A growing revolution in banking is the deployment of technology to drive operations. Banks are investing heavily in technology for the convenience of customers and security of their transactions. The Chief Executive Officer, Keystone Bank, Mr. Obeahon Ohiwerei, in this engagement with Group Business Editor, SIMEON EBULU, says the bank is upping the ante through the deployment of state of the art technology in it operations.
How serious is the threat of cybercrime to the bank’s overall health? What measures are in place to combat menace?
Globally, incidents of cyber-attacks both in the commercial and political spheres have made cybercrime a major risk factor in the overall financial health and reputational standing of institutions, banks in particular. At Keystone Bank, we have taken a holistic approach to this, leveraging not just technology, but people and processes to build the culture, knowledge and hands-on skills required to proactively identify and forestall such attacks. In addition, we are currently in the process of building an enterprise Security Operations Centre (SOC) that comprises threat monitoring, forensic investigation, incident management and security reporting. The proposed SOC will enable us identify, monitor and manage security risks.
Do you think the 2016/17 economic recession is now firmly put behind us? If so, how well positioned is your bank to capitalise on the recovery?
Despite fragile growth quarter-on-quarter and subsisting vulnerability to global shocks in commodity prices, I believe it is safe to say that the recession is past and barring any major socio-political upheavals, it is unlikely to recur, at least not to the scale witnessed in 2016 through 2017. Moreover, the Federal Government has taken active steps towards reinforcing growth and widening its revenue base, particularly from the standpoint of driving increased tax compliance and plugging any identified areas of income leakage.
Other fiscal and structural factors that should strengthen economic growth include the Presidential Enabling Business Environment Council (PEBEC) set up in July 2017 to remove bureaucratic constraints to doing business in Nigeria; increased diversification of the country’s economy through multiple intervention programmes in the non-oil sectors; accretion of external reserves on the back of increasing oil revenue; steady moderation in inflation, among others.
As a bank, we are well poised to capitalise on this recovery and on our assumption of office in third quarter of last year, my executive team and I embarked on an extensive restructuring process aimed at achieving greater operational efficiency, extensive process improvement and the re-alignment of skills and competencies to areas of best fit, both at senior and middle management levels.
We have also remodelled our digital platforms for collections and payments, to provide increased convenience and value-addition to our customers’ lifestyles and business. So far the market response has been positive and our customer deposits have grown in excess of 40 per cent over the last three quarters.
How are you actualising the bank’s vision?
Our vision is to be the preferred platform for delivering convenient and reliable financial solutions. In doing so, we are consistently leveraging people and technology to deliver superior customer experience and enhanced stakeholder value. In my view, the word “preferred” takes us above the fray; it elevates the discussion beyond traditional metrics of balance sheet size, asset base and the like, which are still important to us. However, it commits us to delivering such excellent service in all we do that customers repeatedly trust us, desire to do business with us and are always willing to give us the benefit of the doubt.
What is the objective in dedicating a special account for women, especially the one that gives access to an online digital-marketing network, among other features?
In its Financial Inclusion Overview updated April 20, 2018, the World Bank noted that “around two billion people don’t use formal financial services and more than 50 per cent of adults in the poorest households are unbanked.” In Nigeria, multiple surveys by EFInA Access to Financial Services confirm that about 36.9 million adults are financially excluded, of which 57.9 per cent are female while 42.1 per cent are male.
Against this backdrop, the Central Bank of Nigeria has in recent years actively pursued a holistic financial inclusion strategy across the country. On our part, the “Pink Account” is designed to meet the needs of our female working class and SME customers and provide such benefits as access to attractive loans, customised electronic debit cards and access to discounts from partner stores. The Pink Network is an online forum that empowers our female entrepreneurs with free mentorship and capacity building sessions. Women from different walks of life can network, share ideas, inspire each other and develop mentor/mentee relationships.
Your corporate banking division has a sector focusing on oil and gas trading. How significantly has Keystone’s earnings been impacted by the slump in oil prices over the last three years?
In reality, the negative headwinds on the sector were two-fold; globally, increased output both from shale oil in the U.S and Organisation of Petroleum Exporting Countries (OPEC) countries impacted negatively on price, while domestically the federal government prioritised its re-engineering programme in the sector to plug income leakages and improve overall accountability.
This additional level of scrutiny, brought with it a major downside risk to the banking sector in general, with the recurrent spectre of delayed payments to oil marketers and their resultant inability to effectively service their loan. Prior to this, Keystone Bank had significant loan exposures in the petroleum downstream sector and a strategic decision was taken to consciously wind down these exposures and diversify actively into other trade sectors. Overall, while the slump in oil prices had some impact on our earnings, our cautious and largely bearish approach to risk asset creation in the sector moderated this as well.
You recently partnered with CELD Innovations Limited, a cash reward as-a-service company, to launch CashToken. What are the main benefits of this product?
In our bank, we already know that today’s businesses are not only susceptible to technology disruptions, but are under a bigger threat when they fail to place a premium on their share of the consumers’ “emotional equity.” Across all sectors, consumers are forcing the narrative that achieving customer-centricity is no longer a differentiator, but a key determinant of business survival or leadership. This informed our partnership with CELD to launch the cash-reward-as-a-service product named the “CashToken.”
How about your planned engagement with the about 50,000 SME?
Globally, SMEs are established drivers of even the strongest economies and Nigeria cannot be an exception. With over 15million SMEs dotting the Nigerian landscape, we are poised to ensure our customers in this segment actively grow their businesses through our partnership and focused initiatives in the segment. Our SME proposition is the “Growbiz Account” with three variants that address their cycles of growth from infancy through maturity and stability. We are also empowering SMEs through our Agency Banking initiative by signing them up as agents for basic off-site cash-in/cash-out services.
What mix differentiates your customer-service strategy from your competitors?
Our customer service strategy is to deliver such unique customer experience at every touchpoint that it engenders customer loyalty, repeat business and ultimately greater customer lifetime value. Ours is a paradigm shift from simply a transactional mind-set to one that is focused on achieving enduring relationships with our customers at the attendant financial benefits. Our major drivers for this are digital channels and platforms, particularly our Mobile App and Internet Banking; our interactive 24/7 Contact Centre; Customer Loyalty & Reward schemes and Metrics & Information-Driven Feedback Processes that help us tap-in effectively to the voice of the customer.
How will access to finance improve the underbanked and unbanked in Nigeria? What specific measures are you taking to attract these groups?
Financial institutions, FinTech companies, government and other developmental partners need to sustain the momentum by continually driving and funding research into relevant behavioural dynamics of the unbanked and underbanked segments; creating incentives for the unbanked to see value in being part of the formal sector; developing suitable savings propositions and appropriately-priced micro-loan products that realistically address their needs. We also leverage on the extensive geographical spread of government agencies to co-locate and in the process bring financial services within reach of the populace.
In specific terms, what are the measures you are taking to improve access to finance?
Nigeria currently has about 96.4million adults (EFInA) and we are focused on driving an all-inclusive retail growth structure from the underbanked through high net- worth individuals. We are currently deploying a range of solutions to serve the unbanked population. Some of these include, deployment of Automated Teller Machines (ATMs) to locations with little or no access to financial services; deployment of our Agency Banking solution under our direct plan, called KeyServ Agency Banking and in partnership with the CBN and other Federal Government agencies; co-locating with NIPOST to reach both rural and semi-urban dwellers at minimal cost.
We are also partnering with other strategic organisations to ensure our agent network is spread across Nigeria in the next 12 months and leveraging digital platforms for account opening and other financial services. Our USSD banking service was re-launched recently, allowing customers to perform basic money transfers and airtime purchase, among other things.
Trade finance is anticipated by businesses to be transformed by blockchain. Are you deploying this technology in the future for such a purpose?
Blockchain, with its mechanism of distributed and secure validation, has the capacity to subject every party to a high degree of accountability, forestalling missed transactions, human or machine errors, or transactions occurring without the consent of relevant parties. Nevertheless, the peculiar demands of banking transactions require that we implement a measured approach to adoption.
The Central Bank of Nigeria has advised financial institutions to stay action on the use of this technology for now and this prudential safeguard is not unconnected with the risks currently associated with it. We shall follow the lead of the CBN regarding integration into our operations.
You plan launching new digital financial-services platform. What are some of the platform’s key features?
The proliferation of digital banking in the retail space has made branchless banking a strategic and compelling proposition especially in the retail value-chain. Our Mobile Banking App has introduced a new level of banking with exciting offerings and features most of which were hitherto non-existent across the entire banking industry. These include Zero-Data Banking – which allows customers to transact using our mobile app even without data on their phones; Chat Banking service – which allows customers to transact while they chat via Telegram and Facebook; the “Meet Account Officer” feature – which introduces customers to their assigned account officers and allows them to interact directly on the platform; Foreign Currency (FCY) Transfers – where customers are able to make transfers to banks across the globe right from the mobile app; amongst others.
As part of the bank’s digital strategy, how much of your existing IT infrastructure do you expect will be overhauled to make way for new systems and technologies?
Our digital transformation journey is for us a key strategic initiative and as such we are undertaking a holistic and far-reaching overhaul of our current IT infrastructure to drive this effectively.
Given the growth in the global regtech sector, is the bank at all utilising innovative technology in order to more effectively deal with regulatory challenges?
Yes, we are indeed leveraging technology to enhance regulatory compliance and our solutions cut across Fraud Management, Anti-Money Laundering (AML) tracking, know your customer (KYC) and due diligence. Essentially, they detect and deter non-compliant conduct as well as retroactively investigate and create audit trails as may be required. The bank has also invested in solutions that screen customers at the point of account opening against designated terrorist lists such as those of the CBN, U.S. Office of Foreign Asset Control (OFAC), UK (HM Treasury/Bank of England), the European Union (EU) and the United Nations (UN). While these solutions also screen transactions and transfers against such lists, our other solutions monitor and report suspicious transactions and activities on customers’ accounts.
Of all your initiatives, which of your CSR would you say has been the most effective and successful and why?
To date, our youth and women empowerment programmes have been the most successful in the bank, both as independent initiatives and as partnerships with reputable organisations. Our focus is to empower indigent youths and women through training, education and other forms of learning, to achieve sustainable job creation and income generation. We have consistently won awards in recognition of these initiatives, the most recent of which was the 2018 Global Impact Leadership Award for “Best Bank In Women Entrepreneurs Empowerment Category.”
How do you see Nigeria’s banking industry changing over the next few years?
Over the next few years, I expect to see increased competition for customers’ confidence and share-of-mind. I expect to see banks compete more aggressively on such subtle yet potentially profitable indicators as increased account activity; customers’ ease of transaction across touch points; scale of digital spread and partnerships (as against number of physical branches); incentives for repeat business and greater customer life-time value; overall business efficiency. I also expect to see banks increasingly leveraging data analytics to better-predict customer behaviour for effective marketing and retail loan creation. Finally, while the retail and MSME sectors should remain the main focus for banks, I expect to see this drive replicated strongly in the corporate banking space with unique offerings to tap their downlines and value-chains.
Are you considering expanding your branch network within the country? Are you satisfied with this level of coverage?
We actually have 154 active branches in Nigeria with strong presence and multiple locations in key commercial nerve centres in the country such as Lagos, Kano, Kaduna, Port Harcourt, Onitsha, Aba and Nnewi, to mention a few. However, over the last nine months, we have progressively changed the narrative from merely having physical presence to achieving effective presence in the minds of our customers, through a massive yet sustained deployment of ubiquitous digital and agent platforms that are literally within reach of our customers such as the mobile app, the USSD platform, the revamped internet banking interface and our contact centre. For us, it is about taking the bank to our customers and not just building structures and expecting then to come to us all the time. Where we need to complement our brick and mortar network, we shall deploy nimble yet effective touchpoints that fit with our customers’ businesses and lifestyles, such as e-centres and galleries, Fixed Agents in the local grocery stores and Teller Implants, all of which still take banking to the customer as much as is practicable
Are there any plans for the bank to expand its presence into other countries in the region?
Currently, there are no immediate plans for expansion into the West African sub-region. As a major fallout of our prolonged bridge-bank status was the decision to divest from our subsidiaries in the sub-region namely Keystone Bank (Sierra Leoe) Ltd and Global Bank (Liberia) Ltd with negotiations currently at an advanced stage. While not denying the economic potentials in selected West African countries, we shall adopt a measured approach towards harnessing these opportunities in the medium to long-term, as we re-invent our business model.
What advice would you give to youngsters looking to forge successful career in the banking industry?
I will emphasise three key areas: emerging bankers should constantly expand their knowledge about the workings of the economy and the banking sector, within the overall socio-political context. For every transaction, they should be passionate about maximising profit, yet deeply conscious of the boundaries of sound ethics and corporate governance. In all interactions with customers, they should do whatever it takes to remain responsive, professional and always within reach.
Upon the completion of your tenure, what is the one goal, above all others, that you hope you would have achieved?
I would love to leave with a sense of satisfaction that I delivered on the mandate of our investors by making Keystone a Tier-1 bank. I also want to leave behind a tested and proven team of passionate and highly motivated people that refuse to see any barriers to what they can achieve; people that are able to compete shoulder-to-shoulder with any leading bank in the industry. At the end of my tenure, the recurrent customer feedback should be “my bankers are highly professional solution providers, responsive and always within reach”