Dozie: Nigerian Market and Digitisation will Boost Our Performance

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The Managing Director/CEO of Diamond Bank, Mr. Uzoma Dozie spoke to Goddy Egene on the bank’s decision to divest from its West African businesses, how to make banking more enjoyable for customers, the bank’s digitisation programme, among other issues. Excerpts:

Diamond Bank recently sold its West African banking operations. What informed that decision?
A few years ago; about four years ago, we decided that a lot of free flow between Nigeria and the rest of Africa and also, we are an import driven economy and we needed to retail was our future, in fact, retail is the future for Nigeria and that meant we allocate our resources to where they are. Now, as a Nigerian bank but operating in West Africa, the idea was to follow our customers wherever they were and provide services to our customers beyond what corresponding banks were doing. In the case of West Africa, our licence allows us to operate in different countries and so we saw that region as one country because it is about 49 million people. We were also investing in that region with the hope that with the West African Monetary Union (WAMU) taking place, we have to take advantage of it.

But that has not come through and Nigeria is still unbanked; about 60 million people are not banked in Nigeria. So this 60 million are more than the whole region we were operating in. We were deploying capital in those areas and the returns were not as much as those we got in that area. But now, considering capital constraint, we have to decide where we are going to get the greatest value and certainly Nigeria, it has to be Nigeria. Nigeria is a place where we have largest cities in Africa, the largest population.

So, not just financial but we deploy human resources to ensure we are successful in the market. Look at Lagos for instance, with a population of over 20 million people that is about a population of about two countries that we were operating in West Africa and still we have not provided adequate services to these people. And for us to build our business in this region, the way we have built in Nigeria, it means deploying more capital and I will rather deploy more capital here in Nigeria than in other West African countries. That is the rational for doing that.

So how will this benefit Diamond Bank?
First of all, focus. When you diversify, it means you are going to devote more resources to outside. But now we are more focus in Nigeria and it means we have more resources in doing businesses here. It means that our best hands that we have deployed to West Africa, we have now brought them to add value to our operations and drive our retail strategy in Nigeria. More focus means that the probability of getting it right, the probability of being successful will be definitely much higher.

Considering the competition and terrain you operate, how does this decision fit into your strategy?
Perfectly, well fitted. It means more concentration. If you look at our strategy, it includes going into new markets. And the new markets in Nigeria, is the unbanked. We have more people that are unbanked than the banked. It is not that they are not doing financial transactions. It is just that they are not doing it in formal setting. And we believe now that we have developed and collaborated with people enough to be able to provide services to the people regardless of where you are in the society in a very cost-effective manner much better than the way they are doing their financial services.

We have many case studies to show that working with people, the women especially, we have displaced the trading ajo system daily contribution. Before now, you have somebody who will be collecting money. But now we have people that go round providing banking services and what we are going to find is that we have people and once you give them service, they are trustworthy and you will see that they will stay with you. We have over 600,000 market people both men and women that are using those services happily and it helps to create 3,000 new type of jobs because they are not core bankers but our agent women.

We realised that Diamond Bank is high on digitisation, how will this impact on your profitability?
Directly and indirectly. Directly, I think digisation allows you to reach more people in a very cost-effective manner. It allows you to generate information that will help you take cost effective decision. Let me give you an example. Diamond Bank had over 300 branches that ran for 25 years. We had a total of 15 million customers. It took 23 and 300 locations to acquire them. But it took us just three years to acquire the same number of customers. They did not go into a branch.

They did not fill any form and paper. So imagine, if those have been coming to branches and filling papers, imagine the cost and then the scale in a two year period. And this is just the beginning of what digitisation can do. For us, we are in era we do need to use cards to do transactions; we need to use the Point of Sale (POS) terminal. They will all be mobile base. Look at what NIBBS is doing with MCash and use QR code that is like a piece of paper. That is what digitisation can do. It is going to reduce the cost of services we provide to customers. It is going to allow us to grow very fast to places that you had to have a branch before you get to. With that we are generating more information. In fact, we are now a data company, not even a cash company. We move more data than we move cash. Over 80 per cent of our customers are doing electronic, they are not actually going to collect cash. They are doing electronic payment. We are more of a data company.

Talking about services to customers, what do you have for SME based customers. What is the proposition of Diamond Bank in that area?
We have two slogans: ‘Going beyond banking’ and ‘Connecting people and market,’. In a successful economy, small businesses are engine of growth and biggest employment of labour. If I want my market to grow, I actually have to play a role in developing my market and that market for us is the small business space. There are three things that small businesses want. They want access to finance, they need access to advisory, and access to market. For instance, a baker can have money but if they don’t have a market, nobody can buy and they cannot produce more.

If they are growing and nobody is telling them how to keep their books and financial records, they won’t be able to have access to finance and even grow bigger. So knowing all these, what Diamond Bank is trying to do is that, we can provide the access to finance and we are also partnering with so many of them to provide the access, provide the advisory services. That is why we have an initiative that has been going on for years, probably, actually the longest initiative in Nigeria on how to help small businesses grow when we partner with EDC of Lagos Business School to provide capacity building programme for them for over five months.

And this year, which is the seventh year, we are using technology. We are going to spend money recording it so that millions of businesses, even if they don’t participate, they can actually watch and learn what we are doing in that assemblage. So those are some of the things we are doing in that space. And our platform is used to connect and create awareness and connect people with the market. And there are many other things we do. For instance, I have this show called Tech Talk. What do I do, talk to people and businesses that use technology to either service customer or change your defined industry that people have never heard about. We are using our mobile platform to create awareness about how people are using technology to drive and improve on agriculture. We are using technology to improve life in healthcare sector.

For them to do it themselves, the cost to them would be huge. So that is how we play a role in trying to build capacity and show the world that it is not only in Kenya that technology can be used very well to transform businesses. Nigeria can do it better and we must show the world that. I like it the way, not just Diamond Bank, others organisations that have the platform are exposing what Nigerians are doing in the market place.

Will you say that informed your decision to hold the largest technology forum next year?
Most of the tech conferences you find are in places like Kenya not as big as in here and two weeks ago, we just held conference as Africa as the Platform. We need to have more of that in Nigeria because without Nigeria, Africa does not exist. But Nigeria is also doing a lot in the tech space. We probably have the largest payment infrastructure in Africa and nobody knows about it and we are not talking about it. We need to talk about it. We need to tell the world that we can walk around Lagos with just mobile phone and you don’t need to carry cash. You only need to carry a card and that is what we are doing through the services we are providing.

I hardly walk around with cash, I hardly have my debit or credit card because I can go to an ATM and collect cash initiating with my mobile phone. We go to a shop and use QR code to make payment, I can go to a man on the street and use USSD entry to pay them and they get value immediately and not tomorrow and without a POS or card. So those are some of the things that we need to scale up. We need to also all come together and change some legislation so that we can scale all these technology because you are seeing pockets of success in silos, we need to scale because that is what lead to success and that will now help us take advantage of it.

You are known for driving technology, and one of the best APPs in the market currently, but competition is stiff out there, do you have plans to upgrade your Apps and remain above competition?
Certainly yes; the only thing that is constant in today’s world is change. Customers are changing, customers’ needs are changing, and so for us, it is how we can do things better. Our business is no longer banking; it is how to collaborate with people to provide you with better services. If you take our SMEs for instance, it is not about providing services but making you successful. It is about being part of your journey. And so, our App is going to evolve so that, one, it can collaborate with more partners and can be more of an integral part of our customer journey.

And you have to also take into consideration that our customers are also the 15 year olds. In the next five years, you will have people, whose lives will just have to be on tech and we must also seamlessly integrate in their lives and you cannot be separated from what they are used to. So now, if you what to open an account, it has to be online, if somebody is developing a solution, it must be able to integrate Diamond Bank code so that people will be able to open an account immediately because nobody is going to walk into a bank and open a business account any more. Individuals do not walk into branch and open an account. Businesses are going to say, I want to open an account and I need to do it online. I need to upload my file and it needs to be secure and start running immediately and I start getting payment.

The private sector is striving to make banking enjoyable by everybody. But there are some things that government can do to complement efforts of the private sector and make banking easier. What are those things that are beyond the private sector that government can provide?
The biggest one is looking at Data laws. The government can look at regulation around data. I think we have all the ingredients to actually leapfrog and scale. Right now, digital payment is competing against cash and if you are competing cash, you know people are going to use cash. Meanwhile, cash is expensive, it is fraught with Know your customer (KYC) issues, lack of transparency and cash also slows commerce. Moving a million Naira in cash is not as fast as moving a million Naira in electronic payment.

And so, we need to change some laws around that area. The new KYC laws have been great on deposit side. Anybody can open account and do at least N150,000. That is fantastic. But we need to do that also on the lending side, so it is not just only on the BVN if you want to borrow N1, it is BVN if you want to borrow above N2, 000 because the BVN acquisition is still expensive and not convenient for the man that is leaving in the village right now. Those are some of the things that we need to change in some of those laws.

All these your efforts, how will they translate to more dividends and returns for your shareholders?
We are not trying to be the biggest bank. We are just trying to be the most efficient platform that can provide services to millions of Nigeria. My vision is like I want to have 20 million people on our platform by 2020. Twenty million active people on my platform by 2020 and I am providing services for them, will be cost effective, and also my income stream will be diversified, which means that when next there is economic shocks, we won’t have to suffer as we did in the past. Besides, people just want a sustainable growth and that is what we are trying to build in the retail strategy.

Generally, Nigeria has gone through a challenging period, this is the first deep recession we have had in many years. And I think the economy has been resilient. We have seen stability in the exchange rate. We are beginning to see the right movement in inflation, and we hope that will continue and if we can create a platform where we can have some changes in some of the laws from 2018 and beyond, we will begin to see robust growth in the economy. And for us, our focus now is Nigeria. So we are very excited about the future.