Johannesburg - Banking institutions were benefiting from the use of the bancassurance model, which involves the selling of insurance products to bank customers, and insurance was now contributing significant revenue streams that were expected to grow as more clients came on board.
Bancassurance had become one of the fastest-growing revenue streams for banks in South Africa.
David Macready, the director of bancassurance at Nedbank, said the bancassurance channel had become one of the bank's biggest sources of revenue. He said Nedbank had realised growth from this source in excess of 100 percent per annum since bancassurance became a major focus area in 2004.
Willie Lategan, the managing executive at Absa, said bancassurance contributions to earnings had reached 20 percent.
Absa reported earnings of R4.902 billion for the nine months to December.
Lategan said bancassurance benefited clients in that they were able to get comprehensive financial services from their banks. He added that both insurers and banks realised synergies from using the bancassurance model.
Macready said bancassurance cemented the relationship clients had with their banks, offering a one-stop shop.
Banks were most advantaged in using this channel because of the nature of the relationship they had with their clients.
Banking institutions that were part of or affiliated to large insurers benefited from the scale and diversity of product offering.
Macready said that in the case of Nedbank, the Old Mutual group boasted of both life products and short-term insurance through Mutual & Federal. It was easier to sell to existing clients and bancassurance reduced duplication.
While it was not easy to quantify synergies from bancassurance, Japie van Niekerk, the chief executive of Old Mutual Bank, said the model made it easier to identify client needs. Bancassurance would grow but its growth would depend on the quality of advice offered.
This view was shared by Lategan, who said the bancassurance channel would be ideal to distribute insurance products to the lower-income segment.
Peter Wharton-Hood, the chief executive of personal and business banking at Standard Bank, said there was still room for growth through client acquisition given the strong convenience appeal that bancassurance had.
Thami Bolani, the chairman of the National Consumer Forum, said bancassurance was advantageous for the consumer as it created a one-stop shop, saving consumers a lot of time.