Will Revolut spice up South Africa’s digital banking recipe?

Have you ever been to a braai (a typical South African barbeque) where everyone has to bring a dish? Typically, people prepare what they think will appeal to everyone. What this usually results in is a selection of familiar favourites, with nobody making any bold moves – that is, until the ‘friend of a friend’ brings the potato salad with a crazy twist. It instantly becomes all anyone can talk about, and even though there was already a potato salad on the table, this firm favourite remains untouched. People have gravitated to the bold new offering. 

A little while back, the financial news in South Africa was dominated by the announcement that Revolut, Europe’s largest digital bank, was eyeing South Africa as a market for expansion. Since this spicy news dropped, there has been considerable worry that all the traditional banks in South Africa are now under threat. 

I have a different opinion. There were similar sentiments when TYME and Bank Zero started, and while they are doing well, they haven’t taken the ‘Big 5’ – Standard Bank, FirstRand, Absa, Nedbank, and Capitec – down, or even made a significant dent in their earnings. 

I have worked with executives at South Africa’s big traditional banks for nearly two decades, and for the most part, they always find a way to co-exist with new market entrants. 

In my opinion, Revolut’s potential launch in South Africa isn’t a culinary explosion, but a subtle shift in the banking menu. It does, however, prompt a critical question: who’s poised to adapt, and who risks being left with a stale offering? It’s not about a total industry shake-up, but a targeted refinement of the digital experience.

The focus here is on the digitally-inclined customer, a segment increasingly prioritising seamless, global financial access. Institutions that have built their reputations on premium digital services like Discovery Bank, may find themselves facing increased competition – they are offering a similar value proposition to Revolut, albeit with differing features.

South Africa’s digital banking landscape has been ripening over the last 10 years. Data from Statista shows that mobile app transaction volumes have grown significantly over the past decade and will continue to grow, reflecting a shift towards digital banking for some segments of the banked population – digitally savvy, affluent, and mass-affluent consumers. So, if your bank wants to stop Revolut catching the eye of those customers, what should you do? 

How South African banks should respond

The 2024 South Africa Banking Consumer Study by Accenture found that consumers’ main bank holds 73% of banking revenue, second in the world only to Spain. This tells us that South Africans are more loyal to their primary bank than Europeans or Americans, so banks should prioritise strategies that deepen customer loyalty and increase their share of wallet, making it harder for Revolut to entice existing customers. Here’s how:

– Adapt referral programmes, not just for new customers, but to reward existing customers for deeper engagement. 

– Leverage data and AI to offer personalised financial tools within the existing app. This can include targeted savings goals, investment recommendations based on spending patterns, or customised budgeting tools. By becoming an essential part of the customer’s financial life, the bank increases stickiness.

– Use agentic AI to proactively identify and address potential customer pain points at scale, blending digital with the human touch (something purely digital banks struggle to do).

– The Rapid Payments Programme (RPP), or PayShap, introduces a new ingredient to this mix. Will Revolut put Payshap at the heart of their offering, or treat it as a bolt-on afterthought to satisfy regulation? The South African banks should be weaving RPP into as many of their digital offerings as they can.

Let’s be real: Revolut’s potential arrival isn’t the main course at the braai. Banks that want to capture the affluent, digitally savvy customers – likely to form the backbone of your next generation of wealth – can’t just stand by with their same old recipe. 

They need to play Revolut at their own (digital and AI) game, while maintaining local flavours that a European import cannot replicate. The question is: will you be serving up the same old bland side dish, or will you create a culinary masterpiece that keeps them coming back for more?