Mrs Arinola Kola-Daisi sheds light on Retail banking in Skye Bank
The policies introduced by the Central Bank of Nigeria to increase financial stability over the past few years prompted significant changes in Nigeria’s banking sector. The industry had undergone a period of transformation as banks embarked on consolidation initiatives that involved recapitalization, mergers and acquisitions, policy reforms and other changes that saw Banks work towards strengthening their businesses. Banks in their nature devised very aggressive strategies in raising cash and improving on their businesses and the focus for some simply pointed at retail banking.
Skyebank Plc.’s GM Retail Banking Group, Mrs Arinola Kola-Daisi in this edition speaks about this sector that is often described as the ‘high-street face’ of banking.
WOS: Banks have refocused on retail banking to attract more customers and make more profit, is this the surest way to go?
AKD: The Retail Business is very important for all Banks because essentially what is in retail banking is provision of banking services to individuals and small businesses and any commercial bank must be interested in retail banking because that is really what you are set up for, you are there to meet the financial needs of the banking public and that cuts across a wide spectrum.
WOS: What threshold exactly qualifies an account as retail and how has the philosophy of “Expanding your world” distinguished Skyebank?
AKD: All individual accounts are classified as retail account whether individual current or individual savings they are all retail accounts but we have the SBG that is Small and Medium Scale Business Group and these are businesses doing about 350million Naira in turnover in a year and what we do is to extract these sorts of businesses to try and see what they need because for them to make that sort of turnover they have specific needs so I would say in “Expanding your World” which is our philosophy we are able to look at these different categories of businesses and provide them with tailor-made services by striking a balance between what they want and what they need.
WOS: How much of profit in percentage does retail banking contribute to skyebank?
AKD: In terms of profitability percentage-wise I may not want to go into details but suffice it to say that it is a significant proportion of our profitability because the strength of retail business is in numbers, when you look at different businesses in the bank, you may have some businesses in which the profitability is on few very large transactions but of course you need the numerical strength of people in different locations across the country all adding up to give you the profitability that you want.
If you look at yourself as an individual, almost everybody runs a bank account, a lot has been said about financial inclusion even now it’s not only the literate and educated that have bank accounts, even those in rural areas are being moved to have bank accounts and when all these come together from a million places you are bound to get the sort of profitability that you desire.
WOS: Let’s talk about Cash Reserve on Public Sector Funds
AKD: This issue is important for all the banks because essentially it reduces the amount that you have for lending. At Skyebank we operate well in strength in many areas, the Investment Banking area, the Retail Banking space and in the public sector because we maintain a strong relationship at federal and state levels in most states and this has an impact on us but the drive for retail has become even more important for us as it is for other banks and this drive is something that we have pursued in the last 5years. It was in 2008 that the retail banking business was extracted from the main business and given a specific focus because we decided that it shouldn’t be mixed with commercial banking and merchant banking so we took it out, gave it its own officers and group head so that we can keep that focus and it’s been like that for 5 years. It’s important to build a very strong base because that truly defines the strength in numbers.
The Retail Business is very important for all Banks because essentially what is in retail banking is provision of banking services to individuals and small businesses and any commercial bank must be interested in retail banking because that is really what you are set up for, you are there to meet the financial needs of the banking public and that cuts across a wide spectrum
WOS: Apart from these, what other avenues do banks have to raise cash and what are the risks attached to these?
AKD: Everyone knows that in Nigeria, the government is the biggest spender we all know that no bank will move away from banking the government but of course we have to begin to look at retail banking which is where you have large number of customers so instead of getting 500 million from one location you may need to look out for one thousand people from different locations to mobilize that volume of cash so retail business is important on an individual level. Another is the Small and Medium Scale businesses which is also very important, when you look at the number of Nigerians in the paid employment sector it is not a huge proportion, a hug number of people are self-employed and we are encouraging people to be entrepreneurial instead of waiting endlessly for jobs that may never materialize.
The SMEs are the engine growth of any economy and there are huge risks because businesses like these are owned majorly by one person, it’s either a man and wife or man and kids and decisions are taken by just one person majorly and there really is nothing wrong with that because conglomerates around the world that are making huge profits today started out like this, what is important is that structures must be put in place, relevant personnel must run the business and people must have financial discipline to separate themselves from the business financially so that when money comes in for the business it should not diverted for family use.
It’s a high risk business but if its managed well it can and will definitely grow just like the ones I have seen in the course of my career.
WOS: What strategies are in place to guard against losses like these?
AKD: Let me say that for individual businesses one thing that has risen in the past for individuals is the availability of consumer finance, where you can buy a car or household appliances once you have a regular job and your salary account resides with us and we give you a flexible payment plan. The idea is that we have made those things possible but we have restricted them to those who earn a salary as long as they are confirmed staff of their organizations.
For SMEs we say run your account for 3-6 months let’s see how it is run then we can give you a lease to buy equipment for your business and we spread it over a reasonable period. Let me state that we prefer to buy assets because of what I said about financial discipline so as financial institutions, once the basic controls are in place you find out that people want to grow their businesses. Another thing that has helped the risk in financing SMEs is the Credit Bureau because any loan above 1 million Naira is registered so Banks can do a check on you to be sure you are not owing one bank and seeking another loan from another bank.
WOS: Away from Retail Banking now, I have noticed that Skyebank is not inclined to Gender-based products, any reason for that?
AKD: Skyebank is one that wants to be relevant to customers in whatever phase of life they are in, there are products for Kids, Youths and those just starting out in life, there are customer products and investment products, we don’t really have any gender-based products and my reason for this is quite simple because if you are running a business it doesn’t matter whether you are a man or a woman the challenges are the same and personally I’m not a believer in Gender-based products because the things that you encounter as a business person in Nigeria are not gender specific.
For Children we have our Rainbow Savings account and we try to make it an account that’s interesting for children and the rewards have been largely things that are of interest to children. Skyebank also has a Youth account – the Campus plus Card for undergraduates of tertiary institutions, it’s a web-enabled card which enables them do online transactions.
WOS: How strong is Skyebank’s CSR drive to its host communities?
AKD: We do a lot of health and Education, we recently donated a Mammogram machine to an NGO called COPE they are into Breast Cancer Awareness and their activity in that area is huge. I am very proud that Skyebank did that and we also did something at the Accident and Emergency unit in LUTH. In Education we are proud to say that we were involved in a project with the Obafemi Awolowo University and an International Organization where we donated an ICT center.
Obafemi Awolowo University is an institution that has advanced technology and the campus is ICT compliant, it’s one of a kind with a 400 hundred-seater facility with personal computers where you can deliver a virtual lecture. We are proud of that because technology is the way of the future, there are a lot of bright minds and we need to develop these minds to make way for more centers of excellence for different things.
WOS: Thank you for your time
AKD: My pleasure