Dozie: Traditional Banking Infrastructure Can Only Provide Limited Services to Customers


The recent appointment of Diamond Bank Plc as a forum member advisor to the World Economic Forum is no mean feat. The forum, which aims to shape global, regional and industry agendas to deliver WEF’s mission of improving the state of the world, has its membership by invitation. By standards, the invitation is extended only to the most dynamic businesses, using tech-driven disruption to drive growth. According to WEF, member companies represent outstanding firms that count among the world’s top innovators, market shapers, disruptors, niche market leaders and regional champions. They are businesses of growing influence that help economies thrive and contribute to societal prosperity, and are transforming into industry and regional leaders. Diamond Bank, now the first bank in Nigeria and the second in Africa so appointed as the WEF member advisor, is one of the country’s fastest growing retail banks. Established about 27 years ago, the bank currently serves over 150,000 businesses cutting across diverse sectors of the economy as well as MSMEs, for which it provides value-adding banking solutions. Back from the WEF annual meeting, just-concluded in Davos, Switzerland, where he participated in an interactive session titled ‘A Shared Vision for Financial Inclusion’, the bank’s chief executive officer, Uzoma Dozie, spoke with Arise News Channel  Anchor, Modele Sarafa-Yusuf, on the membership appointment, financial inclusion and sundry issues in the banking sector as well as the economy, especially as it relates to growth and interest rates

Diamond Bank was appointed a forum member advisor at the recent World Economic Forum in Davos. It is the first Nigerian company and the second African company to be a world economic forum advisor. What does Diamond Bank’s invitation as a forum member of WEF mean for the bank?

For us, it means a validation of what we have been doing. How we have been using new technologies to access new markets, provide banking and beyond banking services to our customers.  And I think for the banking sector as a whole that it is a good platform to tell the world what we actually do here in Nigeria. I think we hear too many negative things about what is happening in the country, meanwhile, there are a lot of innovation and creativity going on for us. Because for us to actually access new markets, provide services for people, especially, in a country where the infrastructure is limited, you need to be innovative. And I think Diamond Bank and a few other banks in the country have used enabling technologies to do that in a cost-effective way.

What was your personal message in Davos?

Our message is that the future of Africa is digital; especially banks in Nigeria are using technologies to provide services for our customers in the market. The threat of Fintechs, as they say, Fintechs is going to take over banking sector. It is not as it portends here because we are actually partnering with Fintechs, fantastic real cases that Diamond Bank has done.  Our foray into better proposition, which is providing better services to market women, was actually done in collaboration with Fintechs companies.  Our Diamond Yellow Proposition, which is in collaboration with MTN, the banking solution was actually developed in Nigeria by Fintechs. So for us it is a course of business where we don’t feel that threat because we know that by collaborating we will be able to provide better services for people in Nigeria and really thrive the financial inclusion in Nigeria.

While discussing the main theme of this year’s event, one of the co-chairs: Chetna Sinha, called for financial access for everyone. She announced an alternative investment fund of about 100 million rupees for female entrepreneurs, are there any lessons for Africa? 

Definitely. In fact the themes from Davos should definitely resonate in Nigeria. First of all, it is talking about shared values in a fractured world. We have similar trait in Nigeria and one of the underlying things that was missed was that as we go into the fourth industrial revolution, how do we ensure that we use those emerging technologies to bring people out of poverty and make sure that there is inclusion and it is democratised? From what we have seen in the first, second and third revolution, although there was economic growth, there was increased inequality. So as we go into this new fourth industrial revolution where the trophy is going to be larger, if we do not take this into consideration, we will see increased inequality, which is simply what we see in Nigeria as well. In the case of Nigeria, we have locations where people have not gone past the first, second and third revolution, where there is no power, no access to mobile phones or computing because of no network. So how do we leapfrog those stages so that we can provide better financial solutions? We can have inclusive network, people can be part of the economy, government can tax more efficiently, spread it across, and provide better utilities for Nigeria. So those were the things that we discussed in Davos but truly resonate strongly in Nigeria

On the side lines of WEF, the International Monetary Fund raised its global growth forecast for 2018 to 3. 9%, expecting the global economy to continue to recover on the back of trade and investment.  What does this mean for Africa and Nigeria, in particular?

I think that resonates in Nigeria because we are beginning to see growth.  If we look at where we are today compared to 12 months ago, we have seen a turnaround, especially in GDP growth. We were in recession 12 months ago, now we are out of that recession. Inflation is coming down. There is increase in foreign currency liquidity in Nigeria and, today, the currency has stabilised. And we are beginning to see GDP growth in non-oil areas like agriculture. But there is still a lot to do. We still have businesses that are financially excluded, that are supposed to be the engine of growth. In any developed economy, the small businesses are the engine of growth. They are the biggest employers of labour, biggest generator of GDP. We have a long way to go from there. Banks like us, Diamond Bank, have a role to play in providing resources and support for those businesses to be sustainable. An example that I usually give is if you have 17 million businesses that are financially excluded, if you provide enabling environment for them and they all pick one extra employee, that is 17 million people you are going to give jobs to.

Davos is generally considered the meeting of the famed 1% who control most of the world’s resources. Can they really be expected to honestly address the imbalance in the distribution of resources, and is it in their best interest to do so?

Certainly. That was one of the overriding discussions that we had in Davos. There is no economic growth without social inclusion and it is important. It is business’ imperative to ensure that the community in which they serve must be socially uplifted, if not, their business models will not be sustainable and the more that inequality gap increases, the more dangerous it is for the business and the geography as a whole. Those were the underlining themes at Davos and they cut across every discussion that we had in the education area, health area, how do you democratise the new emerging technology, how do ensure that these emerging technologies are human-centred and are value-based. And it is highly important because just as they can do good, they can also do damage from areas of artificial intelligence.  If they replace jobs , how are you going to create jobs for new people? The jobs that are actually going to be displaced have more women, how do you ensure that we recruit people so that nations continue to generate tax, provide services for their citizens?

Talking about inequality, Norway has one of the smallest gaps between rich and poor in the world and the most inclusive economy in the world. What lessons can Nigeria learn from that country?

You know Rome was not built in a day. And leadership has to have a foresight and a short term plan on what they want to provide for their citizens and Norway is an oil-producing country but they do not rely on oil and it is a windfall as they saw it. They are still focused on their core resources and I think that is what we ought to learn. We have to have a very long-term plan that we execute and we use sustainable resources that we have and certainly not oil. It is our people, 180 million people.  It is a youthful population and it is an arable geography. So those are the competencies that we have and we should actually use.

Despite on-going efforts, the reality is that most poor people in the world lack access to sustainable financial services.  What are the banking practices that continue to exclude these people and how can banks review those practices to align them with the objectives of financial inclusion?

With the traditional infrastructure that banks have, there is little you can do when it comes to providing services to people in remote areas and it does not make sense for banks to build branches in places where the financial activities are highly limited, especially in village areas where maybe there highest financial activity is during the market day, which is probably once a week. So we have to find new ways to provide access. In Diamond Bank, we have realised that we cannot use the existing banking models, it just does not exist. We see banking as a commodity now. It is a question of deciding that we are going to take banking to the people. Like any other service, it must be frictionless; banking must be done without thinking. Twenty-five years ago, to do banking, you have to freeze your day, go to the bank and queue up, take a tally number and wear your best clothes so that people can have a good impression of you. Today, nobody cares about that and people want to do banking without thinking that they are doing banking.  What we have done is that we know that everybody has a mobile phone. There is a reasonable amount of mobile connectivity in Nigeria, so let’s try deal with that first. Where there is connection, let us enable people to access financial services in a very cost-effective manner that does not disrupt their day. So those are the things that have guided us in coming up with solutions that have been very successful. If we take that into consideration, we have 15 million customers; seven million of those were acquired over a 23-year period in 270 locations. The other half was acquired in three years. Nobody came into the banks because it was all done by mobile. We have provided a platform in which they can access financial services in very cost-effective manner with what they use everyday. And what we have discovered is that in most cases, it’s not that they are poor but the banking system was inconvenient, too costly and they did not understand it and not much effort had been made to show them the benefit of using a more trusted and structured way of saving and doing their transaction in a cost effective manner. On the flip side of it, if financially excluded, it is very expensive because you have to carry and manage cash, even the cost of doing transactions, transferring money to people; the risk of loss is very high. What we see is that we actually change people’s lives. The stories that we have heard, especially from customers, like the market women, is how they have been able to keep their monies safe. They can save and send their children to school and those are the things that make Nigeria more sustainable and people can actually feel the economic growth.

But financial inclusion is not just for the people, is it? There is robust positive association between financial inclusion and bank stability.

Definitely.  With Diamond Bank, the first thing that going retail has done for us is that it enhances the bank’s credibility. Not only are you serving just a small sector of the economy but you are serving a wider base. Secondly, to do that, you actually have to go beyond banking, which is one of the things we are very good at. We don’t see ourselves as bankers, we see ourselves as people who are working and partnering with people, helping them to provide an infrastructure for them to succeed. Whether they are individuals, small businesses, people who are financially excluded. We just want to bring them. Another indication is hand holding and it is actually required. If I look at Diamond Bank’s brand equity five years ago and now, it is a totally different place. Our partners and customers do not see us as bankers but partners who actually want to help them get on with life.

What are the key initiatives Diamond Bank is deploying in this regard?

The first thing we have done is that, we know we cannot do it by ourselves, so we have partners in telecoms place, in technology place and also advisory as well. For example, small businesses are not about just providing a bank account; it’s also about providing access to market.  Even access to market includes using technology. So how do we create awareness of your goods, how do we ensure you have a cost effective way to do that? We partner with companies like Microsoft, who provides a cost-effective environment to actually access markets. I think we have certain years of relationship with EDC of Lagos Business School. We are in our seventh year of our Building Entrepreneurs Today (BET) Programme, which has been very successful and this year we are going one step further by using technology to showcase it across Nigeria. In previous editions, it was not captured on video, only a limited number of people could benefit from it, that is people who are participating. But this year, we are televising it. Even if you are not part of the programme, you can actually watch people who are in similar fields like you are and you can benefit from the questions and answers and the stories that are being told. So that is how we are going beyond banking to ensure that we provide you financial services, but also provide you with the services that we are sure will make you successful.  Your business grows and you also have the resources that ensure that you are also sustainable. And the sustainability of our customers is directly linked to the success of Diamond Bank. So it is in our interest that that happens.

You once said, “I have always believed SMEs and young entrepreneurs, to empower them to play their role in employment generation and economic growth.” Why is this important to you on a personal level?

I like to be involved in growth and in change and I believe everything that I do is linked to growth or playing a role or trying to fix in success. We love small businesses in Diamond Bank. We know that if we help, the partnership and commitment is there forever. We know that there is tremendous opportunity in financial inclusion and we have seen that it is not charity but a sustainable business model contributing to our bottom-line. We also know that in our corporate business it helps grow them by providing a new way for them to mine their value chain. How do we connect small businesses with large businesses down to the consumers? So another tagline that we have is why we want to be relevant beyond banking. If we are seen as intermediary that connect people to markets and when people ask what does Diamond Bank do to be my partner, they can say, Diamond Bank helps me grow with relevant markets and keeps me sustainable. People say what is the role of banks, how are we going to be sustainable, that’s how we are going to be sustainable. Beyond the commodity services that banks provide – others, including non-banking institutions, provide today – there are things that we have. It’s a community that we have, a platform that we have built that enables people in that ecosystem to benefit from it and give them a reason to say Diamond Bank adds value to our lives and businesses.

You are also reputed to be highly passionate about technology. You’ve said that a couple of times in this conversation. At the recently concluded WEF, Ali Baba founder, Jack Ma sounded a note of warning on technology. He said, “We are very lucky because the world is in a big transformation because of technology. This new technology will create a lot of successful people, interesting careers but honestly every new technology will create social problems”. Do you share his concerns? 

Certainly. Too much of everything is bad for you. You also see it in households today. People are always on their phones. Social skills are being impaired completely. Going back to the theme of Davos, there must be human-centric approach to the deployment and use of technology. There is inherent value in any technology and to use them, you must constantly debate to deploy it: what are the impacts to humanity? Is it positive or negative, and what are the things to do to ensure that in deploying it we don’t lose humanity and it does not have negative impact?

In the early months of 2017, we saw the economy come out of recession, what would you say is the major driver of this improvement?

There are few things but the one that comes to mind was that Central Bank of Nigeria came out with some policies as well that made sense with markets and instilled confidence. So we have, one, policies that encourage foreign investment to come into Nigeria, two, we had policies that stabilised the naira internally,  so the rush to look for foreign currency was limited and thereby providing access to banks and all their branches across the country. Then the policies to diversify the economy from oil also kicked in and then the limited importation; because of the high cost of dollar against the naira, consumers were very critical of what they imported, how they travel , looked  at education and health so the demand on dollar dropped as well. The oil price also helped, although we are still trying to diversify from oil. We saw oil prices above $50 per barrel. We saw stable production, so there was less restiveness in the oil-producing areas. Those are the things that actually help sustain that recovery.

Many have made allusions that the foreign exchange problem was partly solved. Isn’t it curious that activities in the domestic economy are still largely dependent on the happenings in the foreign exchange market?

It will be for a while. If we are self-sustaining from a food perspective, there are some areas where we will never be competitive and it does not make sense to build industries around it. So we are still going to need to import raw materials and some services for a long time to come unless we can do it more cost-effectively. For example, power is still an issue. It makes production and manufacturing a challenge in Nigeria. If we are able to solve the power and infrastructure issue in Nigeria, it will make cost of production and manufacturing cheaper and now people can start competing with other companies where we import. So until we solve that problem, we are still going to import raw materials and finished goods and services.

Do you think an easing of interest rates in 2017, as many clamoured for, could have also increased the business activities in the economy?

If inflation is high and you reduce interest rate, it might have a negative impact on trying to bring the inflation down as well, unless you can grow yourself out of that inflation, which was a challenge that time. I think the MPC stance on keeping the interest rates high to bring down inflation was a right one and we are beginning to see the results. We have seen the inflation come down. We still have a long way to go. I think the high interest regime is going to be there for a while, although government is also trying to play its role by reducing its own debt burden and converting its debt from local currency to foreign currency to reduce the interest

So now that government seems to be focusing more on foreign borrowings than domestic borrowings, do you think this could possibly drive short term interest rates, like you mentioned, lower?

Yes. The thing is that it will help us well because if we reduce the cost of borrowing money, that should also trickle down to the commercial and banking sector, eventually. And we are saying that inflation is coming down, treasury bill rates are coming down as well, and that should take back into the commercial activities of the Nigeria economy if it is sustained

So what are your other expectations for 2018? Are you more optimistic or pessimistic?

I think for the type of business that we have, we are very optimistic. I think we are providing services that people want. Our strategic focus is aligned to the national objectives and also global objectives coming from Davos, we are now more determined. I think it has validated our strategy, which is to drive retail, look for new markets in the financial inclusion space with also a social charter in our strategy. So there is always business opportunity for us. We have 60 million individuals, we have businesses that need support to grow and there are very good businesses there. So we have a lot of opportunities as a bank for the kind of businesses that we have and as technology improves, it creates a more cost-effective, better user experience way to actually access these customers.  Few of those technologies are going to come mainstream this year, which we are going to use to provide a better service for our customers, go into new markets and also enhance the Diamond Bank brand angle to go beyond banking solutions for our customers that make us bulletproof in economic downturn and also dispel the fear that Fintech and other related businesses will take over the banking industry.

I can see everybody jittery about this Fintech companies. Is there really that much to worry about?

I always tell people that when people keep saying that Fintechs will take over banks, the flip side is that those solutions Fintechs use are the same ones that banks can actually use to take over Fintechs business. And we have seen cases where banks in other climes have actually bought over Fintech solutions. The most important thing is that Fintechs also require customer base as well. And what do banks have, we also have customer base. But if we are not forward looking,  if we are not looking at who our customers are going to be in the next five years, that’s when we will lose the business. Now look at my children, they are aged 15 and 14 and I know that if they are going to work in a banking sector in five years’ time, it is certainly not going to be the way we are doing it now. They are definitely not going to the bank, they will do it on the mobile phones, they will actually want to see and feel the apps that they use today. So banks will have to look today at what their solutions are, how easy it is for people to use it, and if it is not integrated into their lifestyles, they are going to go to somebody else that can provide it. And that’s where Diamond Bank, from our beyond banking philosophy, comes in. How do we integrate ourselves, look, thought, mind, feeling into the lives of our customers so that we are not intruding, we are just partnering and collaborating with them?

The CBN MPC meeting could not hold due to lack of quorum. What impact is this development likely to have on the economy?

Not really. Personally, I think that they have kept the same stance that they had. So if they don’t hold in January, which is usually a slow month, waiting for the budget to come out and all, if in three months we are still having this conversation and they have not held, then we can start getting worried. But for one month, I don’t think it is going to have any impact and the economy is growing. So if it’s not broke, don’t fix it.