Turning Banking into a Full-Service Affair: How FNB is Cashing in on Asset Management

5 Min Read | 730 Words

This week, we dive into the strategic moves of FNB’s Wealth and Investment division, which is emerging as a hidden titan in the asset management industry. FNB, South Africa’s oldest bank, is rebranding itself as a full-service financial institution, moving beyond traditional banking and into asset management. By leveraging its existing client base, FNB is positioning itself to compete with both local and international players in the asset management space.

Fun Fact

Did you know that the word “bank” comes from the Italian word “banca,” meaning “bench”? In the Middle Ages, Italian merchants would conduct business on benches in market squares! 🏦💰

Sign Up for Trainee Contract Opportunities

For those of you working toward your CA(SA) qualification, we’ve got great news! As a subscriber to The Journal Entry, we’re doing our best to find article program opportunities for you.

Don’t miss the chance to grow your professional network and take that crucial step toward your CA(SA) designation.

Be sure to fill out the sign-up form linked below to stay informed about upcoming trainee positions!

FNB Nails Down On Cross-Selling Its Asset Management Division

FNB’s Wealth and Investment division has recently grown by cross-selling its products to existing banking clients and plans to disrupt the asset management industry. As part of FirstRand, FNB aims to become a full-service financial provider, offering products from banking to insurance and asset management.

CEO Bheki Mkhize explains that by integrating services like asset management, FNB can reduce reliance on traditional lending, which is sensitive to interest rates. Asset management is capital-light and offers higher returns on equity. FNB Wealth and Investments now manages R84.8 billion in assets, with 10% of banking clients using its investment products. Mkhize sees continued growth as the bank focuses on integrating its services, positioning itself as a competitive player against traditional asset managers.

As FNB expands across Africa, its Wealth and Investments portfolio is poised to meet growing demand.

Let’s take a look at where we fit into this.

Driving Revenue By Increasing Average Order Value(AOV)

When aiming to increase revenue, businesses typically focus on three strategies: attracting more customers, increasing purchase frequency, or boosting the average transaction value.

While FNB may not deal with traditional "order sizes," it achieves similar results by increasing the average revenue per client. By offering asset management services, FNB reduces its reliance on interest-sensitive lending, while simultaneously enhancing client value and aligning with strategic financial management principles. This diversification results in more stable, high-quality earnings, which are crucial in today’s volatile financial environment.

FNB’s strategy also coincides with a promising period of improving financial sentiment in South Africa, driven by infrastructure developments, interest rate cuts, and growing investor confidence, both locally and internationally.

Cross Selling In Business

FNB’s strategy to cross-sell asset management products to existing clients is a textbook example of cross-selling to improve client retention and boost profitability. Mkhize noted that 10% of FNB’s banking clients use its investment products, with room for further growth, especially among high-net-worth individuals.

This strategy holds valuable lessons for aspiring accounting and finance professionals, who can drive significant value for the firms they will work for or own, many of which offer a broad range of services. Understanding how to leverage these opportunities can be key to maximizing revenue and client satisfaction.

Roundup

FNB’s Wealth and Investment division offers valuable insights into how financial institutions are evolving beyond traditional banking models. With asset management being a capital-light, high-ROE business, FNB is effectively positioning itself for sustainable growth.

Quote Of The Week

Resources

We’ve compiled a list of our favourite value-packed finance and other resources, including industry relevant courses from Wall Street Oasis.

Check them out!

Make Your Mark On “The Journal Entry”

Fill out the form below with any content topics you’d like to see us cover.

Share The Journal Entry

If you enjoy our content we’d love it if you showed your friends and peers!

Or copy and paste this link to others: