From the propagation of Bell Pottinger’s white monopoly capital narrative to the new public protector’s CIEX report, political mischief and fake news have been tough on all the country’s banks — but Absa has taken the hardest beating.
According to the findings of the 2017 South African Banking sentiment index, compiled by BrandsEye, consumers were mostly disgruntled by the controversy around the bank’s purchase of Bankorp, demanding that it pay back the money the Reserve Bank had used to bail out the ailing apartheid-era bank.
The analysis, based on a sample of more than 1.8 million social media posts from about 500 000 unique authors between September 2016 and August this year, showed Absa was the worst performer with a net sentiment of -24.5%.
The posts were distributed to a proprietary crowd of vetted and trained local language speakers before being coded and verified by multiple crowd members, who assessed the sentiments of the posts.
Capitec had the highest net sentiment with 13.5%, followed by Nedbank with a score of -5.8%, Standard Bank with -6% and FNB with -7.6%.
Absa’s score had dropped from -11.3% in 2016, with 32.2% of its negative sentiment attributed to the release of public protector Busisiwe Mkhwebane’s report on the Bankorp saga.
Mkhwebane had recommended that Absa pay back R1.125-billion, but Absa maintained that it had met its duties relating to its purchase of Bankorp.
In July 2017 it launched a high court application for the review and setting aside of Mkhwebane’s findings and remedial action, but the damage to Absa’s reputation appears to have been done by then.
Jeremy Sampson, founder of Interbrand and veteran brand specialist, said Absa had fallen victim to a white monopoly capital agenda pushed by the defunct PR firm to the Gupta family, Bell Pottinger.
“The whole Bankorp thing from 20-odd years ago doesn’t seem to go away. I think Absa would argue that it was raised again [this year] by people who are being mischievous,” he said.
The Bankorp issue had been used as ammunition against the bank by people seeking to be “divisive” and “sow dissent”, Sampson said.
“Certainly there is a lot of mischievousness going on at the moment and it’s made that much easier because of social media,” he said.
Patrice Rassou, head of equities at Sanlam Investment Management, said few people properly understood the Bankorp matter but many were willing to drag Absa’s name through the mud online over it.
“For very political reasons the whole thing has been amplified on the internet and people have taken this at face value. It’s not a South African issue, it’s a global issue of fake news,” he said.
“You just have to have one tweet on something and people take it as fact when these things are firstly contentious, unproven and in a court of law [the accuser] is likely to lose.”
Rassou said corporates such as Absa were not equipped to rebut the “guerrilla warfare” seen online in which “the enemy is faceless”.
Overall the banking sentiment index did not find that banks had suffered negative sentiment driven by other matters related to the Guptas, but that consumers were more concerned with good governance than they had been in previous years.
“South Africans are holding their banks to higher standards now. If banks make a claim, and fail to match it, customers will call them out on this,” said Tania Benade, head of analytics at BrandsEye.
But Absa also received many negative complaints when it came to its services, such as the turnaround time on receiving credit cards and its R120 credit card replacement fee.
Absa had 15.6% more complaints related to branches than to online banking.
Included in the sentiment index was the net experience effect metric, which takes the net promoter scores of the banks, based on the likelihood of customers and non-customers to recommend a particular bank to others, to quantify the impact of customer experience on brand opinion. Capitec’s net experience effect exceeded those of the other banks, followed by FNB, Nedbank, Standard Bank and Absa.
Customer experience specialist and researcher Julia Ahlfeldt said that most consumers were unhappy with the basic “hygiene factors”, such as in-branch experience, app bugs and call-centre waiting periods.
“Most of the banks put time and energy into promotions and loyalty programmes but were unable to live up to their brand promise.
“Every time they do that it chips away at people’s perceptions of the brand.”
Ahlfeldt said that the average net promoter score for the industry in the US exceeded that of South Africa’s five retail banks, with the US being a highly competitive market.
But Rassou said that globally, perceptions around banks had always taken a negative slant, with banking services viewed as a grudge purchase by consumers. “Absa was seen as the leader in retail banking if you go back about 10 years ago but has lost a lot of market share to a number of other players, not just Capitec,” he said.
Barclays Africa, which owns Absa, had seen its share price drop 4.06% in the sentiment index’s review period, while Capitec’s grew by 22.78%.
“I think in the case of Absa, they’ve really suffered in terms of very low risk appetite. Absa has got the lowest market share in unsecured lending, which has been the big area of growth,” Rassou said.
Adrian Cloete, a PSG Wealth portfolio manager, said the valuations investors were prepared to pay when they traded in a company’s shares could indicate investor sentiment.
Based on this metric, “market participants are more optimistic about Standard Bank’s and [FNB owner] FirstRand’s future prospects,” he said.
Absa declined to comment without seeing the full index.