Monday, July 22, 2024

Stanbic Bank Botswana to retrench

Stanbic Bank Botswana is retrenching – the bank confirmed to Sunday Standard.

This comes at a time when several banks in the country have already laid off hundreds of workers.

This has raised concerns about the broader impact of the digital revolution, including the influence of artificial intelligence (AI) on the industry’s workforce.

While the exact number of affected employees has not been officially disclosed, a reliable source close to the bank has suggested that the figure could potentially reach at least 100. 

Stanbic Bank Botswana is characterizing the move as an “organizational re-design process” aimed at fundamentally repositioning and reorganizing the bank to align it with its Letsema 2025 strategy. The strategy seeks to create a future-ready platform business with a workforce that is in tune with the bank’s evolving goals.

In a response to Sunday Standard inquiry, the bank’s Stephanie Sandridge (Head of Brand and Marketing) emphasized the need for the restructuring, stating that it would involve “some roles shift, significant re-tooling, training which commenced over 3 years ago, and significant recruitment, which is ongoing for roles in-line with our strategy.” 

Furthermore, Stanbic Bank Botswana said its intention is to increase its headcount significantly as it reshapes the face of the bank.

The news of the impending layoffs comes in the wake of a broader trend in the banking sector in Botswana, where several financial institutions have been letting go of hundreds of employees. 

It is clear that the industry is evolving rapidly in response to technological advancements, and many traditional roles are becoming redundant.

One key driver of job losses in the banking sector is the growing role of artificial intelligence (AI).

Automation and AI-driven technologies have been making inroads into various banking processes, leading to efficiency gains but also workforce reductions. 

For example, customer service chatbots and virtual assistants have become commonplace, handling routine customer inquiries and freeing up human employees for more complex tasks. Additionally, AI-powered algorithms are increasingly used for risk assessment and fraud detection, which can replace certain manual tasks.

The integration of AI technologies, particularly in the form of robo-advisors, has disrupted the traditional roles of human financial advisors by offering automated, low-cost investment services. This has put pressure on banks to adapt their business models and reduce costs, often resulting in staff reductions.

As Stanbic Bank Botswana seeks to position itself for the future, it is evident that AI and automation will continue to play a significant role in shaping the workforce of the banking industry. 

While these technological advancements can enhance efficiency and improve customer experiences, they also pose challenges for existing employees who may find themselves needing to upskill or adapt to new roles.

The ripple effects of these developments in Botswana’s banking sector highlight the urgent need for a proactive approach to workforce reskilling and retraining. As the sector evolves, a collaborative effort between banks, regulatory bodies, and educational institutions will be essential to ensure that the affected employees have access to the necessary resources and opportunities to transition to new roles or industries. 

The impending retrenchment of 100 employees at Stanbic Bank Botswana is just one example of the broader transformation underway in the banking sector. 

The influence of AI and automation is reshaping traditional roles, leading to job losses, but also creating opportunities for a more agile and tech-savvy workforce. The industry’s response to these challenges will be crucial in determining the future of banking employment in Botswana and across the globe.

The impending restructuring however comes off the back of the Bank’s profit before tax of P303 million for the first half of the year, which is a 48% increase from the previous 2022. 

This improved performance the bank has said can be attributed to several factors including: 151 basis points (bps) increase in interest rates in 2022, which allowed the bank to earn more on its loans and investments; Successful strategies to optimize the bank’s balance sheet. 

This involved managing the bank’s assets and liabilities more efficiently to maximize profits; Focus on non-traditional banking revenues, suggesting that the bank explored new income streams beyond traditional banking services; Effective management of credit controls to reduce loan defaults; Investments in technology and workforce to ensure the bank’s systems are stable, clients have a good experience, and the bank can achieve sustainable growth.

According to the statement the bank has been actively restructuring its balance sheet based on insights from market data, client feedback, and specific customer needs. 

This has led to changes in different areas such as: Business and Commercial Banking (BCB) and Corporate and Investment Banking (CIB) have seen growth, likely due to a focus on supporting local and new businesses; The Africa China Trade portfolio has grown, aligning with the bank’s goal to promote economic growth in Botswana; In Personal and Private Banking (PPB), there has been a shift towards rehabilitating non-performing loans, which has resulted in improved yields (returns) and minimal growth in credit losses; The bank has been working on optimizing its funding structure to effectively manage its liquidity, especially in a market with limited liquidity. The liquidity position has improved in the first half of the year.

The bank’s revenue comes from two main sources: Net Interest Income (NII), which is the money the bank makes from the interest on loans and investments, has seen a significant 49% growth year-on-year. This growth is mainly due to the increase in interest rates in 2022. 

The bank has also improved its efficiency through balance sheet optimization and better management of troubled loans; Non-Interest Income (NIR) has declined overall, but there has been an increase in fees and commissions. This improvement in fees and commissions is partly attributed to investments in technology, which have enhanced customer convenience and allowed for more transactions.

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