Bidvest Bank’s drive toward diversification continues with the acquisition of First Data Resources South Africa (FDRSA).
It acquired 100% of the global commerce-enabling technology leader’s domestic unit for an undisclosed amount. The bank’s relationship with technology firm dates to 2013. It now has a 10-year licence agreement, with an option to renew, with First Data Corporation.
Japie van Niekerk, managing director of Bidvest Bank, said the deal would allow the bank to boost its offerings to its existing customer base. It is to roll out technology and service offerings, gained through the acquisition, such as a stock management tool which works off point-of-sale (POS) data in the coming months.
He described the deal as a significant step toward expanding the bank’s business banking value proposition.
Launched in 2016, Bidvest Bank’s full-service business banking offering is geared to toward medium-sized enterprises with an annual turnover of between R5 million to R100 million. Although it would not disclose the size of its client base, Van Niekerk said it had grown “exponentially off a low base” and successfully converted a number of its existing import/export clients to its platform.
“There is a real gap in the market for mid-sized businesses that feel that they are not getting the kind of service and attention that they deserve from some of the bigger banks. If you’re a corporate, you can demand a very high level of service and responsiveness.
“But if you’re a medium-sized business, typically, the kind of things you hear is ‘I’ve been banking with them for 15 years and they don’t even know my name [or] they change my relationship manager every six months [or] I’ve got R1 million on deposit with then but they make me jump through hoops to finance a R300 000 bakkie for my business’. We think that we are uniquely positioned to be able to provide a very high level of flexibility and high-touch service in that space,” he said.
Bidvest Bank has long been driving a strategy to diversify its offerings and mitigate concentration risk.
According to Van Niekerk, the bank generated around 100% of its revenue from foreign exchange services as little as eight years ago. Today, foreign exchange – including retail, corporate and money transfer services – is its second largest business, making up around 20% of the bank’s business.
Bidvest Bank’s largest business is fleet management. It reported a 71% increase in fleet and asset finance top-line income during the financial year ended June 2016, following “major public sector contract successes”. “We started with one large fleet customer, we said that we want to land one large fleet every year for the next five years and what that would enable us to do is to get to a point where we have, let’s say, no more than 20% of the fleet at risk at any point in time. These are typically five-year tenders and if you’re unsuccessful for the second-time round, you lose no more than 20% of the fleet in theory,” Van Niekerk said of risk mitigation in the business.
The bank also plays in the retail banking space, offering a low-cost bank account, investment accounts and foreign currency accounts. He said the bank boasts around 50 000 retail customers. Old Mutual’s Money Account also runs off Bidvest Bank’s platform.
Van Niekerk said the bank intends to grow both organically and through acquisitions.
Bidvest Bank, together with Bidvest Insurance Group, contributed 10% to Bidvest Group’s R5.8 billion trading profit during the financial year ended June 2016.