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Silos to segments: FirstRand shakes up operating model

No planned job cuts as group puts customers at the centre of business.

FirstRand has changed its internal operating model such that services offered by well-known businesses – including FNB, RMB and Wesbank – will be grouped and managed under three distinct customer segments: Retail, Commercial, and Corporate and Institutional. Externally, however, services will continue to be delivered through its market-facing businesses and customers won’t notice any difference.

FirstRand’s new internal operating model

Source: FirstRand 2018 Annual Integrated Report (click to enlarge)

In his CEO report in the FirstRand 2018 Annual Integrated Report, Alan Pullinger says the change is in line with the group’s objective to become a fully integrated customer-centric financial services provider. “The group believes that real customer centricity is necessary to effectively deliver integrated offerings. Where the group was previously structured around business silos, it has now designed a model structured around customer segments – i.e. putting the customer at the centre of business.”

He goes on to explain that the product and segment-neutral enablers are mandated to:

– extract efficiencies by removing/avoiding duplication;

– run independent transfer pricing and cost recovery principles to ensure neutrality; and

– ensure collective decision-making involving all segments.

The group says FNB now operates in the Retail and Commercial segments, RMB in the Corporate and Institutional segments, and Wesbank across both segments. Aldermore, its recently acquired UK business, and rest-of-Africa operations will not be affected by the change.

Despite the internal changes, the likes of Jacques Celliers, James Formby and Chris de Kock remain CEOs of their respective customer-facing businesses FNB, RMB and Wesbank. “They all remain prescribed officers of FirstRand, they all sit on the group Stratco and all continue to report to the group CEO, Alan Pullinger. Therefore, their remuneration remains on the same basis as before,” the group said in response to Moneyweb’s questions.

Adrian Cloete, a portfolio manager at PSG Wealth, says the new internal operating model will likely improve the overall customer experience. “It will have an overall picture of what each customer does and will be able to appropriately service their needs. It also makes sense in terms of accountability as one person will be responsible for making sure that customers’ needs are fulfilled.”

The group intends to use insights gleaned through a single view of each customer to better collaborate across businesses, channels, platforms and products to service customers.

FirstRand says the restructuring is not expected to impact headcount as it is designed to drive growth, efficiencies and better customer propositions rather than cost reductions.

It sees significant growth potential in transforming into an integrated financial services player by leveraging its banking capabilities and distribution network. “The group is incrementally capturing a larger share of profits from providing savings, insurance and investment products to its customers and the growth opportunity is significant given the annual flows to other providers from FNB’s customer base alone,” Pullinger says in the report.

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I must say I didn’t think that in 2018 I would read a Bank stating that
” Where the group was previously structured around business silos, it has now designed a model structured around customer segments – i.e. putting the customer at the centre of business.”

This change should have been done many many moons ago!

What a joke. They dont have a clue what is happening on the ground. I worked nearly 30 years for FNB and their whole branch model is designed to get the client out of the bank and onto electronic devices so they can reduce staff costs. They also went through a number a restructures where staff were reduced and are currently busy with another reduction in management positions. So they pushed the clients out of the branch and the client probably all went to Capitec because in their minds every person in this country owns a smartphone or tablet or laptop. So i dont think this model of Firstrand applies to Fnb. They are on there own mission. Go look at hellopeter then tell me if they are customer-centric. Worst company to work for.

Have to agree based on my own experience with FNB. Then again the other four are about the same.

NO BANK IS YOUR FRIEND.

Good change, it will work well and remove duplication. Hopefully they maintain the owner manager culture. Best company to work and it was an absolute privilege to have spent time there. By far the best bank in South Africa.

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