Firstrand Limited · JSE:FSR
Firstrand — UBS SA Financial Services Conference 2022
29 slides from Firstrand's conference presentation, Oct 11, 2022
Slide 1: Winning in a disruptive environment – being the disruptor
Winning in a disruptive environment – being the disruptor Mary Vilakazi, COO: FirstRand 11 October 2022
Slide 2: Disruption is inevitable
2 Disruption is inevitable DISRUPTIVE FORCES DISRUPTORS Economic Fintechs Market New entrants Traditional banks Regulatory (digital innovation) Customer Other industries
Slide 3: Financial services presents attractive opportunities for disruption
3 Financial services presents attractive opportunities for disruption Payments RESPONSES REQUIRED TO COMPETE • Right price Credit and debit cards • Product market fit • Distinctive value proposition Lending • Customer acquisition Disruption themes • Cost management Insurance • Leverage world class t
Slide 4: FNB is now a meaningful insurance player
4 FNB is now a meaningful insurance player R6.5 R7 billion >5 million R8 billion billion in-force annual in-force claims paid embedded premium policies since 2015 value income (APE) Top seller on digital channel (SwissRe) 1st Excellence in Insurance Digitisation (Finnovex Awards Southern Africa) Inn
Slide 5: Innovation has resulted in differentiated customer propositions
5 Innovation has resulted in differentiated customer propositions Provide free insurance for up to 30 days First to fully digitise funeral on any purchase done via FNB virtual insurance sales and services card or Apple Pay First insurer to proactively pay 70% servicing is done via self service custo
Slide 6: Leveraging group’s value chain to drive disruption and generate value for shareholders
6 Leveraging group’s value chain to drive disruption and generate value for shareholders Customer Product and technology Distribution Risk management Licences base development channels capabilities Data and analytics Group’s value chain enables the creation of a unique combination of products and fu
Slide 7: Leveraging group’s value chain to drive disruption and generate value for shareholders
7 Leveraging group’s value chain to drive disruption and generate value for shareholders Customer Product and technology Distribution Risk management Licences base development channels capabilities Data and analytics Group’s value chain enables the creation of a unique combination of products and fu
Slide 8: Existing capabilities and integrated model allow for disruptive strategy
8 Existing capabilities and integrated model allow for disruptive strategy Group customers are buying insurance products: Life and Third-party products through Other product Short Term Insurance FNB Insurance Brokers providers Aim is to sell own short-term and life products to group’s customer base
Slide 9: Life insurance propositions resonate across retail customer base
9 Life insurance propositions resonate across retail customer base Market share of FNB customer base FNB personal segment market share FNB private segment market share 30% 35% 25% FNB 30% 25% 20% 25% 20% 20% 15% 15% FNB 15% 10% 10% 10% FNB 5% 5% 5% 0% 0% 0% 2015 2022 2015 2022 2015 2022
Slide 10: Leveraging group’s value chain to drive disruption and generate value for shareholders
10 Leveraging group’s value chain to drive disruption and generate value for shareholders Customer Product and technology Distribution Risk management Licences base development channels capabilities Data and analytics Group’s value chain enables the creation of a unique combination of products and f
Slide 11: Tailored product offering to own customer’s needs
11 Tailored product offering to own customer’s needs Protect income In just over 7 years, FNB has Leveraged technology built an insurance product Customer’s capabilities in the group Protect Manage range that covers the vast insurance to customised insurance assets debt needs majority of customer ne
Slide 12: Focus has been on delivering quality products with some tactical pricing
12 Focus has been on delivering quality products with some tactical pricing Non-underwritten life pricing Underwritten life pricing Discount afforded by choosing FNB (age:30) Pricing comparison: R2 million life cover 100% 100% -6% -11% -14% -21% -14% -10% -12% -78% -8% -72% 90% 90% 80% 80% 70% 70% F
Slide 13: Customers benefit from leading rewards programme
13 Customers benefit from leading rewards programme FNB’s non-underwritten life Since inception FNB has rewarded FNB’s underwritten life products products and short-term policy holders with >R 350 million offer up to 40% of a customer's products offer up to 15% in premium rebates via eBucks premium
Slide 14: Leveraging group’s value chain to drive disruption and generate value for shareholders
14 Leveraging group’s value chain to drive disruption and generate value for shareholders Customer Product and technology Distribution Risk management Licences base development channels capabilities Data and analytics Group’s value chain enables the creation of a unique combination of products and f
Slide 15: Customers prefer banking channels to buy non-underwritten life insurance, a material competitive edge
15 Customers prefer banking channels to buy non-underwritten life insurance, a material competitive edge FNB in-force APE Digital, 6% R million Call centre, 12% 3 500 Non-underwritten life 3 000 2 500 Non-underwritten life distribution 2 000 Credit life channel mix 1 500 1 000 Underwritten life Bank
Slide 16: Room to disrupt distribution model of traditional providers of underwritten insurance products
16 Room to disrupt distribution model of traditional providers of underwritten insurance products Current distribution model Ideal distribution model Channel mix of underwritten life new sales (2020 – 2022) Enhanced tooling and Digital sales efficiencies Holistic Customer value integrated management
Slide 17: Disruption possible given integrated advice model
17 Disruption possible given integrated advice model Integrated advice Customer context and needs Lifestyle benefits Manage Advisor tied to debt Proactive client engagement: group platform • Modernised platform engagement and solutions • Information gathering Provide for • Advice education • Solutio
Slide 18: Leveraging group’s value chain to drive disruption and generate value for shareholders
18 Leveraging group’s value chain to drive disruption and generate value for shareholders Customer Product and technology Distribution Risk management Licences base development channels capabilities Data and analytics Group’s value chain enables the creation of a unique combination of products and f
Slide 19: Approach to acquiring licences to fully unlock opportunities
19 Approach to acquiring licences to fully unlock opportunities 01 02 Build partnerships Acquire own in markets in licence to capture broader Africa full value chain Group initially uses partnerships to enter uncharted markets – as capabilities and market understanding mature, acquire own licences t
Slide 20: Refreshed FNB brand demonstrates evolution anchored to strategy to move beyond banking
20 Refreshed FNB brand demonstrates evolution anchored to strategy to move beyond banking 1987 2000 2005 2022 The FNB brand evolution positions it as a lifetime partner, rather than only a bank – this enables the group to pursue other non-banking opportunities, which may necessitate the acquisition
Slide 21: Leveraging group’s value chain to drive disruption and generate value for shareholders
21 Leveraging group’s value chain to drive disruption and generate value for shareholders Customer Product and technology Distribution Risk management Licences base development channels capabilities Data and analytics Group’s value chain enables the creation of a unique combination of products and f
Slide 22: Leveraging data for optimal risk selection a key underpin to ability to grow life
22 Leveraging data for optimal risk selection a key underpin to ability to grow life insurance and will help scale short-term book Easier claims validation Better Better customers collection rates • Bank profile assists with identifying low-fraud customers • Limit selling to customers in risky • Avo
Slide 23: Leveraging group’s value chain to drive disruption and generate value for shareholders
23 Leveraging group’s value chain to drive disruption and generate value for shareholders Customer Product and technology Distribution Risk management Licences base development channels capabilities Data and analytics Group’s value chain enables the creation of a unique combination of products and f
Slide 24: Data analytics drives sales momentum
24 Data analytics drives sales momentum Interactions Transactional Asset Customer and data data data family profile Data on platform Contextual Frictionless Bureau offering take-up External data Leverage group Personalisation of data to fasten the solution take-up processes Astute Data triggers to L
Slide 25: Still significant runway in own customer base…
25 Still significant runway in own customer base…
Slide 26: Now the fastest growing life assurer of choice in own customer base
26 Now the fastest growing life assurer of choice in own customer base and successfully challenging insurance incumbents New business APE on life products (FNB Life vs banking market) In-force book growth (FNB Life vs insurance market) R million 45% 40 40% 35 35% 30 30% 25 25% 20 20% 15 15% 10 10% 5
Slide 27: Despite traction, the opportunity remains significant
27 Despite traction, the opportunity remains significant FNB Life market share* by value 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 16% 16% 17% 10% 12% 7% 6% 7% 0% FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FNB Life Total other insurers * Of FNB-banked customers.
Slide 28: Short-term insurance business tracking ahead of expectations
28 Short-term insurance business tracking ahead of expectations FNB Short Term in-force APE R million 700 Retail Commercial Corporate 600 500 400 300 200 100 0 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May 18 18 18 18 18 18 19 19 19 19 19
Slide 29: Summing up – the group is successfully executing on its insurance strategy
29 Summing up – the group is successfully executing on its insurance strategy • FNB customers happy to buy product = TRUST • Innovation has been a significant enabler • Platform has assisted in cost of acquisition and scale • Banking data key to building the right propositions Applying this thinking
FirstRand — UBS SA Financial Services Conference 2022 on 6ix