Barclays has been busy. A new app and online banking portal, ChatBanking launches on Twitter and Facebook, as well as increased investment in its innovation hub – and all in the first half of the year. As Ashley Veasey explains to Douglas Blakey, it has been a pretty hectic 2016 so far at Barclays Africa

“Banks that think out of the ordinary will survive,” Ashley Veasey, group chief information officer and chief digital officer, Barclays Africa, tells RBI.

Veasey, a 20-year veteran of global technology leadership experience in retail, investment and banking, joined Barclays in August 2014 from Standard Chartered, where he served as CIO.

Barclays Africa has set itself ambitious challenges: its priorities are to regain its market-leading position in South Africa and drive the build-out of the bank across the continent.

Specifically, it is focused on achieving a top-three revenue position in its five key markets: Botswana, Ghana, Kenya, South Africa and Zambia.

To hit its targets, it is crucial that Barclays’ African digital transformation strategy, overseen by Veasey, pays off. He could not be more upbeat about the bank’s prospects while acknowledging that challenges remain.

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“We are proud to be building the future of the bank and revitalising our digital channels such as our new app and online banking offering, as well the launch of ChatBanking on Twitter and Facebook.

“As technology advances and customers become better connected, we bring banking to where our customers are; the result is to make our customers’ lives easier and help them to prosper.”

While it is a little premature to assess the bank’s most recent digital investment, early signs are encouraging. The new mobile bank app was developed ahead of target and has been well received.

Veasey believes the launch of ChatBanking demonstrates perfectly the bank’s commitment to delight its customers and offer a secure and smooth customer experience from start to finish on their favourite social media platform. He is at pains to stress the secure angle.

“We must experiment, as banks that experiment and do it fast will prosper, but we must experiment in a secure way – we are a bank and we must not forget that.

“In any assessment of the bank’s priorities and challenges, from a technology and digital perspective, despite the constant need to innovate, the number one priority has to be stability.

“Our customers need stable systems that work first time.”

The launch of a new website, a new app, ChatBanking, opening up the bank’s systems via the creation of APIs, and support for developers as well as investment in digital accelerator programmes do not, says Veasey, preclude an ongoing commitment to investment in Barclays’ branch network.

“Branches are still very big for our customers and we will continue to invest in the physical channel.

“A zero-branch model will not work. In Africa, the branch is increasingly becoming the heart of the community, and people still enjoy visiting the branch.

“We are repurposing the branch to ensure that they offer a community service and deliver more than just basic banking needs.”

Performance of Barclays Africa in H1 2016

H1 2016 (ZARm) H1 2015 (ZARm) Change (%
Net interest income 21,093 18,463 14
Non-interest income 15,415 13,960 10
Total income 36,508 32,423 13
Impairment losses 5,197 3,550 46
Headline earnings 7,252 6,755 7

Veasey says that the disruptors – for example, telcos and fintechs – are forcing banks to rethink how they operate, but there is a positive result: it ensures that banks have to adapt and respond more quickly than before.

Rather than be fearful of the potential threat posed by fintech startups, the Barclays strategy is to embrace the challenge.

The bank’s successful accelerator programmes in London and New York have now been augmented by a launch in Cape Town to support its African operations.

In July, 10 firms showcased their services in the bank’s first African accelerator programme, supported by Techstars and hosted by Barclays’ Rise innovation hub, following 13 weeks of mentorship.

The programme represents ‘quite serious investment’ says Veasey. Ultimately, Barclays Africa and its customers will, he believes, be the beneficiaries.

As for the bank’s traditional competitors, he says: “A lot of banks are talking a good game when it comes to putting the customer at the heart of everything that they do, but I am not particularly concerned about the other banks in Africa.
“The future is very bright for us and for our customers in Africa”, he concludes.

His positive outlook is undimmed by the bank’s parent group in the UK’s plans to dispose of its African unit.
“The relationship with Barclays PLC has been incredibly beneficial for both organisations, but from a technology perspective we will continue to be on the leading edge.”

Strong first half but outlook challenging

Barclays has had a presence in Africa since 1925, and kicked off 2016 with a 62.3% stake in Barclays Africa Group, comprising interests in South Africa, Kenya, Botswana, Ghana, Zambia, Mauritius, Mozambique, Seychelles, Uganda and Tanzania.

In March, Barclays announced plans to retreat from Africa in order to raise cash, lighten its capital burden and shrink globally.

Barclays gave itself two to three years to cut its stake to less than 20%, but said that it may retain a minority stake.
The divestment kicked off in May with the sale of a 12% stake in the African unit for around ZAR13bn ($600m) reducing the parent group’s stake to just over 50%.

Presenting the bank’s first-half results on 29 July, Barclays Africa CEO Maria Ramos said: “While there are still some unanswered questions regarding the future shareholding, my message remains clear: our destiny is firmly in our own hands and I am determined that we deliver on our strategy with an unrelenting focus on driving our Africa business forward.”

Barclays Africa’s first-half highlights included:

  • Headline earnings grew by 7%;
  • Revenue from Rest of Africa (outside South Africa) rose to 23% of total revenue, within the bank’s target range of 205-25%;
  • The group maintained top-three status by revenue in four of its five largest markets: South Africa, Ghana, Zambia and Botswana;
  • The group’s cost/income ratio reduced to 53.4%, against a target of ‘low 50s’, and
  • Retail banking customer numbers grew 1% to 8.9m, while affluent and private banking customer numbers grew by 9%.

Looking ahead, the market remains challenging and volatile with signs of the bank’s balance sheet slowing and expectation of low-to-mid-single-digit loan growth.

While the bank’s retail and business banking unit cost/income ratio improved by five percentage points, it remains high at 68%.

Also on the downside, credit impairments increased significantly in the first half while non-performing loans increased for the first time in many years.