SA banks are pushing 'private banking' into the (almost) Nmass market

Key topics:Private banking shifts from elite to mass-market in South AfricaBanks target high earners early to grow long-term client valueRising competition, tech disruptors squeeze margins, boost services.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Prinesha Naidoo.Globally, private banking has long been the preserve of the ultra-rich. In South Africa — the world’s most unequal country — lenders are slashing entry barriers, effectively turning a segment known for bespoke, white-glove service into a mass-market offering.Top banks are aggressively courting South Africans earning more than 750,000 rand ($44,200) a year, about 3.7 times the average household income, with entry-level private-bank accounts. For clients under 30, a four-year degree in science, technology, engineering or mathematics is enough to qualify, with discounted fees.Local banks, already among the Europe, Middle East and Africa region’s most profitable, are betting scale, cross-selling and lifelong relationships will offset thinner margins. The prize is a potential pool of about 1 million clients in a population of 63 million, far larger than the dollar-millionaire segment..Read more:.South Africa’s biggest banks bet on Kenya to drive next growth phase.“The commercial logic is very simple: The earlier you catch a client in their life, career or wealth cycle, the better,” said Armien Tyer, Absa Group Ltd.’s managing executive for private wealth banking.Technology and intensifying competition are accelerating the push. New entrants such as billionaire Patrice Motsepe’s GoTyme Bank, insurer Discovery Ltd. and banker-turned-winemaker Michael Jordaan’s Bank Zero are forcing incumbents to adapt. Potential forays by the likes of Revolut Ltd., as well as retailers Pepkor Holdings Ltd. and Shoprite Holdings Ltd., threaten to intensify the scramble for customers.Incumbents are responding by emphasizing higher-value services from structured lending to investment advice, which may be harder for challengers to replicate..While traditional Swiss-style private banking, with dedicated teams serving a small population of dollar millionaires, remains the gold standard, South African lenders began lowering entry thresholds more than a decade ago, when political uncertainty prompted an exodus of wealthy individuals. Broadening the client base helped banks sustain returns even as gross domestic product expanded by an average of less than 1% annually over the past decade. It also aided them in capitalizing on democratic-era wealth generation, especially among the growing Black middle class.Entry-level accounts typically offer relationship managers rather than dedicated private bankers. Clients can access a broad suite of services, from complex credit structuring to succession planning, but the most personalized, high-touch support is reserved for wealthier tiers..Pricing reflects the hybrid positioning: Some accounts advertise nominal maintenance fees but charge per transaction, while most cost roughly 450 rand to 700 rand a month.The shift mirrors moves by global peers to target so-called HENRYs — high earners, not rich yet — as lenders look to boost fee-generating businesses and reduce reliance on traditional lending income. While emerging markets such as India, Indonesia and Malaysia also offer tiered private banking, South Africa’s approach stands out.“We’re an emerging market where people can move along the wealth continuum very quickly,” said Ciko Thomas, managing executive for personal and private banking at Nedbank Group Ltd. “We can’t think of wealth and private banking in blocks like they do in Europe, where there are very niche banks that cater to established structures of affluence like royal families.”.Banker BurnoutNedbank and Absa have folded standalone wealth units into their personal and private-banking divisions to serve clients across the spectrum and encourage cross-selling.Even Investec Plc, long known as the banker to the rich, is widening its client base beyond finance and medical professionals to include entrepreneurs and high earners from a broader set of industries. That reflects a growing belief that “future-earning potential and entrepreneurial ambition are as important as current wealth,” said Itumeleng Merafe, the head of Investec Private Bank South Africa..But private bankers who spoke to Bloomberg News on condition of anonymity say the approach complicates their jobs.One banker responsible for 450 households estimates only half his client base truly qualify for specialized advice and financial solutions. The rest, he said, treat him like a personal assistant for day-to-day transactions. Another executive, tasked with signing up 100 new clients a year while serving about 300 others, said long hours and little downtime influenced his decision to quit.Banks have attempted to ease workloads by reducing client ratios and appointing assistants, according to the Insurance and Banking Staff Association.The strategy also carries margin risk. As multiple lenders target the same demographic, they may be forced to cut prices or add services, raising costs, said Adrienne Damant, a senior banks and insurance analyst at Avior Capital Markets. In a stagnant economy, she said, banks are largely fighting to protect existing market share. “Right now, all they do is defend, defend, defend.”Competition is visible from university campuses to corporate offices. Private banks sponsor financial-literacy programs and graduation events, and promote products such as partner-equity loans and equipment finance. The marketing push is hard to miss, from billboards on routes to affluent suburbs and commercial districts to advertisements across airports, newspapers and digital platforms, with multiple lenders claiming “best private bank” honors.Wealth-Management PushSouth Africa’s private-banking model remains heavily credit-driven. High earners — often the first in their families to enter the formal economy — tend to prioritize tangible assets, and often receive preferential rates on mortgages and vehicle finance. Now lenders are pushing harder into investments and wealth management.“We are seeing many young, high-income earners who have strong potential to eliminate debt but currently hold relatively low net asset positions,” said Funeka Montjane, chief executive for personal and private banking at Standard Bank Group Ltd..Newer players have added to the pressure. Discovery Bank, which promotes itself as the world’s first behavioral lender, has gamified money management and reported its first profit in 2025, ahead of expectations. Like its health-insurance arm, it rewards positive behavior, offering dynamic interest rates that can lower borrowing costs and boost savings returns.“It’s income-agnostic, because if clients manage their money well using the tools we provide, they can develop an inherent ability to withstand shocks,” CEO Hylton Kallner said, adding that about 1,300 new clients across income levels have joined daily for almost six months.Meanwhile Capitec Bank Holdings Ltd. — founded to serve low-income customers — is increasingly attracting affluent clients, underscoring how blurred the boundary between retail and private banking has become..Read more:.Standard Bank trading update: Revenue growth meets targets despite rate cut headwinds.“There is a very big distinction between high net worths and those actually making money for banks,” said Patrick Mathidi, head of multi-asset strategies at Aluwani Capital. “The most profitable client is someone who earns around 1.2 million rand and has a home loan, car finance and a credit card — and that bankers don’t really need to talk to all the time.”.© 2026 Bloomberg L.P.

SA banks are pushing 'private banking' into the (almost) Nmass market

Key topics:

Related Stories