FNB reveals plan to cut jobs as customers move to digital banking

FirstRand Limited, one of the largest financial institutions in South Africa  is set to close branches and cut jobs at its South African retail-lending unit as customers switch to digital banking and the continent’s biggest lender by market value responds to an economy on the brink of a recession. Almost 600 positions will be lost at First National Bank (FNB), while more than 500 people at the Johannesburg-based company may be able to apply for other roles, said Vanessa Hattingh, a representative from Sasbo, a labour union which acts on behalf of more than 50% of FNB’s staff. About 10% of the bank’s branches will be affected, with 40 closing and another 31 reducing staff, she said. The process, started in February, will remove duplication and improve efficiency as more clients use the internet and mobile phones to transact and FNB increases the use of automation, the company said in an emailed response to questions.
“No full-service branches are affected and FNB is continuing to extend its network of ATMs,” FNB said, declining to comment on how many jobs may be lost.
Africa’s most-industrialised economy has struggled to reduce an employment rate that hovers around 25%, the highest of more than 60 countries tracked by Bloomberg.
 “If a bank can’t grow its revenues at a decent level, it needs to look at getting cost efficiencies,” said Adrian Cloete, a banks analyst at Cape Town-based PSG Wealth.
“The banks will try to reduce costs through natural attrition of employees and using smaller, new format branches that have lower rental costs. The operating environment, and therefore revenue growth, has become very challenging.”
FirstRand has cut back on lending and said on March 8 that its growth rate was likely to decline this year. The lender has 716 branches and more than 33 000 employees in South Africa. In the six months through December, FirstRand’s net income rose just 1.7% to R10.5bn.
All of the banks are “refocusing on digital channels,” Patrice Rassou, head of equities for Cape Town-based Sanlam Investment Management, said.
“Customer patterns are changing. FNB especially is now reshaping its bank digitally, which means they need less of a physical footprint.”

Source: Fin24