Ideas, innovation are key to retail banking, says Adebise
Ademola Adebise is the Managing Director of the newly refurbished Wema Bank Plc since October 2018. In an interactive session with a few journalists, he spoke about ongoing reforms in the bank, insisting that without ideas and innovation, no bank can go too far in the current clime. CLARA NWACHUKWU was there. Excerpts:
Preamble: During the tenure of the past Managing Director (MD), we started to strategically take the bank out of the woods, the first being to address the liquidity situation or what we called stabilising the bank, and the next phase was to put in place building blocks, and the last phase that we’re in now is growing the bank. Basically, it has been a tough, but exciting journey.
Last year, saw the bank declaring dividend for the first time in 15 years. The last time was in the era of Mr Tunde Lemo, also a former CBN deputy Governor. We see this as the demonstration of all the efforts over the last nine years, which culminated in the payment of dividend for the first time in 15 years.
Where do we intend to be, we intend to be a strong retail bank, leveraging technology and innovation. Also, the next two years, we will try to double our key indices including assets, deposits, profits etc, and to play big in the retail segment. At the end of the day by 2020, we would have doubled our numbers. By this, we would then embark on opportunities in M&A for inorganic growth.We have key sectors of the economy that we have mapped out to achieve this growth. Also, we are trying to ensure that we have well-trained and well-motivated staff that will also be well-remunerated.
You said you plan to play big in the retail segment, what are your strategies. What do you plan to do to remain competitive in that segment of the market?
To play in the retail market, you need to be very innovative, because basically, everything you see in the banking industry in terms of products, are commoditised. You find one product running across many other banks. For us, we want to be an ideas bank. We want to be agile, and for you to make a mark you have to develop products that appeal to the market. It’s not just about churning out products, but about meeting the needs of customers.
For instance, the ALAT that we launched two years ago is doing very well. We are reviewing ALAT to take it to the next level. By this we mean, take it to a platform where we’re into lifestyles – where there are a lot of value creators, many consumers, buyers and sellers of the bank. The whole idea is basically to reduce the cost of doing business and to improve the top-line.We have sectors that we very clearly mapped out like the SMEs where there are different categories; we have the creative, MSMEs, agric value chain for which we will have clearly mapped out products. By the way, the bank was set up as a retail bank in 1945, and we have not moved away from that vision. It’s just that things have evolved over the years.
You are aiming for somewhere in the industry within a time frame. And you’ve made it clear you can’t get there within the time frame without M&A. who are those you are talking with?
There are two ways to grow – you grow organically or you grow inorganically. What we are saying is that in the next two years, we want to double our indices through organic growth. Afterwards, if there are opportunities for M&A we will consider it. M&As are created by opportunities, it’s not that you will go and submit yourself to M&A. today, we are in the neighbourhood of N400billion in assets, so we will be shooting for about N800billion by the time we double that. We want to get into the trillion naira mark in terms of asset base, and not that we will get there through M&A.
How is the bank managing with the IFRS 9 standard?
In 2018, we adopted IFRS 9, and the impact was felt, but not heavily like it was with some of our colleagues in other banks. Again, this is based on the fact of the quality of your assets, the quality of collaterals that you have. For us going forward, we will ensure discipline internally in granting loans; we will ensure we create good quality loans; otherwise we would have adverse effects from the IFRS 9. To ensure you ensure you don’t incur the wrath of IFRS 9, discipline, good corporate governance and ensure your assets are in good quality books.
You talked about focusing on different service sectors. For instance, if you look at agriculture, you have micro farmers; even the BOA seems to have failed because when you interact with them, they will tell you there is no access to loans.
Specifically on Agric, how do you intend to make your facilities accessible and simplified?
For agriculture, we have done our strategy and looked at the value chain. For us, we need to focus on the processing side, and of course we will look at the aggregators for the medium, small, and peasant farmers, and that is where we want to be. Of course, in supporting the aggregators, we are looking at cassava in the south west, and rice in the north. We have identified these crops as key, and looking at engaging them.
The other interesting bit in agriculture today is the fact that the different styles are changing. We are talking about the different players within the value chain, and being able to use technology to pull everything together so that if we grant a loan and you are not able to get the produce back, your loan won’t become bad. If you grant a loan at commercial rate, from day 1 your loan is bad, so you need intervention schemes.
The Central Bank has provided some interventions. We have Cards for the Anchor Borrowers’ scheme and all that. If you get an anchor that you are supporting, the anchor has access to thousands of farmers and everything comes back to you. So it’s massive, and as you know, Agric is a major contributor to our GDP. And then the other bit is, once you have those, how do you boost exports? Exports will bring back a lot of foreign exchange (FX) into the system and for reserves. Of course at the end of the day, if you’re able to boost your GDP, your tax revenues with government will also increase.
In the area of creative, entertainment, Nollywood, and all that, we also see opportunities in that space. We are trying to build a structure to ensure that we take advantage in that space. But of course you know the SMEs – the super market, education, these are all areas that we are tailoring it along the line of intervention schemes of government. Government is interested in certain sectors, we key into these sectors and begin to build competencies in that space.
You mentioned certain crops like cassava in the south west, rice in the north. Are you not thinking of other crops like cocoa for instance?
It’s in where we have comparative advantage. The problem with cocoa is that it’s a bit perennial, and has a lot of issues associated with it. As we speak today, cassava is on the front burner for the Central Bank, where you can quickly harvest the crop. I’m not saying that cocoa is not focused, but as we speak today, it is cash and carry in Nigeria, just as rice is to the north, and a lot of companies are setting up cassava processing plants in the South West to take advantage of this.
What magic wand did you use to turn the fortunes around enough to pay dividend? Also, how will you make the ALAT system more seamless in terms of resolving all the transaction glitches that customers currently face, since you want to take it to the next level?
Let me start with magic; there is nothing like magic in banking curriculum. That is coming from the fact that we said we want to be an innovative bank. An innovative bank is one that generates ideas. We just launched a Hackathon recently, and the whole idea about that is to generate ideas, solve problems both societal and bank problems using technology, and we got young brilliant minds to pitch and solve some of those problems. We had it about two weeks ago. The whole idea is to generate good idea and the best idea; we are putting money behind it to a commercial level. And these are basically meant to solve three things – reduce cost to service our customers, improve top line, revenue for the bank, and the last one is solve societal problem.
We got very interesting ideas from young talented Nigerians, and we intend to take this to the next level, and that is what we meant by saying ideas generation with a view to being a very innovative bank and we need hackaholics. There is no magic wand about it. Basically this is a journey of over nine years that started in the era of my predecessors. We started in 2009 with the transformation that has now led to the payment of dividend today. And you might say, 3kobo; it’s because we have over 38 billion units in circulation. If we had 10/15 billion units in circulation, we will be talking almost 10/15 Kobo. Again, one needs to look at it. Really, it’s been a journey for the transformation that has led to this. This can only be the worst case scenario, and we will ensure that we continue to improve on this as we move on to 2019/20. You mentioned ALAT, as we speak to you, we are refreshing our IT. IT is expensive but we are also being very responsible. I have an IT background, so really technology is not strange to us.
When you say you want to leverage technology, technology is very expensive as we all know, we are pushing toward the fourth industrial revolution, and we are talking about the fifth generation network. But some experts have said we are not even ready for these – Artificial Intelligence, the cloud and what-have-you, so what kind of areas of technology are you looking at?
It is not about pumping money where we don’t know what we are doing. And IT is not just about exciting ourselves; shareholders are interested in return, so we also ensure that we deploy our limited resources in a way that will benefit all stakeholders. So really, we have a clear digital journey that we are working on. Of course, you’ve heard about banks deploying robots today.
Basically, it will resolve Internal issues, and then the other follow up questions “are people not going to lose jobs?”
No. Business models are changing with the adoption of new technologies. All these technologies are already here in Nigeria, so it’s not that we have missed the fourth or fifth generation networks. It now depends on how we apply ourselves. What is happening with technology adoption is business needs have changed. What does the amount of data that you have mean to you? You monetise it. What patterns are you seeing? Amazon started as a retail outlet, but now playing all sectors and now a big IT firm into several sectors. What have changed is just business models, and this disruption is not about technology but business model changing.
Finally, how are your branches in the North performing?
When we got our national licence in 2015, we then decided to go back to the north. Today, we are in Kano, Kaduna, Lokoja, Minna, and Bauchi. We are in five locations already in the North. In terms of performance, they are picking up. Some of them are not breaking even yet, but they are picking up in terms of businesses. We hope to go to other areas also in the north, but branching out is not based on wishful thinking, but on business exigencies. If there are business opportunities there, we will open a branch.
In the East, we are in the verge of opening a second location in Aba. We are making money in Aba. We are opening a second one in Ariara market as we speak. So it’s not about just launching out, it’s about where there is business. We are looking for a branch right now, a location in Onitsha. It’s based on business opportunities, not where you are from. If Aba will give me five branches that are profitable, I will open Aba branches so that’s basically the nugget.