SA banks urged to innovate as new entrants circle

South Africa will strive to allow competition into its banking system in a way that won’t threaten the stability of the industry as more and more entrants seek to rival the nation’s biggest lenders, said Kuben Naidoo, the chief executive of the Prudential Authority.

While many new banking licences are expected to be granted, these would be done within “reason” and in a way that doesn’t allow too much of a disruption that will put the system at risk or make it fragile, he said at a Banking Association of South Africa summit in Johannesburg on Monday.

While he hopes the industry will become innovative, “safety and soundness is important”, Naidoo said.

More “non-traditional” banks are trying to enter the segment, such as mobile phone operators that don’t need to hold capital. And while banks want a level playing field, there are technological developments that can provide better services to customers, said Naidoo, who is also a deputy governor of the South African Reserve Bank.

The central bank is likely to make changes to regulations involving the country’s payments system that balances a stable financial industry against the evolving needs of consumers, he said.  — Reported by Roxanne Henderson, (c) 2018 Bloomberg LP