Banking brillance.

Tom Nevin reports on South Africa's burgeoning banks which, since the economy's transformation, seem unstoppable in the global race for financial sophistication that also serves the people.

South Africa's banks have found them selves under growing pressure in recent years, to provide a service to the rising number of salary-in/salary-out depositors with fast-moving, low-balance accounts. The depth of demand saw banks apply a first world solution to a third world problem. Not only has SA's electronic banking system come of age, it has developed into one of the most sophisticated in the world.

A country-wide proliferation of automatic teller machines (ATMs), interlinked through a computer network, now exists to the delight of customers. Account holders can withdraw from any ATM anywhere, regardless of the particular bank which is a better service than many European countries can offer. Massive amounts have been invested into the new system in a drive to reduce costs and service the millions of new customers flooding in.

It doesn't stop there either. According to the SA Journal of Trade, Industry and Investment, the next step is the introduction of smart cards to, "usher in the era of the 'electronic purse', allowing millions of low-income customers to withdraw cash and make payments at thousands of ATMs and payment points."

The total industry assets grew by 16.4% in 1995 compared with a 16.04% rise in advances. Most of the growth came from mortgage lending and instalment finance, with growth last year at 18.4% and 24.2% respectively.

South African banks found themselves back in the international money market with the lifting of sanctions in 1994 when a new era of global banking associations was born. The Board of Executors (BOE) in the Western Cape, for example, tied in with Britain's NatWest. This was close to a coup for the relatively small SA house considering NatWest's assets are some three times the size of the entire South African banking industry.

Size is important in the banking world. BOE's Managing Director, Mr Tom Boardman, explains, "We now find we can do business with corporations which previously considered us too small."

The country's banking giants (see figures below) bought their way into the international arena. In recent years, they have become significant players in the world's money markets. Conversely, unaided foreign financial institutions have experienced a logistical and financial nightmare when trying to enter the already overloaded retail banking market. As a result some international financial houses have taken the option of buying into local banks instead. Indeed, most of the 40 foreign banks with present in South Africa operate from representative offices.

The big four - Absa, Standard Bank, First National Bank and Nedcor - control 90% of the banking industry's assets. The people who run them, furthermore, have become some of the most astute in the global banking community. As foreign bankers looking to put a foot in South Africa's financial door have discovered, it's an uphill battle to beat them. The better option is to join them.

SA'S BIG FOUR:

Absa                             R110bn
Standard Bank                    R83bn
First National                   R71bn
Nedcor                           R52bn