FNB Private Wealth

Ups, downs and

in-betweens to
close 2023

ISSUE 32

South Africa entered November 2023 on a World Cup high, after the Springboks retained the coveted William
Webb Ellis trophy in Paris. There were accolades all around from inspirational Springbok captain Siya Kolisi to
outgoing coach Jacques Nienaber, who we sat down with in our previous edition of this newsletter.

The highs of rugby victory were still
reverberating around the country when
Finance Minister Enoch Godongwana
presented the Medium Term Budget Policy
Statement (MTBPS) to Parliament on 1
November. The MTBPS highlighted some hard
truths about South Africa’s weak economic
outlook over the medium term, with biting
issues including ongoing load shedding,
high inflation and rising borrowing costs.
The finance minister noted that, since 2008,
government spending had exceeded revenue
and said: ‘Action is being taken to review and
reconfigure the structure and size of the state,
in line with the president’s commitment in the
2023 State of the Nation Address. A joint plan
to review government departments, entities
and programmes over the next three years is
being prepared.’
Looking beyond the MTBPS, and towards 2024,
it is easy to see that many questions still remain
unanswered about the trajectory of the local
and world economies over the next few months.
Fortunately, Chantal Marx, Head: Investment
Research and Content, sat down with us to
offer a glimpse into what the coming year might
have in store in terms of trends. Interest rates
and inflation will doubtless remain key drivers,
alongside the many geo-political tensions
playing out around the world currently, but as
you’ll read there are always opportunities at
hand for the discerning investor.
How you harness these opportunities has
much to do with how we support you on your
wealth journey. As our Chief Investment Officer
Renzi Thirumalai explains in a piece that takes
you behind the scenes and into our wealth and
investment thinking, building an investment
plan of action around client goals, is a surefire
way to create tangible value – no matter what
the market conditions are.
To help you and your family navigate one
of the more pressing issues facing South
Africans currently – loadshedding and how
to finance renewable energy installations –
we are delighted to introduce FNB Private
Wealth’s new solar finance offering, as part
of Treasury’s Energy Bounce Back (EBB) Loan
Guarantee Scheme. This means affordable
loans are now at your disposal for solar
systems and solar generation. You can read
more insights on this from our loans expert,
Gavyn Letley.
With the holiday season upon us, we continue
to focus on your safety and the protection
of your assets. As such, we urge you and your
family to remain vigilant as fraudsters and
scam artists up their game when defences
are down. We work hard to ensure that our
systems and technology are robust, but
sometimes human behaviours unwittingly
open the door to fraud. I urge you to heed the
warnings shared by Ettienne Fourie, Head of
Fraud Risk Management, and Trish Ramdhani,
Head of Fraud.
We are also excited to share the news that if
you’ve left securing your foreign exchange to
the last moment this holiday season, FNB has
you covered. We’ve enhanced our global travel
offering so that our clients can now order
foreign notes and even a Multi-Currency Cash
PassportTM using the FNB App. Even if you need
to top up your forex while you are strolling
along the Champs Elysees or sunbathing on
a tropical island, you’ll now have immediate
access to the funds you need with just the tap
of a screen.
If this sounds like futuristic banking, then we
end on an exciting note with a glimpse into
the future of financial services in the age of
artificial intelligence and the rise of generative
technologies like ChatGPT. Our Chief Data and
Analytics Officer, Mark Nasila, tells you what to
expect and what FNB Private Wealth is cooking
up behind the scenes.
From all of us at FNB Private Wealth, we wish
you and yours a peaceful – and richly deserved
- holiday break.

Economic update and trends

Looking to 2024: So much is up in the air

Predicting what 2024 might look like, from an economic and markets perspective, is hard
when the world is sitting on a knife-edge waiting to see what else 2023 has in store.

Wealth and performance

Goal-centred wealth performance is about marrying

good investments with good advice
FNB is not just another bank, says Renzi Thirumalai, Chief Investment Officer of FNB Wealth
and Investments, it also manages investments.

Solar generation loans

FNB finances solar generation

through cost-effective loan scheme
In partnership with National Treasury, FNB’s new solar finance offering forms part of
the Energy Bounce Back (EBB) Loan Guarantee Scheme that was formulated to cover
the costs of personal and commercial solar installations at affordable interest rates.

Travel

No more fiddling around with forex,

just use the FNB App
Concerned about securing your forex as your long-awaited trip abroad approaches?
Don’t panic, with new features recently added to FNB’s existing global travel offering, you’re
now able to order foreign notes and a Multi-Currency Cash PassportTM using the FNB App.

ChatGPT and AI

AI in banking - it’s not all ChatGPT and Bing

Dinner table chatter about artificial intelligence (AI) has surged since non-profit research laboratory
OpenAI’s launch of ChatGPT just over a year ago. ChatGPT galloped to more than 100 million active
users by January 2023 and then, in March, an even more sophisticated version was released: GPT-4.
Now, it seems everyone is using Chat, for work and for pleasure.

Fraud

Fighting fraud with FNB

With the end-of-year holiday season fast approaching, scam artists are upping the ante
when it comes to gaining access to your wealth. While FNB continuously works to ensure
that systems and technology are robust and secure, fraudsters still find it effective to
exploit human behaviour, the psychology of trust and our increasing reliance on technology
to poke holes in personal protection measures.

Economic update and trends

Looking to 2024: So much is up in the air

Predicting what 2024 might
look like, from an economic and
markets perspective, is hard
when the world is sitting on a
knife-edge waiting to see what
else 2023 has in store.
With rapidly escalating tensions between
Israel and Hamas in the Middle East, alongside
the continuing war between Russia and
Ukraine, the geo-political gulf is widening
between countries on opposing sides of
these conflicts. While the humanitarian cost
is staggering, there are also economic knocks
to consider, which will have a direct impact on
people in these regions, and around the world.
What, for instance, will the implications be
for energy prices? If the world’s major oil
producers are drawn into the conflict, what
might this mean for the supply of oil? How
will grain costs be affected as the Black Sea
corridor stalemate continues? And what does
all this mean for global growth?
These are just some of the questions hanging
in the air as we say goodbye to 2023.
According to Chantal Marx, Head: Investment
Research and Content, we are likely to go into
the new year with many of these questions
still unanswered. ‘There’s actually no way
of looking forward to 2024 because we still
don’t know what’s going to happen for the
rest of 2023,’ she said. ‘I think we’re probably
going to feel that way into January, February
and even March. Maybe after that we’ll start
getting some sort of clarity. What we can say
for certain is that there’s a lot going on at
the moment, and market direction is being
influenced by probably 40 or 50 different
things.’
The main issue on the table currently, says Marx,
centres around interest rates and inflation.
‘These two are linked, and they remain the
main driver. As long as there is uncertainty,
or risk around the trajectory of interest rates,
coupled with the risk of high interest rates for
longer, it will have a negative impact on the
market in terms of volatility and direction,’
says Marx. This uncertainty will impact bond
yields as well, further compounding the effect
on global equity markets and continuing to
drive the debate around the potential for a
global recession – led by fears around the
US - in 2024. As long as these issues persist,
sentiment will continue to be broadly negative.
What to expect from interest rates
While uncertainty still persists around whether
or not there will be another interest rate hike,
Marx notes that most investors feel that the
world is close to ‘the peak of interest rates,
which means now we have to start looking
towards when we are going to start seeing
interest rate cuts. And we are definitely going
to see them at some point - likely next year for
the US Federal Reserve, as well as the South
African Reserve Bank.’
Markets tend to bottom in a recession and
start moving up when the first interest rate
cut comes, or the expectation grows that
the Fed will start cutting or possibly cutting
aggressively.’
Looking back on 2023
The past 12 months have been challenging,
particularly at a local level where the impact
of the weaker rand has weighed on rand
hedges. ‘Investors have been largely risk
averse. Emerging market assets, in general,
have been under pressure and emerging
market currencies have been under
pressure, and South Africa is absolutely no
exception,’ says Marx.
The underperformance of commodity prices
currently is also part of the South African
story, although this is fuelled by a lack of
conviction in China’s growth story, it has
proved exceptionally negative for South
African miners, for South Africa’s terms of
trade and, in turn, the rand and overall equity
market experience. Marx’s advice currently is
to ‘look through the noise’ and remember the
fundamentals of investing.
‘Whenever we have these periods of volatility
and chaos – when there’s a lot happening in
the world and everything seems to be falling
apart around us – the first thing for longer-
term investors to remember is: don’t panic.
The market always recovers,’ says Marx.
The second point to hold onto is that
opportunities are there to be seized.
On this point, Marx says: ‘Perhaps be a little
bit more specific in how you allocate your
funds and identify the opportunities that are
out there because of the current volatility
that we’re experiencing and the mispricing
that we’re seeing, specifically in South African
equities and bonds. These opportunities do
come around, but they don’t come around
often. So, when something has been sold
off heavily and unfairly - particularly when
you keep the long term in mind - it is an
opportunity to buy.’
A word on South African equities
and bonds
Regarding opportunities, Marx notes that
investors should not be put off by the global
reduction in listed companies. A recent
World Finance article, quoting a National
Bureau of Economic Research report,
noted that: ‘The average number of listed
companies per one million US citizens has
also halved since 1976 … [and] the US has
roughly 5 000 fewer listed companies than
would be expected for a country of its size,
population, economic development and rule
of law. The picture is similar on the other
side of the Atlantic: since 2000, the number
of listed companies has dropped by 37% in
Germany and by 23% in the UK.’
In South Africa, ‘the number of companies
listed on the [JSE] bourse has dropped by
more than half over the past 30 years to less
than 300’, according to Daily Investor.
environment because investors are looking
for places to put their capital since the
momentum is quite positive. What we’ve seen
over the last few years is that momentum has
been broadly negative and there’s been a lot
of uncertainty.’
To illustrate the point, Marx notes
that several big listings were meant
to come to local market over the last
few years but these were put on hold
to wait for better market conditions.
‘Coca-Cola Bottling Africa is a prime example
of this. This company was meant to list two
to three years ago, and they still want to
list, but have noted that conditions are not
appropriate at this time,’ says Marx.
She notes that while it is normal for de-listings
do take place from time to time on any stock
exchange, in South Africa she sees de-listings
being driven by the fact that the market is
extremely undervalued, particularly in the
small- and mid-cap space. ‘This offers an
opportunity for management or founding
family buyouts, and takeovers, which we’ve
seen picking up quite substantially. So, this
is going to continue happening as long as
companies are trading at exceptionally cheap
multiples,’ explains Marx.
Is there an opportunity in this trend?
‘Absolutely,’ says Marx. ‘Either you invest in
one of these companies and eventually these
valuations get closer to fair value as they
are driven by broader market optimism and
a turnaround in terms of the interest rate
environment, or you are going to get a takeout
offer at a 50% premium. At this point I think
there are so many opportunities there.’
Ending on a positive note, Marx also believes
the number of listings on the JSE will tick up
again when market conditions start improving.
‘The JSE will see new listings come to market,
you will start seeing companies raising capital
again on a public exchange – because it’s
super-efficient to do so. And, obviously, if
we get any sort of momentum or perceived
momentum on the reform agenda, this will
spark additional interest.’
With the elections due to be called in early
2024, Marx had this to say: ‘The elections
will be a very interesting one to watch and
I think that, from a business perspective,
investors will want either a commitment to
positive change, or at least, if there’s not going
to be any sort of business friendly change, a
continuation of things as they are - which isn’t
great, but is a known quantity at least.’

What will hasten an interest rate cut will be
evidence of a sharp slowdown in the US, says
Marx. ‘We would see equity prices and bond
prices move even lower if we start seeing a
recession in the US, and we would then expect
a very quick response from the Fed.
Marx notes that the global trend of publicly
listed companies reducing is ‘a result of
tumultuous market conditions. Typically, a
company would want to list if conditions are
favourable, so if asset prices are going up, it
makes sense for them to raise capital in that

Wealth performance

Goal-centred
wealth performance
is about marrying
good investments
with good advice
FNB is not just another bank, says Renzi Thirumalai, Chief Investment
Officer of FNB Wealth and Investments, it also manages investments.
‘We have a multi-manager product range with a 16-year track record.
We’re an investment destination with our work predicated on creating
meaningful value for clients as we work towards achieving their goals,’
he explains.
Rather than bombarding clients with the technicalities of asset
management, FNB investment philosophy is centred around meeting
client goals, says Thirumalai. ‘The departure point for everything we build
is client goals. Whether our clients want to save for an emergency, go on
holiday, retire more comfortably, or save for their kids’ education, we then
reframe that around what investment solution suits that outcome.’
Attaining good performance requires a multi-dimensional approach
tailored to a specific fund, Thirumalai explains. ‘We make broad
asset-class decisions – around which bucket to put our money in – and
we’ve done well there, making good calls on asset allocation which has
contributed to performance.’
Overall, says Thirumalai, ‘we have observed very good long-term
performance’. This doesn’t mean that funds don’t go through highs and
lows in order to reach an upward trajectory to grow one’s assets. In fact, he
notes, this remains an area in which many investors still battle. ‘We need
to get people comfortable with the fact that figures are not always going
to be green – indicating an upwards trend – they’re not always going to be
above benchmark,’ he says.

Using a car analogy, he explains: ‘We’re not telling you how big the engine
is and we’re not telling you all the technical specs of the engine, we’re
telling you that if you’re a family of five, we’ve got a nice sedan for you.’ In
applying this thinking to the investment space, Thirumalai says that while
the right technical components are undoubtedly in place, FNB Private
Wealth aims to connect with clients on a more meaningful level.
Managing expectations
To forge these close connections, FNB Private Wealth prides itself on
open communication with clients. Using the example of the long-term
goal of saving for a child’s university education, Thirumalai notes that
this ambition is more complex than a one-year investment plan to save
for a deposit on a house. ‘In the case of a house deposit, you’d put a
certain amount of money in the bank so it will stay safe over a short
period. Yet with regards to a university education, fees steadily increase,
so we would have a 10-year horizon that might include putting savings
into what the market refers to as a Balanced fund, for example,’ he
explains, adding: ‘Because we know how to express the outcome of that
fund, we then focus on managing client expectations.’
Instead, you want a clear and credible plan of action. ‘We’ve delivered
good performance not as a one-off occurrence but in multiple time
frames in multiple product lines and in multiple formats of delivery,
whether it be in unit trusts or private client portfolios. Clients know they
can trust in us,’ says Thirumalai.
Riding out your investment
Thirumalai compares investment strategies to taking an Uber ride to the
airport. ‘If you have a flight at 8am and you get into an Uber at 6am, that’s
like a fixed income asset. You tell the driver that you don’t like driving
fast so drive carefully and slowly. But if your need is more significant and
you get into that Uber at 7am and your flight is at 8am then you need the
driver to go faster. Your driver is going to tell you ‘it will feel uncomfortable,
yet you’ll meet your objective to make the flight,’ he continues. ‘So, you
hold on and buckle up, but you can’t complain that he’s speeding because
that is what he has to do. In the same way, you can’t be uncomfortable
with the ride on an equity or balance fund when your objective is to send
your kid to UCT. Your need requires that growth element.’

During turbulent and unpredictable times, Thirumalai cautions against It all comes back to FNB Private Wealth’s outcome-
going in and out of such long-term funds when motivated by panic based wealth philosophy. ‘We want to enhance our
which ultimately leads to capital destruction. To guard against this, clients’ financial futures by creating congruence
FNB Private Wealth’s approach is to manage expectations upfront
and an ongoing basis by positioning products from a risk and return
between the client goals and the investment solutions
perspective. ‘Clients have to be prepared to take the ride,’ he says of we create,’ says Thirumalai. ‘Without that tie-in it
the route plotted out. It’s not just about the goal but also about the risk doesn’t work.’
you have to take to get there, especially in an uncertain world.

‘Regardless of your financial position, the discipline of staying invested is
hard,’ Thirumalai continues. ‘Consistently investing and staying invested,
and not drawing that capital to use for an unforeseen short-term need.
That’s why we take the complexity of where and how to invest, and when
to change and rebalance, out of the equation for you.’
Ultimately, taking a long-term view is vital but that’s not always easy in
practice when inflammatory headlines cause investors sleepless nights.
Thirumalai stresses that no matter what you read, rest assured that FNB
has you covered. ‘Our portfolios include local and offshore, single and
multi-manager, active and passive fund as well as multiple asset classes.
We’ve diversified your portfolio for you. We have our finger on the pulse,
and make tweaks when needed.’
Measuring performance
To ensure your financial future and that of your family and future
generations, FNB Private Wealth is dedicated to educating clients by
providing input and material that they can trust and content they can
learn from, especially in times of market crisis. ‘We live in a world where
information is thrown at us, it’s just a daily deluge and bad news sells and
incites impulsive reactions,’ Thirumalai explains.
‘That is why our value proposition is not only to deliver good products
but also to deliver good advice – something we call our integrated advice
proposition. If you jump out of the Uber before you reach the airport, you
have not completed your journey successfully. You need to get to your
destination – in other words, achieve your goal.’ And, ultimately, seeing
a goal come to fruition comes down to marrying good investments with
good advice.

There are various ways of measuring fund performance, mainly against

peers and benchmarks. While the most recent figures show that FNB’s key
funds have delivered good performances in a tough market, Thirumalai
stresses the importance of adopting a realistic long-term view when
assessing such data.

Solar generation loans

FNB finances solar

generation through
cost-effective loan
scheme

In partnership with National Treasury, FNB’s new What’s more, unlike banks who restrict the approved solar installation
companies, FNB allows clients to choose their own reputable suppliers.
solar finance offering forms part of the Energy ‘This gives clients more flexibility to choose who they want to, how they
Bounce Back (EBB) Loan Guarantee Scheme that want to have it done and what they want to finance.’

was formulated to cover the costs of personal
and commercial solar installations at affordable
interest rates.
While Eskom may have given clients a slight reprieve of late,
loadshedding will remain a reality for the foreseeable future. In
recognition of the need to fund solar installations, to not only mitigate
the effects of loadshedding but to also take pressure off the power
grid, FNB has teamed up with National Treasury who are providing
funding to allow banks to offer FNB clients affordable loans for solar
systems and solar generation.
‘That allows us to do is essentially create a product at a significantly
cheaper price point,’ explains Gavyn Letley, product head at FNB Loans.
‘If clients can demonstrate that their personal loan is used for solar
generation, they will be given a fixed interest rate of Prime +1% over
5 years. This interest rate is significantly lower the average personal
loan rates and very competitive within the market. This reveals FNB’s
commitment to offering affordable value driven services to its clients.
The loan offering also helps clients not only to finance
a solar system that suits their needs, it also allows them
to diminish their reliance on Eskom and help reduce
loadshedding.
A seamless process
If one were to finance their solar solutions through their home loan,
refinancing and accessing the bond would be a six-to-seven-week
process, the loan offering is processed quickly. ‘End-to-end from
personal loan to conversion to the FNB Personal Loans Solar Benefit
could be within three working days, although officially it takes seven to
10 working days.’
The process to apply is as follows:
• Step 1: Get a quote from your preferred solar installer. The quote must
include solar panels and solar related expenses only. Solar-related
expenses can include batteries, inverters and sundries

Financially speaking…
While the loan rate is higher than a home loan rate which is generally
around prime, or prime less for the private wealth segment, it is financed
over a significantly shorter period – five years as opposed to 20 or 30
years. ‘You’re also financing a depreciating asset in terms of solar, solar
panel, batteries and inverters,’ says Letley, ‘which have an average lifespan
of around eight to 12 years. So, you don’t want to finance a depreciating
asset over a 20–30-year period when you can finance it over five years,
pay it off, create value for the grid and add value to your house.’
Individual clients will apply for a personal loan via normal channels at a
personalised interest rate, but the interest rate will be lowered to prime
+1%, fixed for the term of personal loan after proof of use is verified.
Loans start at a minimum of R3 000 and go up to R300 000. At least
90% of the funds must be used for solar panels and related expenses
such as batteries and inverters. Only one loan per client is permitted by
the scheme. ‘If you’ve taken a personal loan in the last two months and
used 90% of that for solar, you can convert your loan,’ Letley adds.
• Step 2: Apply for a personal loan. If you qualify, you will be quoted and
paid out on your personalised interest rate
• Step 3: If approved, your personal loan will be paid into your bank
account as personalised rate. Use the funds from the personal loan to
pay least a 25% deposit to your preferred solar supplier
• Step 4: In order to convert your loan to the lower rate. You go to
nav» Energy on the FNB App and convert your personal loan
• Step 5: Once documentation has been received, it will be validated and
if approved you will receive an updated agreement of your new lower
interest rate of Prime +1%. Changes will be effective on the date your
documents have been validated
To find out more about FNB’s Personal Loan Solar Benefit offering and
our other finance solutions for power generation, click on nav» Energy
on the FNB App. Alternatively, speak to your private banking team.

Offering more client flexibility

Not only is FNB’s EBB loan competitively priced, it offers clients

flexibility. For example, it can also be used to finance solar geysers,
usually priced at around R25 000. ‘You can reduce your energy bill
by installing a solar geyser at a significantly lower price point,’ Letley
explains. ‘This is because your average geyser consumes 30% to 40%
of your energy bill.’

Travel

No more
fiddling
around with
forex. Just use
the FNB App.

Concerned about securing your forex as your
long-awaited trip abroad approaches? Don’t
panic, with new features recently added to FNB’s
existing global travel offering, you’re now able to
order foreign notes and a Multi-Currency Cash
PassportTM using the FNB App.
From booking your hotels and flights to planning your itinerary,
international travel involves intensive planning – especially if your
trip is over the end-of-year holiday season. Yet, with the enhanced
Global Travel offering on the FNB App, even if you find yourself needing
more forex when you’re already strolling along the Champs Elysees or
sunbathing on a tropical island, you’ll have immediate access to more
funds with the tap of a screen.
Cindy-Lee Mayes, Head of Personal and Private Banking Foreign
Exchange, explains that clients can now order forex for themselves or
their family seamlessly via the FNB App’s newly updated Global Travel
offering. ‘In addition, this can be delivered to you at no additional charge.
The new functionality also allows clients to top-up their Multi-Currency
Cash PassportTM via the FNB App while abroad.’
residents over the age of 18 transfer funds abroad for purposes of travel,
gifting and even foreign investment. These forex limits are reported and
controlled at an individual level, based on identity number, which makes
it essential to remain in step with the South African Reserve Bank and
South African Revenue Service and not to exceed the stipulated
R1 million per year.
It is important to remember that any purchase using your local debit
or credit card while you are travelling is also allocated to the SDA, says
Robertson. Although she adds that for a couple travelling together,
using the SDA for each will certainly add more flexibility. However, it is
important to bear in mind any funds which might previously have been
externalised, for instance through payments made to overseas-based
retail platforms like Amazon, or into offshore accounts like the FNB
Global Account or FNB Channel Islands Account.
To help avoid the additional costs of 2% which you will incur if swiping
a local credit or debit card abroad, Robertson adds that part of your
holiday pre-planning should be to open an FNB Global Account in your
chosen currency, be it euros, US dollars, yen or pounds, and to transfer
funds offshore over a period of time – using the FNB App.
Not only is using a Global Debit card more financially
savvy, but it also earns you up to 4% back in eBucks.

Catering to clients’ travel needs

This latest innovation is integrally linked to FNB’s consistent drive to
better service its clients. This latest App enhancement is, therefore,
positioned to meet the evolving travel needs of clients.
‘Innovation is crucial for us in solving for our clients’ needs, because it
enables us to continuously improve and evolve our solutions to meet
their requirements and expectations,’ explains Mayes. ‘It’s part of our
DNA. By fostering a culture of innovation, we can create unique solutions
and deliver greater value to our clients.’
Not only does this thinking benefit FNB Private Wealth clients – many
of whom are truly global citizens - it has also resulted in FNB Foreign
Exchange being awarded South Africa’s Best Foreign Exchange Provider
for the last seven years running, as voted by Global Finance. This is a track
record which FNB as a whole intends to continue building and developing.
With an inherent appreciation of the amount of effort and time that goes
into planning your international trip, it was important to FNB to make the
process of obtaining foreign exchange as easy as possible, says Mayes.
‘With this new functionality, you can order your foreign exchange
through a simple, secure and convenient process and have it delivered
for free,’ Mayes reiterates. ‘Our clients’ needs are the cornerstone of our
solutions, shaping every aspect of our offering. That was the motivation
for the enabling of our extended travel solutions as part of our wider
forex solutions currently available on the app.’
Dotting all the forex Is and crossing the Ts
As slick and seamless as this new offering is, there are still some
regulatory hoops that must always be considered before converting
rands into foreign currency. As Chantal Robertson, Head of Cross-Border
Advice, explains: ‘There are a number of financial considerations that
travellers need to keep in mind from an offshore spend perspective,
including individual allowances that South African residents need to
comply with from an exchange control perspective.’
‘The Global Account is really the most cost-effective and easiest way
for travellers to enjoy their time abroad without any hidden currency
conversion surprises and with a lot of additional banking benefits,’
says Robertson, stressing the need to tread carefully when it comes
to regulations.
She adds that while those looking to enjoy a slap-up holiday, the limits
of the SDA are not likely to dent your ability to splash out and enjoy
yourself. In fact, says Robertson, if you have gone through you SDA over
the course of the past year, it is possible to apply for tax clearance to
utilise the R10 million Foreign Investment Allowance, although this
process does take approximation 21 working days.
Enhancing FNB’s existing travel solutions
With demand from clients growing to transact on a global level, and as the
primary banking channel of choice for FNB Private Wealth clients, the FNB
App is constantly being developed with functionality being built in line
with clients’ preferences and needs. ‘The enablement of a travel service
on the FNB App means a more convenient channel is available to clients
24/7 and can be accessed easily, even when they are abroad, to top up
their travel cards with additional funds if required,’ explains Mayes.
There are also other travel perks which clients who hold a Global Account
should also take advantage of before travelling, these include obtaining:
• Free travel insurance when you pay with your credit card.
• Up to 40% discounts on flights and car rental when booking with
eBucks travel.
• eBucks Travel desk assistance with booking your holiday.
• Access to SLOW Lounge locally and to more than 1 000 airport lounges
internationally.
All of these advantages – along with increased ease when it comes to
obtaining forex – should help you plan for, and execute, a truly stress-
free end-of-year getaway.

Robertson points out that while FNB’s Forex team make it easier to send
funds abroad or convert to foreign currencies, it is still critical to operate
within the rules. For the most part, the Single Discretionary Allowance
(SDA) is the consideration that comes in to play when South African
.

ChatGPT and AI

AI in banking. It’s not all ChatGPT and Bing

Dinner table chatter about artificial intelligence (AI) has surged since non-profit research laboratory
OpenAI’s launch of ChatGPT just over a year ago. ChatGPT galloped to more than 100 million active users
by January 2023 and then, in March, an even more sophisticated version was released: GPT-4. Now, it
seems everyone is using ChatGPT, for work and for pleasure.

Despite the hype, ChatGPT is not the only AI in
town. There’s Microsoft’s AI-empowered Bing
tool, Google’s Bard and even paid for options
like Jasper, Otter.ai and YouChat, all of which
fall under the banner of Large Language
Models (LLMs). LLMs are user-friendly
because they communicate using human-
like language and have easy-to-navigate
interfaces, so engaging with them feels easy
and natural. On top of that, LLMs have the
potential to take the grind out of mundane
tasks such as setting up appointments,
replying to emails and even coding. So, we
can expect to see a proliferation of more AI
tools in the months and years to come, as
they become increasingly intertwined in our
day-to-day lives.
The mainstreaming of AI has been met with a
range of views, from Elon Musk (ironically one
of the original co-founders of OpenAI) and
his view that ‘we are not far from dangerously
strong AI’ and ChatGPT represents ‘one of
the biggest risks to the future of civilisation’,
to Microsoft founder Bill Gates’ assertion
to Forbes magazine that AI is ‘every bit
as important as the PC, as the internet’.
Locally, Stellenbosch University’s Johan
Steyn advocates continuous learning and an
adaptable mindset in response to the rapid
pace of technological change and disruption
which ‘is posing significant challenges
to individuals and organisations across
industries and sectors’.
Much has already been written
about the potential for AI and
LLMs like ChatGPT to disrupt
financial services by replacing
advisors, streamlining the client
experience and even assessing bond
applications and insurance claims.
One man who embraces the potential of AI
tools, but takes a more pragmatic view of
their long-term disruption, is Dr Mark Nasila,
Chief Data and Analytics Officer in FNB’s
Risk division. Nasila, who holds a doctorate
in mathematical statistics and probability
from Nelson Mandela University, is a frequent
commentator in the media on the subject of AI
and its ability to impact multiple facets of our
lives, including banking.
AI, LLMs in the world of banking
Nasila points out that in the world of banking
and financial services, security and privacy
are key. Therefore any discussion around
these technologies must consider that open
platforms like ChatGPT – even if they are
customised to a specific company’s needs –
will not offer the robust protections required
by regulators and law makers.
Nasila notes that ‘we’ve even seen some US
banks blocking the use of ChatGPT among
employees’, referring to the likes of Citigroup,
Deutsche Bank, Goldman Sachs, Wells Fargo
and Bank of America which have responded
quickly due to the legal implications
associated with use of the tool in what should
be a highly confidential and data ringfenced
internal banking system.
Given that accountability in the use of AI
is so critical, this rapid shutting down of
indiscriminate use of external AI tools –
particularly in such delicate banking divisions
as forensics – is understandable. Indeed, right
now many organisations, from universities to
retailers and marketing teams, are grappling
with how best to incorporate LLMs into their
existing systems. FNB is no different.
Nasila explains: ‘In terms of FNB as a bank, we
have a clear idea of what we want to do with
AI and what we want from LLMs. Obviously
digitisation is a big one and it represents an
opportunity for us to enhance our processes
around, for example, how we understand
what clients are saying as well as responding
to their needs timeously.’
He notes that it is not only text generation
applications around client experience and
marketing where these tools can be deployed.
In the banking world, there are important
implications around legalities, intellectual
property, and client privacy to consider. ‘For
example, as a big organisation what are the
implications if we use ChatGPT to generate
contracts and what if this information and
input is not aligned to the value proposition of
shareholders? Who takes responsibility?’
A hands-on approach
Given these considerations, how does a bank
ensure that it can benefit from tech tools like
AI and LLMs without compromising essential
data, personal information, and trade secrets?
In the case of FNB, Nasila explains that the
use of AI-enabled technologies hinges
on taking a risk-driven perspective. While
exploring and understanding the strengths
and limitations of generative AI-enabled
apps or bots like ChatGPT (which are capable
of generating text, media or images when
prompted) is important, for use cases that
involve any form of IP or confidential data
FNB’s response was to develop its own, in-
house AI tools which make it possible to flag
risks and mitigate them, while still
benefitting from the efficiencies and
time-saving potential of AI applications.
FNB’s forensic systems have been using the
banks own AI tool since 2019. Since rolling
out the technology, Nasila notes that the
time taken to produce reports has been cut
by 70% while generating a draft forensic
synopsis for scrutiny by a human analyst has
been reduced from hours to mere seconds.
At the moment, FNB’s Risk team is adding to its
AI capability by piloting the use of AI for digital
onboarding of clients, as well as for verifying
documents and confirming legitimacy.
This represents just one area of potential
development and opportunity for financial
services institutions, without compromising
client information and confidentiality.
What are the potential rewards?
Having outlined the possible risks associated
with a laissez-faire rollout of AI in financial
services, Nasila circles back to the
opportunities that digitalisation presents in
the banking sector.
‘Technology enables or helps us to imagine
processes, but we need to have the right use
cases to create efficiencies,’ he explains.
This requires time and effort to, for instance,
determine exactly how best to use tech
tools to enhance employee effectiveness by
analysing the entire system from information
gathering to how time is allocated for
specific tasks, and even revisiting what might
be regarded as important performance
indicators in the future. A measured approach
will, to some extent, also cushion the anxiety
with which some might greet the mass
arrival of AI tools in the workplace, thereby
supporting the adoption.
Once fully embedded in the banking
system the options are seemingly endless.
A big area of possibility lies in the ability
to harness AI tools to determine a clients
creditworthiness using alternative sources
of data than those usually considered by
formal banking institutions.
As Nasila explained in a TechCentral article
in 2022: ‘For individuals, meaningful
inferences can be made by looking at data
on their smartphone (with their permission)
which can reveal financial behaviour, from
call activity to app usage, and even which
applications a consumer uses most…. This
opens the door to new avenues of lending: for
example, smartphone-based microlending,
bereft of the usually prohibitive and punitive
interest rates such lending models tend to
use to insulate themselves against risk.’
Nasila also notes that in sectors such as
agriculture, AI can access satellite imagery
to estimate past and future income from
farming to help bankers make better
decisions about loan applications.
But watch out for…
A consideration which Nasila does not feel
has garnered sufficient attention in the
current AI debate is how blind adoption
across all levels of an organisation might have
the unintended consequence of negatively
impacting critical thinking skills in the future.
‘The process of critical thinking comes down
to trial and error. If you take away the trial
and error process then you are likely to have
a generation of people who never thought
and never actually executed thinking,’ he
explains. ‘This development would affect
the ability of an organisation to come up
with ideas, explore ideas, and arrogate
their own processes, rather than relying on
another system to tell them what to do. At
the end of the day, LLMs like ChatGPT can
only work with what they’ve been trained on
and programmed to do.’ This, notes Nasila,
underlines the importance of having teams
of highly-skilled experts working behind
the scene to ensure that AI is fine-tuned to
address the specific needs of the industry
and business it serves.
At the moment, the hype lies around the
technology as millions engage with AIs like
ChatGPT for entertainment and novelty
value. Much of the conversation is swirling
around threats and possible disruptions to
livelihoods and human value. Nasila’s advice
is: ‘Don’t buy into the hype!’
Right now, he says, the power of AI lies in its
ability to automate and optimise routine tasks
and augment the innovation process, but
there is still room for the human being in this
equation. In fact, critical thinking and human
creativity have never been more important.
The role of the Private Advisor in the FNB
Private Wealth context is a case in point. In
preparation for the AI technology onslaught,
our Private Advisors have undergone
extensive training and upskilling to enhance
their very human and personal offering, and
their ability to offer relevant and integrated
financial advice. The power of our data-
driven AI tools takes care of the routine tasks,
giving our people time to form partnerships
and meaningful connections.

Fraud

Fighting fraud
with FNB

With the end-of-year holiday
season fast approaching,
scam artists are upping the
ante when it comes to gaining
access to your wealth. While
FNB continuously works to
ensure that systems and
technology are robust and
secure, fraudsters still find
it effective to exploit human
behaviour, the psychology of
trust and our increasing reliance
on technology to poke holes in
personal protection measures.
This is why FNB Private Wealth is invested
in empowering our clients by examining
the latest fraud trends, so families and
individuals are better equipped to work
alongside us to protect hard-earned assets.
From expert investors to those opening their
first bank account, anyone can be affected
by fraud. With a recently reported increase
in more sophisticated phishing and smishing
scams, in addition to long-established
methods, it pays to be aware of how these
criminals operate.
Since vigilance is such an essential tool in
ensuring you and your family do not fall
victim to fraud, let’s recap some of the
current methods being deployed.
Phishing and smishing
FNB recently alerted clients to an increase
in phishing attempts. A type of cybercrime
in which people are tricked into providing
sensitive information such as login credentials,
passwords, PINs, card details, or ID numbers
by using deceptive techniques such as fake
emails and websites, phishing is not new but is
becoming increasingly sophisticated. Similarly,
smishing, the use of text messages that appear
to be from reputable institutions is being used
to trick people into disclosing the same kind of
information.
‘In recent cases, some consumers received
SMSs claiming that their bank requires them
to urgently FICA by clicking on a link that takes
them to the fraudster’s platform, where their
information is then compromised,’ says Trish
Ramdhani, Head of Fraud at FNB Card. ‘The
technique now includes attempting to entice
the user to divulge both their card information
and the one-time password (OTP), which is
subsequently used to complete successful
transactions using smart devices.’
Never enter your login credentials, card
number, OTP or CVV on such websites. Credible
financial institutions will never ask you to
click on links, Ramdhani says. When in doubt,
contact the bank directly using the details
provided on their verified platforms, not those
provided in suspicious communication.
The ‘fraud department’ phone call
In this popular scam, a fraudster gives you a
call. ‘I, the fraudster, tell you there’s fraud on
your account,’ explains Ettienne Fourie, Head
of Fraud Risk Management at FNB. ‘I convince
you that I’m supposedly phoning from the
bank. You, therefore, believe it’s FNB fraud
department. You compromise some of your
details or process a transaction, giving them
access to your profile.’
The fraudster might give you a reference
number to write down. They’ll tell you a
few numbers, then tell you to add a dash
and then write down your banking password,
add another dash and add your credit card While this functionality protects you in the
number, dash. They’ll then ask you to repeat event of a breach of your banking app, it
the entire reference number and if you’re not remains a good idea to always vary your
paying attention that’s how they’ll get your routine and travel routes on a daily basis.
information. This is just one of many techniques Don’t engage with strangers and do detailed
to get your passwords and banking details. due diligence when meeting with potential
Another ploy that these fraudster use is to
business partners. Unfortunately, fraudsters
are also abusing social media and online
tell you that your banking profile has been
marketplaces as a means of scamming people
compromised and, in order to protect your
money, they ask you to make a payment into
or luring them into a face-to-face meeting.
You might, however, be robbed as a result of
an account, the details of which they provide.
this contact.
They claim that this is a suspense account
and transferring your funds into this account If you find yourself in a compromised situation,
will offer protection, however this is a scam to FNB also offers GuardMe, a panic button for
persuade you to make a payment. use in an emergency.
‘These fraudsters are very sophisticated,’
says Fourie. ‘They might play automated
background music and might even pretend to
transfer your call to a fraud agent if you call Important security tips
them back. Make sure you know who you are • FNB will never ask you to share
actually dealing with because people claiming your username, password or OTP
to be phoning from the bank are not always One-Time PIN.
who they say they are.’
• Always know who you are
dealing with. People claiming to
Lost or stolen mobile devices
be phoning from the bank might
The FNB App and online banking are both not actually be from the bank.
extremely secure channels, both of which • Immediately contact our
require password access. Sometimes clients 24/7 fraud line on
unwittingly save these crucial banking 087 575 9444 to delink a lost
passwords on their mobile devices, in the or stolen device (including your
cloud or via their internet web browser. It is lost or stolen cellphone) or to
for this reason that you should immediately report a fraudulent transaction.
contact FNB through the 24/7 fraud desk in
• Never save your banking
the event that your mobile or smart device is
passwords to your internet
lost or stolen. This will allow us to delink your
browser, device or in the cloud.
lost or stolen device from your banking profile.
You can also rapidly delink any device from • Never open any suspicious email
your profile using online banking. attachments.
‘If I can get access to your mobile device, then • Never click on any suspicious
I can get access to your life, your email, and links contained in an email
as well as WhatsApp where
so on. I can basically access any app for which
messages contain links or
you have stored passwords on the device,’
potentially false information.
explains Fourie. ‘It is also important to have a
screen lock or PIN on your device.’ • Take the time to confirm
account information when
Go virtual making large payments on
an invoice emailed to you.
Connecting seamlessly to your existing
Always confirm bank account
business accounts and allowing you to make
information directly with a
digital payments online, FNB Private Wealth’s
service provider on the phone
virtual card makes banking safer, thereby
before payments are made.
limiting incidents of fraud. It is simple, safe
and the CVV number changes hourly, making • Make informed choices
a virtual card more secure. Plus, you can regarding which email address
create and manage multiple virtual cards at no to use, since some email
additional cost. services are not secure.
• Enable additional security-
Protect yourself related features to protect your
email account, such as two-
In addition to other fraud protection
factor authentication.
measures, FNB Private Wealth clients have
• Perform frequent anti-virus and
access to Money Protect, a value-added
malware scans on your personal
service that helps you in the event of proven
computer and mobile device,
card fraud (subject to a fraud investigation).
This protection offers partial or full using software that is up to date.
compensation against certain fraud losses • Use unique and strong
initiated by a third party against a bank client, passwords. Don’t use one
up to a maximum limit as determined by your password for multiple profiles
type of account. and accounts.
FNB takes fraud and the protection of our • Limit the amount of personal
clients seriously, which is why we have a information that you publish
dedicated Security Centre on the FNB App. on social media and apply
You can use the Security Centre to report privacy settings where
fraud. It also contains additional information appropriate. Closely guard your
and videos on how to protect yourself and personal information and login
your information. credentials.
FNB Private Wealth also offers a unique
functionality that enables you to hide your
accounts via the FNB App. This may protect
you in the event that you are forced to unlock
your phone and log into your banking app.
You can access this functionality via the app
by going to ‘settings’, then choosing ‘visible
accounts’ and select the accounts that you
want to display.

A division of FirstRand Bank Limited. An Authorised Financial Services and Credit Provider (NCRCP20)

Disclaimer: The material is based on our specialists’ views in line with current market developments and is for informational purposes only. Information pertaining to specific products
or services offered by FirstRand Bank Ltd or any of its affiliates may furthermore be subject to specific terms and conditions, which terms and conditions are subject to change from
time to time.