Ben Kruger – Building an African Bank

Author: Luleka Mtongana
Source: GIBS News
Ben Kruger, joint chief executive of Standard Bank Group describes the financial institution as primarily an African bank following its latest strategic realignment. There are a multitude of further investment and development opportunities on the continent, he told a recent GIBS forum.

The repositioning of the bank’s strategy towards Africa in 2009 after the global financial crisis, which forced many global banks to reassess their operations, was fortuitous, as it had coincided with high levels of growth in the region.

A central aim of the group is to connect countries in Africa to pools of capital around the world so as to encourage portfolio and foreign direct investment flows. Funding of power and infrastructure projects as well as mining and gas “are all crucial for development and to encourage foreign exchange,” Kruger said. 

African opportunities 
Kruger’s vision is to create a quality business with relevant clients and good returns for shareholders by building strong domestic operations and a portfolio of businesses in Africa. 

 “Despite the emotional sentiment around Africa, the truth is always somewhere in between the positive and negative extremes.” The potential for further power, infrastructure and industrialisation projects remain, and a youthful population and high growth rates means there is the “potential to create mini Chinas” across Africa. 

Recent disappointing economic performance figures in sub-Saharan Africa were due to over reliance on single commodity exports. However, continued efforts at diversification and favourable global conditions mean growth in the region could begin to pick up by the end of the year, with GDP in the region touching 5% by 2019. 

With operations across 25 jurisdictions in Africa, Kruger emphasised that it is important to have a passion for what is happening on the continent in order to succeed. Global best practice must be customised to the local country context. “Do not underestimate the level of sophistication of the local entrepreneurs. You can have a standard operating model, but must be culturally aware,” he explained. 

Operating in Africa is a long-term investment, Kruger emphasised, and many successful multinational corporations such as Siemens and Unilever had long histories in the region. The next wave of Chinese investment, following the initial interest in commodities and infrastructure investments was likely to come through industrialisation and manufacturing activities. 

Political environment and policy stability 
A stable political and policy environment are crucial for companies when assessing investment destinations, Kruger said.

Commenting on the South African political environment, he said that the dismissal of former Minister of Finance Nhlanhla Nene was an “inflection point. It was when we figured out what was truly important for the economy and for the country.”

Nene’s replacement, Minister Pravin Gordhan played a unifying role between different functions with a common objective as business, government and labour worked together to avoid a ratings downgrade. “A new relationship was developed and a greater trust forged. It showed we could unite. It would be great if we could get back there quickly,” Kruger said. 

Technology and cyber security. 
The greatest threat for the financial sector at present is cyber security, calling repeated and sophisticated cyber-attacks a “nightmare of unbelievable proportions.” 

“It is an exciting time for banks, but is also a difficult time,” Kruger said.  

The exponential growth in digital and card transactions had resulted in a reduction of demand for in-branch services and the bank was focused on adapting its business to the digital world, including artificial intelligence, big data and robotics. While the new technologies produce enormous resilience and efficiencies, they are expected to have significant impact on banks’ cost to income ratios. 

“Digital lowers the cost of serving customers and the revenue banks are able to generate. If you don’t get your cost curve down very quickly you will be dead. For all banks this is a race against time to make sure we build an excellent experience for the customer, and do it in a seamless way so that it all switches automatically behind the scenes.”

Kruger said he expected cost to income ratio for banks would be markedly lower in five years, and significantly lower in a decade. 

In his role as Joint Group Chief Executive of Standard Bank with Sim Tshabalala, Kruger said leadership of a large financial institution required that he sometimes acted as “a coach, and sometimes as a captain.” Running the bank conjunction with Tshabalala, presented unique opportunities for teamwork and cooperation: “The world today is all about collaboration and utilising opportunities to build on people and technology.” 

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