Adebise: Banks Must Be Innovative to Remain in Business

Ademola Adebise
Managing Director/CEO of Wema bank, Mr. Ademola Adebise

The Managing Director/Chief Executive Officer, Wema Bank Plc, Mr. Ademola Adebise, who assumed the position six months ago, has over 28 years’ experience in the banking industry, inclusive of four years in management consulting. He had worked in various capacities in Information Technology, Financial Control & Strategic Planning, Treasury, Corporate Banking, Risk Management and Performance Management. In this interview, he speaks about efforts to transform the bank as well as plan to remain a dominant player in the retail segment of the market. Obinna Chima provides the excerpts:

What has been your experience since your appointment as CEO and what was the journey like for the bank to get to where it is presently?

I was appointed in October 2018. I joined the bank in 2009, with Mr. Segun Oloketuyi, the erstwhile Managing Director. When we joined the bank we embarked on what we called Project LEAP, which was basically a strategy to take the bank out of the woods. Of course we all knew the precarious state of the bank at that time. The first thing was basically to address the liquidity situation. We called that the phase of stabilising the bank. The next phase was basically to begin to have those building blocks put in place and the last stage, which we are in now, is basically to grow the bank. It has been a very tough, but exciting journey. Last year was a major milestone for us as we declared dividend for the first time in 14 years. The last time dividend was declared in this bank before last year, was during the era of Mr. Tunde Lemo. The efforts of all the transformation over the last nine years has culminated in the payment of dividend for the first time in 14 years. Where do we intend to be? We intend to be a strong retail bank, leveraging technology and innovation. For us, what we have said is that in the next two years we will try to double our key indices of assets, deposits, profit, so that by 2020, we would have achieved the doubling of our numbers and we would then embark on looking at opportunities in mergers and acquisition (M&A) for inorganic growth. We have key sectors of the economy that we have mapped out to achieve this growth. We are also trying to ensure that we have well-trained and remunerated staff to be able to achieve this vision and we are very committed to it.

Looking at your results for the year ended 31st December 2018, your efforts in taking the bank out of the woods appears to be yielding positive results. Now that the International Financial Reporting Standard 9 (IFRS 9) is expected to rub off on banks, how are you going to manage that situation?

The issue is that in 2018 we adopted IFRS 9 and the impact was felt, but not heavily felt like some of our peers. Again, this is based on the quality of the collateral you have against your risk assets. For us, going forward, it is to ensure that we have that discipline in creating loans. We need to ensure that we have good quality loans. If you create good quality loans, you are not going to have an adverse effect of IFRS 9. So, that is the panacea to ensure that you don’t incur the wrath of IFRS 9. So, discipline, corporate governance and ensuring that you book quality loans are very important.

There was a N30 billion increase in your loans and advances in same year. What were the sectors you concentrated on in terms of lending?

Basically, oil and gas was the major sector and of course, the SMEs’ space. There was a number of intervention schemes from the Central Bank of Nigeria towards the agriculture and manufacturing sectors and we took advantage of all that. But largely, the oil and gas downstream was a major contributor to the growth in lending.  

What strategy are you deploying to remain competitive in the retail segment of the market?

To remain competitive in this market, you need to be innovative. That is because basically what you see is that everything in the banking industry is commoditised, talking about products. You will notice that product A which is in one bank, is also in another bank. For us, we want to be an idea bank. We want to be known for innovation and we want to be very agile. For you to make a mark in this space, you need to be very agile and speak to market with products that appeal to customers. It is not about developing products, it is about appealing to the needs of the customers, which for us is very key. We are going to leverage technology as much as possible. Of course you know about ALAT, the fully digital bank that we launched two years ago, it is doing very well and what we are doing now is that we are reviewing ALAT to take it to the next level. That is, to take it to a platform where we would be appealing to lifestyles. We have a lot of value creators and value consumers, that is buyers and sellers, on the platform. The whole idea is basically to reduce the cost of doing business and improve out top-line. We have sectors that are clearly mapped out that we play in the retail space. Of course, in the SMEs’ space we have different verticals that we can work with. We have the creative, the micro-businesses, the agriculture value chain, and other clearly mapped out products that we would use to appeal to these segments of the market. By the way, the bank was set up in 1945 as a retail bank. We have not moved away from that vision; it is just that things have been evolving.

It appears that you are aiming at somewhere in the industry because you earlier talked about leveraging M&A opportunities for growth. What actually is your aim in the industry?

You know there are two ways to grow- it either you grow organically or inorganically. What we are saying is that in the next two years, we want to double our key indices through an organic growth. Now, after 2020, if there are opportunities for M&A, we are not saying that we are going for an M&A, but if the opportunities exist. It is important I clarify that. Today, we are in the neighbourhood of about N500 billion in terms of assets, if we stretch that, we should be getting to about N800 billion by the time double those numbers and if you want to get into the trillion-naira mark in terms of assets base, you then have to consider that. But it is not that we are saying we would get there through M&A.

Are you not looking at the agriculture sector?

For us in agriculture, we have our strategy. We have looked at the value chain and for us we want to focus on the processing end and of course we look at the aggregators to the small farmers. For us, that is where to be. Of course, in supporting the aggregators, we look at key crops. These include cassava in the South-west and rice in the north. Another thing which is interesting in the agriculture sector today is the fact that the business model is changing. It is not the old style of doing agriculture. We are talking about the different players within the value chain and being able to use technology to put everything together. To grant a loan and if you are not able to get it back, the loan becomes bad. If you grant a loan at commercial rate, from day one, the loan becomes bad. So, you need to see if there are intervention schemes in the economy. The central bank has provided intervention schemes through the Commercial Agricultural Credit Scheme and we have the Anchor Borrower’s Scheme. If you get an anchor that you are supporting, the anchor has access to thousands of farmers and if you are able to bank all these farmers, the loan is repaid. And as you know, agriculture is a major contributor to our Gross Domestic Product. Once you put that in order, another thing is to boost export. Export will bring back a lot of foreign exchange into the system and it will support our external reserves. At the end of the day, if you are able to boost your GDP, tax revenue also increases. We also see opportunities in the creative sector and we are trying to build a structure, to ensure we take advantage of that space. Government is interested in certain sectors and we have keyed into those sectors and we have started building competences in those sectors.

Why not cocoa?

As we speak today, cassava is on the front burner for the central bank and it is a crop you can cultivate and harvest within a short period. Cocoa takes about three years. And a lot of companies in the south west are already processing cassava to take advantage of the opportunities.

There is an inscription at the entrance of your head office that states that ‘We Make Magic in Wema Bank,’ and that got me thinking about the type of magic you do at Wema Bank and if I may ask, what was the ‘magic’ wand behind you paying dividend after 14 years. Also, you talked leveraging technology especially with your ALAT platform, but the information we have is that the ALAT is still facing some challenges. What are you going to do to make it more seamless for customers?

Let me start with magic. There is nothing like magic in banking curriculum. So, when we say we are doing magic, it doesn’t really mean magic in the real sense of it. You know we said we want to be an innovative bank and innovative banking has to do with generating new ideas. We just launched a hackathon recently and the whole idea about it is to be able to generate ideas, solve problems in the society and the banking industry, using technology. We go young, very brilliant minds to come together to pitch to solve some of those problems. We had it about two weeks ago. The who aim was to generate good ideas and we are putting money behind the best idea to take it to commercial level. Some of these problems were basically to solve three things- reduce cost; service our customers and improve top-line revenue for the bank and solve societal problems. We got very interesting ideas from young, talented and energetic Nigerians and we intend to take this to the next level. That was what we meant ideas generation, with a view to being a very innovative bank and we christened it ‘Hackaholics.’ So, for dividend, there is no magic wand about it. Basically, this was a journey of over nine years from the era of my predecessor. We started from 2009 with the transformation plan was what led to the payment of dividend. Again, you might say 3k, but it was because we have 38 billion units in circulation. If we had 15 billion or 10 billion units of shares in circulation, we would be talking about 10 kobo or 15 kobo. Really, it was a journey of the transformation that led to where we are today. What do we intend to do going forward? We would ensure that we continue to improve on this as we move on. By 2019 and 2020, we would continue to ensure that we improve on this. What are the things we are doing? We have made sure we have all the right tools in place. You mentioned ALAT. As we speak today, we are refreshing our information technology. Information technology is expensive, but we are also being very responsible. I have an IT background, the Deputy Managing Director has an IT background and our Executive Director, Folake Sanu, has been involved in a lot of IT projects in the past. So, technology is not strange to us and technology is not about just pumping money into what we don’t know what we are doing. Also, IT is not just exciting ourselves. Our shareholders are interested in returns and so we must ensure that we deploy this limited resources in a way that would benefit all stakeholders. So, for us we have a clear digital journey that we are working on to ensure that we deal with whatever comes up. Of course, you have heard about banks deploying robots today, basically to resolve internal issues and problems. Another question you might ask is if people are not going to lose their jobs? No, business models are changing with the adoption of new technologies. All these technologies are already here in Nigeria. It now depends on how we apply those technologies. What actually is happening with technology adoption is that business model is changing. It is not about technology adoption, but about business model changing. The amount of data that you have, what does it mean to you? How can you monetise it and what patterns are you seeing? Today, we see Amazon, which started as a retail outlet, but now plays in all sectors. Today, it is a big IT firm, it is into e-Commerce, logistics and several other sectors. What has changed? Nothing has changed, but the only thing that changed it just their business model. When we say disruption, it is not about technology, but about business models changing.

How are your branches in the north performing?

When we got our national licence in 2015, we decided to go back to the north and to the east. In the north, today we are in Kano, Kaduna, Lokoja, Minna and Bauchi. So, we are in five locations already in the north. In terms of performance, they are picking up. Some of them have not broken even yet, but they are picking up in terms of businesses. We hope to go to other areas also in the north. But, branching out is not based on wishful thinking. It is based on business exigencies. If there are business opportunities there, we would open. In the east, we have a branch in Aba. In fact, we are on the verge of opening a second location in Aba. Aba branch broke even and we are making money from that branch, that is why we are opening a second branch inside Ariaria market as we speak. So, it is not about just launching out, it is about where there is business. We are looking for a location presently in Onitsha. So, really it is based on business opportunity and not sentiments. If Aba will give me five branches that are profitable, I would open more branches I that state.