South African Banks Are Shrinking Branch Networks: “Why Is This So?”

South Africa’s retail banking sector continues to experience a significant transformation, with the country’s leading banks steadily scaling back their physical branch presence as digital banking adoption rises. The latest financial data shows a net closure of nine branches across the top five legacy banks in 2024, reflecting an ongoing industry trend of downsizing. An analysis of full-year reports for Standard Bank, Absa, Nedbank, Capitec, and interim data from FirstRand, reveals that the total number of bank branches dropped from 3,299 in December 2023 to 3,290 by the end of 2024. Though a loss of nine branches may appear modest, the distribution highlights differing strategies among the banks. Notably, FirstRand added nine branches and Capitec expanded with 14 new branches, bucking the trend. In contrast, Standard Bank led the contraction by cutting 26 points of presence (PoPs), while Absa and Nedbank also reduced their networks.

Reasons for Closure

Standard Bank’s approach exemplifies the broader digital migration strategy. Since 2017, the bank has deliberately cut its branch footprint by 42%, yielding cost savings of R768 million. The bank’s 2024 data reveals an interesting shift: while its number of physical branches slightly increased from 485 to 486, it reduced its kiosk count by 27, resulting in a net loss of 26 PoPs. The bank emphasized that it will continue optimizing its infrastructure by shrinking branch sizes and ATM numbers, while expanding access through lower-cost digital channels. However, it acknowledges that certain transactions, especially those involving cash or complex services, still necessitate face-to-face interactions.

Similarly, Nedbank is reducing its physical footprint. In 2024, it closed four branches and significantly cut its branch floor space to 118,000 square meters—a cumulative reduction of 72,000 square meters since 2020. The bank linked these reductions to the growing dominance of digital channels, predicting continued declines in manual branch and ATM transactions as clients increasingly prefer online services.

Conversely, Capitec is charting a different course. In alignment with its strategy to enhance service delivery in key areas, Capitec expanded its branch network in 2024. The bank emphasizes that its physical branches remain critical for personalized customer service and new business acquisition. Branch self-service terminals handle routine transactions, while consultants focus on selling new products and driving client adoption. This approach supports Capitec’s ambitions to penetrate new markets, such as the insurance sector, and cater to underrepresented segments like the informal economy. The bank stated: “We see growth potential in the informal economy in South Africa… We will work towards meeting this need”.