South Africa’s Absa eyes fintech partnerships

South Africa's Absa Group is seeking partnerships with fintech companies in an effort to attract new customers by integrating its services into apps they already use, according to a senior executive. This pivot in strategy comes under the leadership of Absa's new CEO, Kenny Fihla, who recently hired Sitoyo Lopokoiyit, a former M-Pesa CEO, to spearhead the shift.

Lopokoiyit emphasized that Absa must meet the digital natives of Gen Z and AI natives of Gen Alpha where they are, stating that traditional methods like billboards are ineffective for this demographic. The bank's CEO highlighted a recent partnership with EasyEquities as a prime example of this strategy, which involves embedding South Africa's leading retail investing platform within the Absa banking app.

This partnership enables EasyEquities to tap into Absa's 12 million retail clients, while ensuring that customer deposits and investment liquidity remain within Absa. Absa has long lagged behind its competitors, such as Standard Bank, FirstRand, and Capitec, in terms of performance and market valuation. However, under Fihla's leadership, the bank has focused on overhauling its executive team and stabilizing leadership to drive growth.

Lopokoiyit remains optimistic about Absa's potential in South Africa, noting the abundant opportunities in the country's market, which generates $2 trillion in profit combined. One initiative in the pipeline is a new payment tool that will connect personal accounts directly to small township businesses, aiming to replace cash with digital transfers.

This payment strategy aligns with the recent reforms by the South African Reserve Bank, which are allowing non-bank companies to access the national payment system, providing opportunities for incumbents like Absa to compete on a level playing field.