Chase bank is a leading pan-African bank that has put a lot of work into giving world class service. Duncan Kabui, CEO of Chase Bank Kenya talks about its operations in the country, its CSR activities, and the growth of mobile banking
This year marks the 50th anniversary of the Republic of Kenya. As Ms. Lagarde of Managing Director of the IMF noted on her recent trip, “Kenya’s economic gains over the past few years have been nothing short of remarkable.” How has Kenya been able to achieve so much in such a short period of time?
It has been a long journey to get to where we are as a country. The first couple of decades were a bit of a struggle for a new nation trying to find its feet in a world of nations. However since the last government (NARC), and really since the advent of the 21st century, a lot of factors have combined to put Kenya on a certain trajectory.
We must also mention the importance of mobile telephony in the fortunes of this country in the last couple of years because with it, an indigenous entrepreneur class has been opened up. It was in the making but has certainly become more and more prominent in this country. As a bank we are very privileged to work with many of them as we steer this country towards greater prosperity. That SME class is where most employment opportunities are being created and innovation is happening. We reckon that it is going to be one of the key growth sectors for this country moving forward.
In 2011, Chase Bank became the first Commercial Bank to own a deposit taking microfinance institution; Rafiki, which is now I believe a standalone subsidiary, can you tell us a bit about Chase’s motivation for founding Rakifi and why is has been so successful?
Chase Bank is traditionally an SME bank and it’s catered for what we can call a ‘middle of the pyramid’ sort of clientele. However, we are always very aware of the fact that there was a large market below that was not traditionally Chase Bank’s strength, which was really the ‘bottom of the pyramid’. We set up Rafiki to provide financial solutions to that space and hopefully when people reach a certain level, they would find a home in Chase Bank. Rafiki is 3 years old and is certainly one of the fastest growing micro-finance businesses and we are very happy with their performance so far.
It is almost like customer development. Actually, to be honest a lot of the development of Chase Bank over the years cames from our micro-finance clientele who reach a certain level and need more sophisticated financial services and banking solutions; that is how they come to Chase Bank. We then thought it would be wise to just set up something ourselves.
Since Chase Bank’s primary demographic is SME’s and middle income Kenyans, as Kenya grows obviously the affluence and the capital at the disposal of the middle class is getting bigger. Could you outline some of the banking solutions you provide to the growing middle class?
The bank has been fairly absent in the retail banking business until now but we have taken notice of the fact that, with the correct middle class, there is more disposable income and certainly a much more educated retail market. So the bank has begun positioning itself, working in conjunction with McKinsey, to develop what we could call lifestyle solutions for the middle class.
The market has been fairly under-developed with mainly plain banking, savings and loan products but a lot of people are now asking for asset management, wealth solutions and sophisticated insurance products. We are therefore exploring all these options since this is what the middle class is asking for.
You have already touched upon mobile banking. What mobile banking has done in Kenya over the last five years is nothing short of remarkable. M-Pesa it is now used by over 17m Kenyans, which is more than two-thirds of the adult population and accounts for around 25% of the country’s GDP, how did this banking revolution happen in Kenya and what are you expectations for your own mobile banking platform, Mfukoni?
The beauty of technology is that it is a great equalizer and what it has done for 3rd world countries like Kenya is really to enable us to wipe out the advantage. Many countries now have what many developed countries have taken decades to achieve in terms of bringing banking solutions and financial inclusions to the masses. It has taken us just a couple of years. Therefore I cannot over-emphasize the importance of technology and in particular mobile technology.
This being a 3rd world country, the penetration of telephone handsets was extremely minimal, but with the rollout of mobile companies, pretty much every Kenyan has a mobile handset. This has therefore accorded banks an opportunity to provide financial services to an increasingly large market at fairly cost-effective rates. Therefore this has been extremely attractive and Chase Bank has jumped on the bandwagon for mobile banking. We see mobile and internet banking as a key to leverage us going forward.
Our mobile banking app was recently awarded as the Top Mobile Banking platform in East Africa and it is a channel we intend to push much more aggressively going forward. Our ‘Mfukoni’ app is available on all devices and has especially helped our diaspora clientele moreso in America to access their funds conveniently. We see technology as a great place to educate, push sophisticated products and to bring more and more un-banked Kenyans to being a fully banked population.
Chase Bank is not your average bank, investing in SMEs, sponsoring Kenya’s first ever Mt. Everest expedition and especially through your CSR initiatives, such as Chase Group Foundation, how have you been able to turn altruistic banking behavior into impressive profits?
Being a local bank, having started from humble beginnings, we really have to understand what it means to scale great heights. Therefore when the Kenyan team came to us and asked whether we could partner with them to be the first Kenyans on Mount Everest, it appealed to us since we have also scaled a couple of heights to get to where we are. I really like the story of Kenyan business people being in a 3rd world country – a lot of them overcome great odds to be where they are today. So it was a story that was extremely important to us. Unfortunately they did not conclude the climb but the moral of the story is not lost since they could still get another chance to climb the highest peak in the world.
We have always drawn a lot of strength from the communities we serve and have always felt as a business the need to give back. It is therefore extremely important for us that in whatever we do, we are always giving back to the community. We see that as a way of building the SME community; that the more you give in capacity building in doing these sort of business segments, the more you get back a better educated and facilitated SME market, which is good for Chase Bank and Kenya.
While preparing for this meeting, I found several articles about Kenyans warming to Shariah compliant banking, and indeed Chase has its own Islamic banking window, Chase Iman, what are you expectations for Islamic banking sector here in Kenya?
Kenya has a significant Muslim population and out of the desire to provide tailor-made solutions to that segment, we set up an Islamic banking division about 5 years ago which has grown very successfully over the years. We see Islamic banking in Kenya as a growth area, as is Islamic financing worldwide. The good thing about Islamic banking is that it is not just appealing to Muslims but also to non-Muslims. There are a lot of tenants of Islamic banking that have a particular appeal to the business community, especially around asset financing and infrastructure projects. Therefore the uptake is not really just from the Muslim community but from non-Muslim communities as well. We now have 4 fully dedicated Shariah Compliant branches and we are hoping to roll out some more in the next couple of months and years. So in light of the opportunity and of course since the region has a significant Muslim population, we see Chase Iman serving more clientelle and being able to go beyond the Kenyan borders with this brand.
As CEO of Chase Bank looking down the road, what are your short term and long term aspirations for expansion not only in Kenya but the EAC?
Being a local institution we’ve always said that we wanted to be strong in Kenya first. We are nearly getting to 20 years since we started. We’ve established ourselves strongly in our own market. The reality is that the East African Community is here with us now and many of our business partners have gone out into to the region and we have to follow them. Therefore the bank will in the very near future start offices in the neighboring countries because we believe in the EAC community, which is a community of 180 million people. A lot of those countries with newly found natural resource wealth or countries with a fast growing middle class are also an opportunity for us and the bank wants to ensure that it replicates its successes in Kenya in the neighboring countries .
Several keys sectors of the Kenyan economy going to a sort of revolution at the moment, whether it's the recent discoveries of oil and gas or Kenya’s first titanium shipment in the mining sector, but where do you see opportunities to invest in the Kenyan economy?
I usually tell anyone who asks what to invest in in Kenya and East Africa that they could possibly invest anywhere and make decent returns. At the moment nearly every industry is fairly undeveloped so if one has good ideas and strategies, whether in agriculture, oil, gas and energy or in financial services they can make it work. For instance, insurance has only a 4% penetration rate in Kenya so it’s a huge uptake. A lot of the retail market is not yet fully developed, maybe only for a few strong retails chains here, so one could pretty much be in anything and make it work. However, it is very important to work with local partners who understand the market and make the entry much easier and the chances of success much greater.
Passion, integrity, innovation and team spirit like your motto Harambee proclaims, are virtues that we know embody Kenya from our time here, but what would you say are Kenya’s competitive advantages to our American readers?
We are renowned in this country for having a very strong entrepreneur culture. The people here are hard-working. This is especially beneficial for business communities looking to set up in a place where they do not need to tell people too much about how to run a business, Kenyans have strong work ethics. As we said at the beginning, a lot of things have been achieved over the last couple of years and this is because people have a big desire to create a success story in this part of the world. Therefore, hard work and a strong entrepreneur class are 2 things that stand out for me as far as the Kenyan population is concerned.
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