Okoli: Retail Banking is the Future of Nigerian Banking


Head, Retail Banking, Skye Bank Plc, Nkolika Okoli recently fielded questions from journalists on how the bank is empowering the banking public through the ‘Reach for the Skye’ reward scheme. Raheem Akingbolu brings the excerpts:

How is Skye Bank meeting the needs of both prospective and existing customers that are showing interest in its products and services given the benefits that come with the ‘Reach for the Skye’ reward scheme?

The Reach for the Skye reward scheme was introduced in June 2015 and as you rightly mentioned, we have seen growth in terms of customer base and deposits because of the interest generated by the campaign. Aside from the monthly cash rewards given to the customers, we offer attractive monthly interest rates on our savings products as well as third party access through customised cheque books for our flagship savings account. This gives our customers convenience to carry out their banking transactions without having to visit our banking halls. They can also take advantage of our electronic and card services to carry out transactions anywhere and at anytime especially through their mobile phones.

What has been the impact of the reward scheme on your deposit base and what new steps are you taking to ensure that the phase two of the promo produces better results?

The reward scheme has improved our Banks’ deposit base-not just for the two savings products involved in the scheme, but it has also impacted other savings products in our portfolio. However the reward is primarily targeted at promoting customer loyalty and driving financial inclusion. We are happy to see that we have created 36 millionaires in 1 year only!

Many banks previously known for specialising in commercial banking are now moving into the retail end of the market. What do you think responsible for this and how long do you think the quest to serve the retail end of the market will last?

Retail banking is the future for the Nigerian Banking system; the country has a population of over 150 million people. With 39.5% of this population still financially excluded (EFina), this presents a great opportunity for Banks. Also, retail deposits represent a stable source of funds for banks unlike corporate funds which can be volatile. For Skye Bank, our aim is to see every Nigerian carry a Skye bank cheque book or debit card in their pockets.

Many bank customers have complained that banks only go for retail savings, but find it difficult to lend to SMEs. How is Skye Bank different in this perspective and tell us what you are doing to support SMEs in terms of lending to the sector?

We have adopted a solution-based approach to lending to SMEs by tackling the challenges they have, which make people to view them as high risk, such as; lack of collateral and poor business structure. First, let me address what I mean by lack of collateral. In order to address this, working with IFC we launched our SME methodology loan that places less emphasis on tangible collateral, but on cash flows and borrowers’ ability to repay. In effect this methodology helps us gauge a small business owners’ ability to generate enough cash flow from its business to repay the loan and the lending decision is based on this. To mitigate the risk of default owing to death or permanent disability, we incorporated credit life insurance into the lending framework.

Now, on poor business structure, SMEs generally lack structures so we introduced support services like business name registration service, Sales book journal to help with record keeping, business seminars to train business owners on skills required to improve their productivity and long term performance,

However, our consumer banking strategy is interwoven with our SME strategy as most individuals are either entrepreneurs or employed by entrepreneurs so we cannot neglect SME’s.

Despite steps taken by the CBN and banks to boost financial inclusion, the number of the unbanked and under-banked within the country is still very high. What further steps do you think is needed to get more people into the financial system?

I believe that Agency banking and automation is the best way to reach the unbanked and under-banked in the country in a sustainable manner. No bank can be physically present in every nook and cranny of the country. It’s impossible. However, there are agents who can play a role in this regard. They live in these villages, towns and are recognized by the community and can assist with basic banking transactions (deposits and withdrawals) that customers want to carry out. We are partnering with some agents to reach more people, we have also recently launched our ussd banking service so anybody can open a simple savings account using ussd (what we call text message) from anywhere in Nigeria.

Skye Bank is said to have made 36 customers millionaires in the course of the reward scheme phase one. What are the expectations in the second phase of the promo, and what is likely to change?

We don’t intend to change a winning formula, every month; customers who have a minimum of N2, 000 in their savings accounts stand a chance to become one of three (3) millionaires we would be rewarding. The monthly consolation prizes also remain the same – Four (4) customers will win N250, 000 and ten (10) customers will win N100, 000.

What has been the impact of the promo in the lives and businesses of the winners and what steps are you taking to ensure that the funds are well deployed into businesses of the winners or other projects?

During the first anniversary celebration of the promo, we invited customers who had won all categories of our cash rewards to give testimonials on the impact of the prizes. A truck driver (Mr. Job Abiona from our Ogudu Branch) used the money he collected to purchase a new truck to improve his business. A retired civil servant/Pensioner-Mr. Bashiru Adeyemi from our City Hall branch also told us that his cash reward went into the completion of his personal home as well as the business endeavours of his children so he wasn’t the only one who benefited from the campaign. A woman who resides in an area with no access to pipe borne water used her own to install a borehole and other residents also enjoy free water with her now. The young people in this neighbourhood will grow up to associate this with Skye bank.

On steps to ensure wise investment of rewards, we offer financial advisory services, especially to the winners who request for it, to ensure that the funds are not spent frivolously.

Is the reward scheme open to everyone with any type of account with Skye Bank? Could you tell us more on how the promo works and what it takes?

The reward is not open to all account holders. Interested customers have to own either a Skye Save Plus (generic Savings account) or Skye Ease (savings account for the under-banked with no means of identification). All that is needed to qualify is to open either of these accounts with N2, 000 while existing customers are required to fund their accounts with a minimum of N2, 000 every month, to qualify

So many banks are using savings promo to win new customers, especially in the face of tough regulations by the CBN which have depleted lenders’ deposit base. Tell us what is really driving Skye Bank into the promo project?

If you know the history of Skye Bank and the banks that formed the institution like Afribank (Mainstreet Bank), Eko International Bank, Prudent Bank and others, you will understand that the institution has historically had a strong focus on retail banking over the last 50 years or more. The primary motive is to reward loyal customers and build a trusting relationship with them. Over time, the customers will reward us with their patronage.

Skye Bank acquired Mainstreet Bank, which is typically a grassroots bank. How have you been able to benefit from the new customers that are the product of the merger?

As you rightly noted, Afribank (Mainstreet Bank) was a typical retail bank and with our focus on the same ideals it has been a seamless migration for those customers and prospects. We have been able to increase our branch spread and customer base as a result of the merger and we are doing our best to provide them with the same excellent services Skye bank has come to be known for.

How do you define customer loyalty and how does Skye Bank ensure that it retains bulk of its customers in this era of low customer satisfaction?

Customer loyalty is the tendency customers’ display to show their attachment or favour towards your brand/product. This is either due to satisfaction with the product/service or the convenience or rewards given by the organization. This ongoing campaign is a strategy geared towards the sustenance of customer loyalty which is also supported by a pleasant service experience across our platforms. In addition, our customers know that our emphasis on best in class technology enables them transact via mobile phones, online and other channels at their convenience.

What is your view on the state of the economy, especially in this era of low crude oil prices? How can government and private sector operators benefit from the decline in crude oil prices?

I believe the decline provides an opportunity for Government and the private sector to turn towards other areas that can also provide sustainable and stable sources of income to the country. Having been a mono-product economy for so long, other sectors suffered, so it is time to return to Agriculture, mining, real estate and other alternative sources of revenue. The fall in oil prices is a blessing in disguise as it will make us think outside the box and focus on other sources of revenue to grow our economy. It may not be ‘quick money’ like oil revenue, but will provide the stability our country requires.