Key market drivers

Market driver

Impacts on the financial services industry

How we are responding

Banks and other financial service providers play an important role in the economic life of individuals, businesses and nations – helping to create, grow and protect wealth through partnerships in economic development.
There are a number of distinct factors shaping the financial services industry now and into the future.
While ‘traditional’ banking will
still play a role, the industry is rapidly evolving.
While many of these impacts add to the complexity of business and increase pressure,
we believe they present
many opportunities for
Barclays Africa.
Regulatory oversight
  • Active supervision and regulation of financial services, with a particular focus on customer protection and corporate conduct.
  • Significant regulatory developments such as Twin Peaks (financial sector supervision framework), the Financial Sector Code (broad-based black economic empowerment legislation) and Retail Distribution Review in South Africa.
  • Significant accounting and reporting changes such as IFRS 9 – Financial Instruments, IFRS 17 – Insurance Contracts and Basel Committee on Banking Supervision’s principles for effective risk data aggregation and reporting (BCBS 239).
  • A strong and stable financial services sector.
  • Increased costs to implement and manage regulatory changes and impacts on financial measures such as capital and revenues.
  • Differing regulatory standards across geographies and key areas of business.
  • Increased pressure on financial institutions to execute on regulatory obligations relating to illicit money flows, tax evasion and other financial crime.

The Separation provides an opportunity for the Group to change our responses to these market drivers. While developing our new corporate strategy, we made explicit choices about what the new standalone Group will stand for and how we will address the key market drivers.

Our new corporate strategy is centred on our new purpose statement ‘Bring your possibility to life’. We will transform our culture, and our social impact and how we serve our customers and clients.Technological advances revolutionising the financial services industry. To succeed, we must become more efficient, be bold and become digitally focused. These goals are at the heart of our new corporate strategy.

Macroeconomic and political flux
  • Global economic conditions continue to negatively impact many African economies.
    Global uncertainties persist from, for example, Brexit and fiscal challenges in Africa.
  • Volatility in key economic indicators leads to domestic economic challenges such as inflation and currency depreciation in some markets.
  • Persistent political uncertainty and social activism in multiple countries.
  • Sovereign ratings downgrades have wide-spread impact, with a significant impact on banks by, for example, increasing the cost of finance.
  • Persistent low growth in South Africa with consumers under pressure, and weak business and consumer confidence negatively impacting business activities and banking revenues.
  • Economic growth remains tentative in some countries, but is positive in many of our presence countries, albeit with some political uncertainty.
Digitalisation, virtual reality, artificial intelligence and everything in between
  • Disintermediation/non-traditional competitors are distributing financial products.
  • Consumers are increasingly using digital platforms, including a wide array of payment services.
  • The nature of customer relationships are influenced by digital engagement practices.
  • Low-cost, fully digital banking products are being delivered faster, and at a lower cost.
  • Robotics are gaining consumer acceptance.
  • Rapid innovations from fintechs, with the challenge to integrate and up-scale these innovations.
  • Traditional banks challenged by new, niche digital banks.
    Increased complexity of managing technology, information and cyber risks.
  • Competition for specialised and scarce skills, such as information technology, data analytics and risk management.
  • Opportunities for process automation and introduction of artificial intelligence to decrease cost-to-serve and improve customer service.

The health of economies are closely related to the soundness of its banking system. We embrace efforts toward a stable financial services sector and a safe and fair operating environment where systemic risk is minimised. We have ongoing programmes to implement the required regulatory changes. An important part of economic health is operating with integrity, treating our customers fairly and combating financial crime and cybercrime. We have a coordinated response to driving and monitoring this throughout the Group.

We are committed to Africa’s growth and toward sustainable solutions to some of the continent’s most pressing challenges. Over time, we will formulate further strategic responses to the UN Sustainable Development Goals.

Africa demographic and economic development
  • Rapid growth in the young population and expanding mass and middle markets in Africa.
  • Highest rates of financial exclusion in the world.
  • Extent of unemployment, especially among the youth.
  • Job seekers and entrepreneurs struggle to access employment and economic opportunities.
  • Opportunities to support small and medium businesses who increasingly contribute to employment and GDP growth.
  • Alternative channels and partnerships can increase consumers’ access to banking and other financial services.
Focus on social, governance and environmental matters
  • Activism in a broader range of social, environmental and governance-related matters such as financial sector exposure to climate change risks and potential future impacts (e.g. stranded assets).
  • Persistent inequality in, for example, access to quality education.
  • Worsening/persistent infrastructure challenges and opportunities, including electricity and water supply.
  • Emerging regulation and reporting requirements focused on corporate responsibility and governance.
  • Improved governance and transparency in business conduct is required.
  • Financial institutions need to contribute to sustainable finance initiatives aimed at addressing complex social challenges.
  • Climate change risk to be assessed and managed within core business lines.