s most complained-about bank

The banking Ombudsman has released its annual report, revealing which South African bank drew the most customer complaints in 2016.

According to the ombud there were a total of 5,219 cases opened against 17 different banks, over 74% of which were officially closed during the calendar year.

The majority of complaints (over 50%) were fraud related in some way. In these complaints, the complainant is overwhelmingly the victim of a scam. There is no maladministration on the part of the bank, according to the report.

Similarly, with debt-stressed complainants, the ombud found that there wass also no maladministration on the part of the bank, and complainants are simply looking to their banks to ameliorate their debt repayment obligations.

Most complained-about bank

As the biggest bank in South Africa by number of clients, it stands to reason that Standard Bank drew the most complaints during the year. However, when looking at the complaints as a portion of its banking clients, Standard Bank still takes the top spot.

Standard Bank boasted 11.8 million customers in December 2016, up from 11.6 million the previous year. More interesting is that the country’s second biggest bank (8.8 million clients) was only the 4th most complained about bank finishing behind both FNB (7.7 million) and Capitec (8.3 million).

How many complaints are resolved?

There was a slight drop in the number of cases found in favour of complainants for the year under review.

In the majority of cases (75.8%), the ombud found in favour of the bank, compared to 16.6% that were held in favour of the client, while just 0.2 withdrew their complaints completely.

In 2016 the ombud received 205 more internet banking complaints than in 2015. Interestingly, the majority of the internet banking complaints were related to cellphone banking, which increased by 7%. This suggests increased cellphone banking activity, but also a need for greater security, said the report.

There was also a 3% increase in credit card complaints. A staggering 36% of all credit card disputes were charge back disputes, where some element of fraud was alleged. This equates to a 16% increase year on year for this subcategory.

Source: www.businesstech.co.za

SA’s big banks go to court

Unhappy banking clients have instituted legal action against the banking ombudsman and a number of South African banks due to the manner in which they handle Internet fraud cases, according to a report by the Rapport.

20 Absa and Standard Bank clients, who have each lost between R1 million and R2 million to Internet banking or SIM swap fraud, want the banks to be held accountable for fraudulent action.

The ombudsman meanwhile, will not open a case of fraud against a bank unless clients can prove that the bank’s acted negligently. If no negligence can be proven by the bank, it unfortunately means that the complainant is negligent.

In 2016, only 22% of cases of Internet fraud in South Africa was ruled in favour of the customer, while the remaining 940 cases of Internet banking-related complaints went in favour of the banks.

According to the report, the banks and the ombudsman argue that where a PIN or a password is fraudulently obtained, the client must be responsible as they are the only persons privy to that information.

However the 20 clients claim they never acted negligently nor did they give out personal information that could have compromised their accounts. They also argued that they have no way of proving a breach took place through the banks or via a cellular provider meaning it was next to impossible to prove who was at at fault.

They pointed to a recent case in which one of the 20 customers instituting the action had to take both Absa and Vodacom to court in order to determine who authorised a SIM swap on her cell number and therefore had access to her Absa bank account.

It was only after the court ruled in her favour and ordered that the client be given access to the records and was able to build a case that she was not liable for the fraud, said the report.

Source: www.businesstech.co.za

SA’s big banks in big trouble

South Africa’s major banks implicated for price fixing by the Competition Commission could face heavy financial penalties as the Competition Tribunal can impose administrative fines of up to 10% of their turnover for collusive conduct.

“In a world of substantial and ever-increasing fines, as well as the potential for private damages actions, it would be critical for the banks to show that they have stringent compliance policies in place.

“This would assist in providing accurate data and reports to the authorities to show that the conduct complained of was that of a deviant employee/s, and not common practice,” says Anthony Crane, competition law partner at law firm, Dentons SA.

The commission said last week that it has been investigating a case of price-fixing and market allocation in the trading of foreign currency pairs involving the rand since April 2015. It has now referred the case to the tribunal for prosecution against 17 banks, including three of South Africa’s big banks.

Last year six banks in the United Kingdom were ordered to pay $6-billion for manipulating foreign exchange markets in 2013. Coupled with the fact that our courts are now getting to grips with private damages claims as indicated in the recent SAA/Comair matter, this could end up being an extremely expensive exercise.”

In addition, the banking sector was criticised in the State of the Nation Address for its highly-concentrated nature and so the timing of the referral is unfortunate for the banks. However, they now have an opportunity to formally respond to the allegations before the tribunal.

The banks being prosecuted are Bank of America Merrill Lynch International Limited, BNP Paribas, JP Morgan Chase & Co, JP Morgan Chase Bank NA, Investec Ltd, Standard New York Securities Inc, HSBC Bank Plc, Standard Chartered Bank, Credit Suisse Group; Standard Bank of South Africa Ltd, Commerzbank AG; Australia and New Zealand Banking Group Limited, Nomura International Plc, Macquarie Bank Limited, ABSA Bank Limited (ABSA), Barclays Capital Inc, Barclays Bank plc.

Source: www.bizcommunity.com

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My Office News Ⓒ 2017 - Designed by A Collective


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