South African banks closing ATMs and shrinking branches

South Africa’s largest banks are expanding their individual branches but also reducing the overall space their branches occupy as the growth of digital banking has reduced the need for extensive physical infrastructure.

All but one of South Africa’s five major banks increased their branch numbers over the last two reported financial years.

Capitec, FNB, Nedbank, and Standard Bank grew their branch numbers between 2022 and 2023, whereas Absa recorded a net loss of three branches.

However, the actual floor space occupied by at least three of the four banks that increased their branch numbers had declined.

For example, South Africa’s largest bank — Standard Bank — posted the biggest year-on-year gain of 33 branches. However, its branch space reduced by 4% to 239,000m².

FNB was in second place, adding 18 branches. However, its total branch area was reduced by an average of 10% over the past two years.

Nedbank added two branches but saw its branch space decline from 154,000m² to 137,000m² — an almost 18% reduction.

Capitec does not share its floor space figures, but it is noteworthy that its latest increase of six branches is substantially lower than in recent years.

The shrinking of bank branches among the Big Four and Capitec’s branch rollout slowdown is likely driven by a surge in digital banking adoption.

With users able to access many of the services they previously needed to do in a branch on their mobile phone or computer, banks must downsize their leased or owned properties to ensure maintaining their physical presence is as cost-effective as possible.

Digital-first upstarts like Bank Zero, Discovery Bank, and TymeBank have also forced the large incumbents to adapt their offerings to speed up and simplify sign-ups.

This includes supporting online-only onboarding processes for basic accounts.

Another factor to consider is that several banks have started reporting points-of-presence rather than actual walk-in locations as branches in their financial reports.

That may mean that a kiosk in a grocery store is counted with a bank’s tally.

Several banks — including Absa and FNB — have also introduced smaller, fit-for-purpose mobile branches.

These facilities come with all the necessary equipment to help customers perform more complex actions on their accounts.

The mobile units can be deployed at festivals or events with high attendance or in far-flung areas with no branches within easy reach of residents.

The table below compares the changes in branches reported by South Africa’s major banks between their last two financial years.

ATM shutdowns

Another area where there has been a substantial reduction in physical presence among the older banks is in ATMs.

This is partially due to the same reasons as bank branch spaces decreasing — an increase in digital banking adoption that makes ATMs less necessary for various services, including drawing and depositing cash.

ATMs are also major targets for criminal bombing syndicates. Securing or replacing them can add significant costs to banks’ operating expenses.

The only bank that has increased its ATM footprint over the past few years is Capitec.

That may be because many of the bank’s customers earn lower incomes, have their wages paid in cash that must be deposited, and live in areas where cash is more commonly used for transactions.

The table below shows the changes in ATM numbers of the five big banks in South Africa between 2022 and 2023.