The Deputy Group Managing Director, Access Bank Plc, Mr. Roosevelt Ogbonna, in this interview speaks on the bank’s proactive investment in technology which he said has started paying off. Dike Onwuamaeze provides the excerpts:
How has your bank managed the effects of COVID-19 pandemic on its operations since inception of the outbreak till date?
It is evident that the pandemic has affected business operations not just in the banking industry but also across all sectors of the economy. No doubt, it has had a significant effect on how we do business. You will recall that the restrictions meant banks had to prioritize branch openings, whilst serving our customers, and as such, we had to rely on our digital platforms. Prior to our merger with Diamond Bank, we made a lot of investments in IT, training and innovation. As you may know, we have the largest mobile banking network within the Nigerian banking system with over 11 million customers on our mobile banking app. We have upgraded the service and made our digital platform more user friendly to enable improved interactions in achieving our customers’ banking needs. The pandemic has given us an opportunity to test our innovations and the resilience of the investments made over the last two years. Whilst operations were impacted, it might interest you to know that, as a Bank, we have grown through the pandemic in the last few months. We have recorded continued sign-on of new customers leveraging our agency banking network which allows customers perform their banking business within their locality rather than traveling far; and for customers who are tech savvy, they are able to transact via USSD or on their mobile app. Thus, we can safely say this is now the ‘new normal.’ As we go into the future, more customers will rely on the digital platforms and alternative channels for their banking transactions and businesses. Access Bank is well resourced with the infrastructure required to serve our customers and help them through the journey to arriving at a very profitable place.
Are you impressed about how the pandemic has been tackled so far?
In commending the work done in limiting the impact of COVID-19 in Nigeria, even though some have argued that, the weather itself has played a significant role, but whatever it is, the quick thinking and the initiatives embarked on by the federal, through the Nigerian Centre for Disease Control (NCDC), and state governments especially in Lagos, Ogun and Kano states has certainly helped to limit the transmission of COVID-19 across our markets.
Many private organizations and individuals took a patriotic charge in the fight against COVID-19, and this is very commendable. We played our role as a private-sector stakeholder under CA-COVID with other large corporates within this market in providing funding, thus demonstrating to the government and general public that it is not just their fight, but our fight, and that collectively we will win.
CA-COVID’s huge investments in procuring equipment, setting up testing and rehabilitation centers also showed our immense support in this fight to the government and to Nigerians. It showed that, for us, it is not just about making money but also about making an impact. Likewise, it was also important to protect our critical stakeholders – our staff, customers and the general public.
How has your bank been able to thrive in the face of central bank’s policies such as the cash reserve ratio (CRR) hike that has taken so much deposits away from banks’ balance sheets?
These are normal issues in times like this and banks have learnt to be prepared for such policy responses. I don’t believe this is news to any bank neither is it the first-time policies like this have been implemented. The monetary policy authority will always endeavor to manage local currency liquidity, foreign exchange liquidity and of course our currency stability as it is within its remit. Price stability continues to be priority for the regulator and they will do what it takes to manage imported inflation that may slip into our market. It is not a new policy. Banks have come to terms with its reality and it is here to stay. From our perspective, I think what is clear is that we need to maintain significant liquidity buffers as well as significant capital buffers.
On the foreign exchange side, we have been disciplined with how our foreign exchange deposit liability is managed. We have ensured that we are not too aggressive in lending because of scarce liquidity in times like this. We have also leveraged our partners – the likes of IFC, FMO, EIB and of course the trading syndicate banks – to raise about $400 million during the last three to four months. With these funds coming into Nigeria, it will provide significant liquidity in the economy as well as help us strengthen and buffer our balance sheet from a tenor perspective.
On the Naira side, we have continued to invest significantly in financial inclusion initiatives. There is still a lot of money outside the informal sector; we are leveraging our agency banking networks, and the Telcos that have significant relationships with us, to continue to deepen financial inclusion. Through these initiatives, we have seen significant Naira liquidity come through. It will interest you to know that even in the height of the crisis, as a bank, we were signing on about 400,000 to 500,000 customers monthly and each comes with significant liability.
So we have built liquidity buffers to manage ourselves through this period. As for the CBN policy, we understand why they have to do it. We have seen the impact it is making and it is one that we will support. The short-term implication on liquidity, for us, is something I believe most banks can manage.
You talked about having thousands of new customers monthly, also mentioned the new normal and how your bank is adapting to it. How are you positioning your bank’s operations as the economy gradually reopens?
One of the things we have come to realize is that we may never go back to how things used to be done in terms of the idea of big offices, big branches and having significant customer footfall. This might never come back. Investments made by banks and many institutions in technology will now begin to payoff. In the future, although we believe that branch network will remain relevant, alongside onsite and skilled executives, a good 70 to 80 per cent of our transactions will be done via alternative channels. So, it is about banks making the right investments and ensuring they have the right partnerships to support their online and digital aspirations.
The ‘new normal’ is here and it is a reality. It is about banks and customers seeking effective platforms that enable them perform their daily transactions without hindrances.
Some customers are more comfortable with mobile banking, whilst others are more comfortable with online banking or USSD. So there is a channel for every customer depending on the level of security they are comfortable with, as well as their skill and awareness of the adoption of technology. In my opinion, banks, especially Access Bank, are ready to provide alternative platforms for all customers to transact their daily business with ease.
Let’s talk about the concern among Eurobond holders on possible default by Nigerian Banks from coupon and principal payment. Is this a genuine concern and what can you say to the Eurobond investors?
While I cannot speak for the entire industry, I definitely can speak for Access Bank. As you are aware, we have been through several of these situations, and even in those instances, when we had Eurobond out in market, we met all coupon and principal obligations. To the best of my recollection, I do not believe that any Nigerian bank has failed to make good on their Eurobond payments. I believe that Nigerian banks working with the CBN and of course investors, will continue to find a way to ensure that capital investments as well as coupons and interests are remitted to the home countries of investors. You might also find that it is no different from what we saw in 2015 and 2016; these things correct themselves very quickly. I do not think this will be any different.
Let’s discuss Access Bank’s recent acquisition in Kenya and Zambia. Tell us what informed those moves?
As a Bank, we have been repeatedly bold enough to come out every five years to share with the market our plans for the next five years. In the course of these five years, which runs up to 2022, our ambition is to be the most respected African bank and to be Africa’s gateway to the world.
In our plans, we have divided the Access world into global financial centers, trade hubs and the rest of Africa. The global financial centers include London, Hong Kong, New York and Tokyo. We plan to be in several of these centers over the course of the next two to three years. For the trade hubs, which include Dubai, Mumbai, China and Lebanon, we will operate branches or representative offices. We will also maintain a strong presence in significant markets in the rest of Africa.
With these bold plans, we are connecting Africa to the rest of the world as well as ensuring that Africa connects with itself. In doing so, we must remain visible in several relevant markets within the African continent. Zambia and Kenya happen to be one of such markets. We currently exist in Zambia, have been for the last 10 years and are consolidating our franchise in that market. We have also acquired a bank operating in Kenya and we believe that, leveraging the entire Access Bank global network, we should be able to add significant value to the Kenyan market.
In East Africa, you cannot rule out Kenya because it is central to doing business in that region. Kenya, for us, is a key hub as we spread across East Africa. We currently operate in Rwanda, and also in Mozambique, and we aim to use Kenya as our hub in managing the entire network in that region. There are two or three other markets in Southern Africa that look interesting, but Zambia will be our anchor as we invest in the rest of the Southern African region. The bank’s thrust is that in every significant market we play, we seek to be a top 5 bank. If we are not going to do so, then there is no point being in that market. The consolidation of Access Bank in Zambia places us at about seventh in that market today and I think the rest will happen through organic growth as take advantage of the significant opportunities that exist in the market. We have kicked off operations in Mozambique and we just got a license in Guinea. There has been some delay due to COVID-19 but I think before the end of this quarter Guinea will also start operations as well.
We are expanding across Africa and doing so intelligently by ensuring that we are not putting our capital under significant pressure in markets that are relevant and that can help us connect Africa as we see it.
Tell us about your perspective on economic and banking outlook for the year?
It is all about staying afloat by not doing anything aggressively that will expose your institution to either liquidity or capital risk. Surviving and ensuring that 2020 is as good as last year will be a victory already. We have seen three or more sectors that are critical, and we are making significant investments in those sectors, infrastructure being one. We are working with several state governments as well as the Central Bank; wherever we see opportunities for infrastructure lending. We are also working with the Central Bank on the healthcare scheme to lend and support the growth of the Health sector.
We also see opportunities in SMEs, women banking, personal banking and of course agriculture. These are sectors that have significant opportunities and have not been vastly affected or dampened by COVID0-19.
Telecoms and Food and Beverages are some of the other sectors we are excited about and will continue to lend to support them. For several other sectors affected by COVID-19, we have had to realign and make payment extensions for those customers to carry them over this crisis period.
We don’t see a quick recovery; we are also not expecting to see a ‘V” shape recovery post-COVID. We think it is going to be a gradual ‘U’ shape recovery and it could take us up to the next 12 or 18 months to the early signs of a recovery. However, it is at times like this that banks need to stand by their customers, supporting them through the crisis and ensuring that their partnerships are sustained. So, for sectors like hospitality, airline, construction, real estate and some commodity trading, we continue to work with them in seeing them through the crisis that COVID-19 has brought to bear on their businesses.
We are positive, but cautiously so, and are hoping that the opening of the global markets will begin to sift through to the Nigerian market.