One of the first challenges when the bank was nationalised was setting up the right management team who would head the bank to its new identity and consolidation.
You are right. If you assemble a good management team, the job is half done. When we came on board, we identified the critical gaps in the leadership cadre of institution, and immediately hired experts to fill them. We needed very senior and experienced people to make sure that critical functions were well manned. As a result, we now have a crop of senior, seasoned and experienced bankers in finance, risk management, internal controls and operations.
I took on this challenge to run Mainstreet Bank as Managing Director and CEO as a national assignment. I have 28 years of banking experience in Nigeria, since returning from the UK after my Master’s degree. I have a business background and am used to driving business through to operations, risk management and treasury. My appointment as Managing Director of Mainstreet Bank is the peak of my banking career. So far, it has been very challenging, but very satisfying.
One of your first priorities when you started in the bank was to identify and fill in the gaps that existed. What were Mainstreet’s policies in order to ensure a speedy and sustainable recovery?
We have a clear mandate from our shareholder, which is to turn the institution around preparatory to its sale to private investors. We are therefore going through a transformation in order to make the institution attractive for investors. There were a number of measures that needed to be taken once we concluded a wide-ranging diagnostic study of the bank. First, we needed to stabilise the organisation in terms of its staff and customers. This bank is over 50 years old, but has never gone through any major transformation. There had been about three government interventions before we came in. So, some staff were apprehensive about their job security. Although the previous bank’s license was revoked, we took on every member of staff.
We also had to stabilise the bank from the customers’ perspective in order to win their confidence. We need our customers to keep banking with us as much as we need our staff to support us; so we focused on our internal communications, as well as extending our external communications. We tried to do those things very quickly because fears existed about a run on the bank due to customers being unsure and people pulling out their funds. We held town hall meetings at our offices all over the country in order to reassure our staff that their jobs were safe, and customers that their money was secure.
Once the stabilisation of the bank was achieved to a large extent, we turned our focus on our operating policies and processes. We inherited some policies from the old bank which needed some review and re-evaluation. We painstakingly reviewed more than 40 policies, and formed teams to come up with new policies to fill in the gaps. We are now in the final stage where the board is looking at these policies and will give the final approval for us to begin implementing them. The idea is to institutionalise these policies. In terms of our processes, we are looking at the application of new technologies with the support of our shareholder. This will allow us to combat fraud and be more competitive in e-banking.
Banking is a business of trust. Our customers know and trust us, but you need to provide superior service to retain them. We have had to review our processes and support them with new technologies, and adequately train our staff. We always need to improve our service delivery and ensure our offices provide our customers a nice environment for doing business with us. As a new institution and new brand with a heritage, these are some of the steps we have taken to strengthen the institution and position it to compete favourably in today’s marketplace.
You need to link the new brand with the old institution, incorporating new concepts such as new technologies and innovative products and services. What has been the main challenge when it comes to rebranding the old products you inherited from AfriBank?
Most of the banking products in Nigeria are quite similar, in my view the differentiating factor is really the customer experience offered at every touch point. What is the customer experience when using our ATMs or transacting from any of our branch offices? At the end of the day, the products are the same; you deposit your money, take out money or want to take a loan. A lot of similarities exist in the products that most banks offer. Of course you have some products that are more tailored for retail banking, and others that are more suitable for commercial banking, and so forth; but I see the distinguishing factor in customer service. But that is a reflection of my background; I am client-oriented and interested in the one-on-one relationship.
We are also rebranding some of our products. We are doing a number of promos, which promise to be very exciting in this market. We believe that we need to target the youth, which is a large and growing market. We also need to cater to women, a previously untapped segment. It is important not to just target women, but to support and empower their development as well. Nigerian women are hard working, industrious and committed, and I believe they need more support.
Going back to e-banking and mobile banking, what trends can be seen in the market today? How do you see this developing in Nigeria in the future, with initiatives such as Cashless Lagos?
Electronic Banking and its various channels are beginning to become a way of life in the country. We see a large number of ATMs, PoS in use in all parts of the country, which makes it a veritable tool in penetrating the large unbanked population in Nigeria, which is still very high. If you look at the penetration levels, the number of ATMs is actually increasing. But I actually see the most potential in mobile banking, because almost everybody has a mobile phone.
Especially compared to the mobile population.
Yes. I think mobile telephony is really the next big thing. Nigeria has always been a cash-based economy, but the Central Bank of Nigeria (CBN), through its financial inclusion strategy, which has Cashless Lagos as pilot programme, will help change this. There is always initial resistance to every change, but I think Cashless Lagos is a good pilot programme, especially to reduce the use of cash in Lagos. It might take some time to catch on, but it is in people’s interest that we move towards a more secure, cashless economy. In the past, capital expenditure on banking infrastructure (brick and mortar) used to be very high. But now with Electronic Banking, there is less of an emphasis on physical presence in branches, and there is a tendency for banks to use smaller offices and kiosks, which has brought down costs considerably. I think e-banking is an especially effective solution to reach the rural population. Banking penetration in Nigeria is really quite low and more work needs to be done in terms of education and awareness, and the CBN has done a good job in this regard. The population needs to understand that it is safe to use these channels.
CBN is doing a great job to raise awareness and creating policies, but what can the private banks do reach the unbanked population?
Banks have an obligation to engage with customers, cooperatives and unions, so they understand and accept the initiatives we are trying to implement and buy into our financial inclusion strategy. Both the regulator and the private banks are doing a lot to create awareness through various media and channels.
As Mainstreet Bank, we are engaging the various stakeholder groups, for better understanding of the policy and its numerous benefits. Every bank committed to certain targets, such as the number of PoS we must deploy. We are committed to providing about 650 PoS before the end of March. In addition, we are using the various media channels i.e. newspapers, radio and television to place series of advertisements to create awareness and to support this programme.
Returning to the importance of technology in today’s banking sector, many Nigerian banks, such as UBA and First Bank have told us that e-banking is a priority that they are working on. Is Mainstreet following in those footsteps as well?
For us, technology is a priority because it is an enabler of the business in this economy. In more developed economies it is a given, but for us it is an imperative for success and the right core banking application is critical to achieving this.
Once we get that right, we believe that in a year’s time we will be better positioned to focus on e-banking goals.
Would you say that we are going to see some synergies and strategic alliances between key lenders and ICT firms in the near future?
In the mobile banking and payments space, there are already some strategic alliances taking place; I think this has to happen. When you look at the telecommunications firms, their customer base is very large. I expect to see more and more of such synergies been consummated, although issues of connectivity and bandwidth need to be addressed by the telecoms companies. I think more investment has to be made to ensure that we have seamless connections.
What areas of growth are the banking industry going to see in the near future?
The middle markets and SMEs is one in which I envision much growth and as well as in agriculture. Nigeria has a very vibrant and growing middle class, and as evidence, you can see shopping malls springing up in the cities. People are starting to exhibit lifestyles similar to those in the more developed economies. The middle class is very young and there is going to be tremendous growth in that area.
The Federal Government is investing heavily in the agricultural sector. As part of the efforts to de-risking that sector, they are subsidising loans to finance the agricultural value chain through a collaborative effort with the banks. We expect to see a lot of employment coming out of this sector in the future. I also expect to see significant growth in the retail segment. This growth will be spurred through retail outlets and chains, such as hotels, supermarket chains, or auto dealerships issuing credit facilities to consumers, through the use of credit cards. As our people’s level of sophistication rises, you will find out that banks will begin to face competition from outlets outside the financial services segment.
Taking the interview to a more personal level, there is an English saying that states that “without good leadership there can be no success”, and Mainstreet Bank has been very successful in the last year. What is your leadership philosophy at Mainstreet Bank?
The team is very important. It is not just an individual effort. I think we are blessed with a dynamic management team and board. I think leadership sets the tone in terms of the vision, and what you want to achieve. I believe that a good leader has to be passionate and decisive, which are two qualities that I have. If you are a decisive leader with a passion for success, and your people see that passion, and that you are involved, and lead by example, your people and team will follow you. That has helped us, because we all lead by example and are involved in driving the business. We are transparent; there is clarity in what we do. Communication is critical at this stage for us, so a lot of effort is put into disseminating information of what we are doing. We have the GMDs Message to staff monthly and an e-newsletter that goes out every fortnight and communicate intermittently to staff as the need arises. I believe communication and teamwork are very important. Through effective communication and efficient teamwork, we are able to align organisational goals and staff goals to achieve our clearly defined mission at Mainstreet Bank.
With over 27 passionate years in the banking industry, what is the legacy you want to leave behind, not only for Mainstreet Bank but also for the banking industry as a whole?
I would like to be seen as a woman who has been successful, who has worked very hard, and whose hard work has paid off in tangible results for the institution and all its stakeholders. I would like to see more women in leadership positions in the banking industry, but not just at the top. Presently there are four female CEOs, but I would like to see more at the board and senior levels. I would like to be able to say that I have been an inspiration to women out there who are aspiring for success in and out of the home.
The government itself has set the tone for this. If you look at the number of women in key positions, it has risen significantly in this administration. These are women who were accomplished in their previous callings, before they were appointed to serve in government. Our President has set the tone in this regard. The private sector should follow suit by instituting policies and programmes that takes cognisance of gender issues, which will make it easier for women to ascend to the highest levels. In Nigeria, there are a number of talented and hard-working women who need support and encouragement to break through the glass ceiling. The Bankers Committee in its last meeting set up a committee on women’s economic empowerment with a major objective to develop a framework that would enhance women’s leadership and promote a gender-inclusive workplace and society. One can safely say that half of the talent in any country are the women, so how then can the country move forward if half of this talent is not carried along?
I would like to finish the interview with a message to the readers of The Financial Times Deutschland and interested parties abroad regarding the Bank’s privatisation.
There are huge opportunities here in Nigeria. An investor should take a view at the banks that have been nationalised. There were issues that led to the nationalisation of these banks; failures in corporate governance, inadequate disclosure and transparency about financial position of banks, uneven supervision and enforcement, and weaknesses in the business environment. These have largely been addressed now by the regulators. There are now greater levels of disclosure and transparency, stronger risk management and corporate governance framework in all banks, and as a result a stronger financial services sector.
Our shareholder, AMCON, does not interfere in how the bank is run. We therefore operate Mainstreet, like any other privately owned bank this by itself should give confidence to a potential investor. We are working to achieve a quick turnaround and are very clear as to the quality of the people and the quality of assets we attract to the bank.
We are investing in our people through training as well as re-engineering our processes through a change in our technology platform.
We also have a loyal customer base and enjoy a strong network of 220 branches throughout the country. All of these should surely interest a prospective investor.
Mainstreet Bank is a strong brand, backed by a heritage of over 50 years. We have been able to come out of losses, and have started seeing profitability from our operations. I am confident that Mainstreet as a bank will continue to do well.
The Nigeria banking sector offers huge opportunities and good returns on investment: an average of 15–17%.
If I was looking to invest in Nigeria, I would certainly look at Mainstreet, a well-capitalised bank, with a clean balance sheet, strong liquidity, dynamic management team and loyal workforce.
The environment is right and the moment to come in is now.