The Managing Director/Chief Executive Officer, Globus Bank Limited, Mr Elias Igbinakenzua, in this interview with NIKE POPOOLA and ‘FEMI ASU, speaks on the bank’s entry into the Nigerian banking industry and other vital issues
Globus Bank is one of the new entrants into the banking industry; entering at a time when the industry seems to be saturated. How do you really intend to cope with competition?
Globus Bank is just entering the market. Officially, we will open to the public on November 6, even though we have been doing business since the beginning of November. We are a bank of this generation; a bank of the fourth generation banking; a bank that is coming into being during the fourth revolution and we come with a promise, We have come with a lot of aspirations as a bank. We were licensed in July and we set out to prepare for operations and by the end of September, we were ready and went live on October 5. We thought we should just spend some time and dot the I’s and cross the T’s before we open to the public. Today, we are ready to open to the public and everything we need to do full commercial banking is available. We are already working on our branches and we had our board approve five branches to commence operations. We are working on them and four are almost ready. We have a plan to establish more branches next year. We should have about 20 next year.
Back to your question about how we will compete and the issue of market saturation. The market today is heavily concentrated, not saturated. We have six banks holding about 60 per cent of the industry assets and what that tells you is that the market is not charged enough and what you then see is that these banks are very comfortable and the danger in that is that it can dovetail to complacency, which will result in very poor customer experience and I-don’t-care attitude to service.
So, we thought there was a gap to fill. We thought our Nigerian banking public deserves a better experience and more attention. We thought that a bank that can put the customers first in their planning and processes would have an edge in the long run. It is not about today; it is about the future. The future is about how you make it today. And we are saying, ‘As a new bank that is well capitalised, that has no legacy issues, that can play digital as our age requires, we have a lot of leverage that we can ride on in the market. So, the time is now; the time is right. So, we are going to ride on efficiency as our winning edge. While the other banks have negative overheads they are carrying, we will run nimble and efficient and offer something better to the customer.
Financial technology firms are disrupting the banking sector through innovations. How does your bank intend to tackle this challenge?
For us, today, we are regional, but we have raised our capital to N30bn, which makes us to be national. So, we are going to ask the Central Bank of Nigeria before the end of the year to come and verify that and give us our new licence, which is national. From day one, we actually planned to be a national bank. As I am talking to you, we have raised N30bn and we are not stopping there. We intend to hit N50bn in the next 18 months from now. Our branch expansion plan today is spreading across the nation. We have about 20 branches the board will approve. As the CBN gives us the new licence, we will roll out to key centres. But like I said earlier, the main play today is digital. Digital is the game for retail.
The fintechs are not competitors; for us, they are collaborators. We will collaborate and do things that will enhance customer experience together. Our licence is a platform for all those who have value to latch on. We will invest a lot in technology and ensure that the customer gets that flexibility. We are going to actually ensure that we fast-track the CBN’s drive to minimise financial exclusion. So, we will enhance financial inclusion. We have today over 60 million Nigerians who are bankable that have no bank accounts. That is a huge market by any standard.
It is expensive to invest in technology, but we have no choice. Like they say, if you think education is costly, then try ignorance and see what you get. We are ready and we have the technology; we have the market reach and we have the experience to change the way things are done in the marketplace.
The Central Bank of Nigeria is trying to develop a cashless economy, but it recently introduced charges on cash transactions with banks above certain limits. Is this not a way to discourage cashless transactions and prevent people from depositing money in banks?
I actual would differ with you on that. I don’t think the CBN is asking for too much when they say you should pay a certain fee for cash deposit of a certain amount. We have been abroad. Do you carry cash to do business abroad? Why will I be doing business for instance and I will say I want to be paying in N1m cash every day. So, if you have N1m every day from your business, have a PoS. We want to have a paradigm shift. If you don’t force a shift, it will never happen. Why is there armed robbery – people breaking into houses? It is because they have cash. If they know when they go inside that house, they won’t find cash, they won’t go there. The CBN’s policy is to motivate action. We all need to change. The old ways have not been very productive. And it takes only a fool to think he can do the same thing over and over and expect a different kind of result. We have to do something that is different to expect a new result. The cash has not helped our economy over the years, and that is why you find a lot of corruption with people carrying cash to do what they are not supposed to do. I think the CBN is right to say, ‘Look, if you are doing cash today, try and look for a cashless means.’ And we are saying as banks, we can provide that means for you. The cost you are going to pay will be less; so let the banks do it for you.
You are suggesting that more businesses should use PoS terminals for receiving payment to reduce their cash transactions, but customers are being charged for paying through the PoS. What’s your view on this?
What they charge you compared to the cash inconveniences is little because the cost of that commodity does not come cheap. The bank is paying the provider. But ask yourself, “Am I better carrying cash and risking my life or moving light with the card and doing my business?’ That fee you are paying is nothing compared to the benefits you are getting.
The CBN recently issued licences to some Payment Service Banks. Are they not going to be a threat to the commercial banks?
My answer is simple and I will say no. Not as a threat but as collaborators – to offer to the customer a better value. They are Payment Service Banks. Payment is just one part of banking. What the PSBs are doing will still end up in the bank. So, banking remains banking. They are all collaborators; they have come to help the banking space to move from what it used to be to what the modern banking should be. I don’t see the PSBs as a threat at all or competing with banks. The PSBs won’t give the loans to individuals but they can facilitate payment and make it seamless. That is all; you can have an e-wallet, but if you have N1bn, will it be in a PSB? The answer is no. If you need to borrow today, will it be in a PSB? No. The banks are there to offer that realistic support. The PSB and the fintechs are collaborators in the process; so I think it is a wrong thing to say they are threats.
Which sectors of the economy will your bank really focus on?
We took time to analyse the sectors of the economy, and we confirmed the assertion that retail is the future. Retail may not give you results pretty quick but it is the future; so we are prioritising retail. That is why we said we would facilitate the CBN’s drive to enhance financial inclusion. We will leverage digital to penetrate the retail sector. We have our mission statement, which says we will deliver superior value to all stakeholders, leveraging technology and people in the most-efficient and responsible manner. We will penetrate the hinterlands that before now, people were not going to. And that is not to say that we won’t take low-hanging fruits from the other markets but our focus primarily is retail and retail digital play.
How are the lending institutions leveraging credit scores to manage loans they are giving out?
You know we have three credit bureaux in Nigeria and some are actually rating customers now and can give you history on customers’ credit that is helpful as well. And if you are doing retail loan you can easily access the credit bureaux to see customer history over the years. If they are defaulting on their loans, you will see it, I think there are measures to make it feasible and you can’t have bad loan and hide anymore. If you want to do business and be successful, you must be credible.