Absa, a financial institution with over a century of operation, is deploying technology and a "customer-centered" approach to expand its personal and private banking business across the African continent. This strategic push, led by Sitoyo Lopokoiyit, who joined Absa in April as CEO of personal and private banking, aims to bring millions of previously unbanked individuals into the formal financial system, opening new avenues for capital accumulation. Lopokoiyit, formerly CEO of Kenya’s M-Pesa, spent 19 years working to disrupt banks before taking the helm of one, now tasked with expanding Absa's market share.
His stated goal is to shift Absa from a "product-driven organisation to a customer-driven organisation." This reorientation aims to simplify "onboarding journeys" and improve the ease with which customers can use Absa's services. The bank sees significant "unpenetrated opportunities" in township and rural economies, even within South Africa, where some sectors are already highly banked, signaling a clear intent to expand the reach of financial capital into new territories.
Expanding Capital's Reach
Of Africa’s 900-million adults, approximately 70% currently lack a bank account. This vast segment represents a substantial untapped market for financial capital, a pool of potential new customers for Absa. Lopokoiyit noted that fintech and mobile network operators previously capitalized on these "white spaces," boosting financial inclusion in Kenya from 23% to over 80%. Absa, which currently serves about 12-million customers predominantly in South Africa, now aims to bring these unbanked populations into its fold, integrating them into the formal economy where transactions can be monetized.
The competitive landscape for financial services has broadened, with non-traditional players, including supermarkets, now offering banking services. Lopokoiyit highlighted PayInc’s PayShap platform, which serves more than 6-million people in South Africa, as an example of value creation in the current environment. Absa plans to adapt its physical presence, moving away from large, expensive branches toward more differentiated points of presence suited for an increasingly digital customer base, optimizing its infrastructure for broader market penetration.
Digital Infrastructure for Extraction
Absa's most recent earnings report revealed a 14% increase in users for its technology-backed channels. The bank's active digital customer base grew 14% year on year to 5.4-million in the six months to end-June. This growth was particularly strong in other African regions, where it rose 21%, driven by digital onboarding improvements, enhanced app capabilities, targeted campaigns, and ecosystem partnerships. South Africa's digital customer base grew 10% in the same period, demonstrating the effectiveness of digital tools in expanding the bank's reach.
To facilitate this expansion and deepen its market capture, Absa introduced a new pan-African operating model. The group's overall IT-related costs rose 7% in the period, reaching R8.779bn. In the past year, Absa signed agreements with Ripple for digital asset custody services in South Africa and with Salesforce to enhance its capabilities. This investment in digital infrastructure is crucial for the bank's strategy of deeper market penetration and surplus extraction from new customer segments. Lopokoiyit emphasized that success will ultimately be judged by "execution, execution, execution," underscoring the relentless drive for market capture and profit generation from previously untapped populations.