By Vimal Kumar, Chief Executive: Retail and Business Banking, Chief Digital Officer and Customer Experience at Absa Regional Operations (ARO)
When a crisis of the magnitude of Covid-19 strikes, it is our role as a responsible lender to put forward various immediate and medium-term solutions to proactively combat the downturn it brings. As an African business, we have sought to position ourselves so that we can offer not just tangible relief in this time of distress and global upheaval, but also true value in an ever-changing world.
For any indebted individual or business, servicing debt during such difficult times is a source of angst. Absa reacted swiftly to the pandemic by designing, offering and implementing smart solutions and offering significant financial respite during these times.
Relief measures have included repayment breaks, moratoriums on capital repayments and the waiver of fees on interbank transfers through internet banking and bank-to-wallet transactions, among others.
A payment holiday – which also defers the tenor of the repayment – is just one option available and is primarily designed to offer immediate relief and ensure a continued cashflow for a household or business facing financial hardship, while at the same time protecting credit worthiness. The option to exercise a payment holiday is a conversation between the customer and the lender based on the profile and individual circumstances of the client.
All of this has been done in consultation with regulators and governments acknowledging that we need to navigate the Covid-19 crisis together.
These solutions have been carefully thought through to assist those most in distress during the initial wave of the Covid-19 economic slowdown. Although we live in an era of social distancing, geographically segregated interaction, and government-enforced lockdowns, our technology and the array of digital products we offer have enabled us to continue to serve all our customers efficiently and effectively.
It is inevitable that a post-Covid-19 world will see us emerge into a more digitally-driven space. Absa is actively driving the roll-out of digital infrastructure and offering our customers more innovative solutions. Customers can bank in a variety of ways: internet banking, apps, e- and mobile commerce, and contactless payment capabilities.
One of the key pillars of our growth is to build a scalable, digitally-led business. When we launched the new Absa brand across Africa, we spoke about “bringing possibilities to life”, and we are stretching digital boundaries to meet and, indeed, exceed the needs of our clients in a rapidly evolving landscape.
Our digital transformation towards a low-touch, low-contact future is accelerating at a fast pace. In driving this, we will make banking and ways of payment cheaper for all our customers. We are already seeing a massive surge in digital use and pick-up by customers in all our regions, which reinforces our conviction that we are on the right track.
It is increasingly evident that the bank of the future will be known not for the products it sells, but for the creativity, agility and openness to co-creating solutions with clients and partners. Everything we do speaks to our ability to find solutions to our customers’ needs – this is even more relevant at a time when our very concept of ‘normal’ is being challenged and revised constantly.
Support for SMEs
One of the things we are very conscious of is that small and medium enterprises (SMEs) are vital to economic growth across Africa, and we need to support and nurture the entrepreneurial energy and innovation in that sphere. We further recognise that the informal economy needs to be as much protected as the formal economy, because this makes up a large portion of employment in Africa.
Therefore, we ensure that our SMEs and our business banking customers benefit from our relief programmes during these turbulent times as much as our individual customers. There is no doubt that when the time comes to rebuild our economies, SMEs will play a leading role in spurring such efforts.
According to the World Bank, Small and Medium Enterprises (SMEs) play a major role in most economies, particularly in developing countries where SMEs account for the majority of businesses worldwide and are important contributors to job creation and global economic development. SMEs represent about 90% of businesses and more than 50% of employment worldwide, while formal SMEs contribute up to 40% of national income (GDP) in emerging economies. These numbers are significantly higher when informal SMEs are included. https://www.worldbank.org/en/topic/smefinance
We have been heartened as a banking institution by the responsible behaviour of many of our customers who have continued to service their debt as their situation allows, which is a very positive story in these uncertain times.
Our customers see us as a bank that is responsible and willing to assist; that offers help when they are truly in need. Yet they have adjusted their thinking and behaviour to the existing environment and are responsibly only calling on us when they really need us.
Absa has a balance sheet in excess of almost R1 trillion and is well-positioned to withstand financial storms, and as a significant bank on the continent, we play a big part in ensuring stability to financial systems, as well as being able to offer clients and customers a reassuring sense of stability and confidence.
But more than what we represent as a continental banking institution, Absa is also Africa, and the essence of caring for others underpins everything we do. Our commitment to helping save lives and contributing meaningfully to the fight against this coronavirus pandemic has seen us make substantial donations to national governments and various Covid-19 relief efforts.
We believe in getting things done, and in helping people find a way to get things done. And in these extraordinary times, we also understand what it means to be African: that our common humanity and our compassion towards one another in the spirit of ubuntu, is what will ultimately carry us through and be the panacea in this fight against this pandemic.