Africa’s largest bank wary of digital assets, wants to be a ‘fast follower’

Getting your Trinity Audio player ready...

Standard Bank, Africa’s largest lender by assets, is wary of diving into digital assets but will be a fast follower once mainstream adoption kicks in, the bank’s CEO has revealed.

The South African bank has been watching developments in the space but has yet to endorse digital assets, CEO Lungisa Fuzile said in an interview with Bloomberg.

“We move with the world, but you don’t want to be the leaders on some of these things. You want to be fast followers,” Lungisa stated.

He noted that offering digital assets could be misconstrued by its clients as an endorsement of the asset class. Its 18 million clients “believe that once the bank puts its name on something, then it’s good.”

Standard Bank will, however, not deny services to digital asset companies, Lungisa pledged.

“We are very interested, we manage our explorations carefully, we do them with heightened interest when we collaborate with our regulators and other banks in the system to understand them better,” Lungisa said.

Standard Bank has expressed skepticism over digital assets for years. In March, the CEO of the bank’s South African operations, Sim Tshabalala, said digital assets have no clear value proposition. He believes they don’t meet a legitimate social need and claims they are used to launder money.

Despite its criticism of digital assets, the bank has endorsed blockchain-based CBDCs. Wholesale CBDCs could “exploit the self-verifying properties of blockchain to simplify inter-bank clearing,” while retail CBDCs could “increase participation in the formal financial system and reduce opportunities for tax evasion and other forms of financial crime,” Tshabalala said.

South African banks have taken a stance against digital assets for years, with most denying VASPs services and blocking direct purchases on most exchanges. ‘Big Four’ banks, including FirstRand and Absa, have come under fire for shutting down accounts for clients involved in digital asset activities.

The South African Reserve Bank has been calling on banks in the country to accommodate VASPs, but very few banks have heeded the call.

CoinGeek Conversations with Catherine Lephoto: How blockchain is transforming health and education in Africa