After one year of operation, Ifie Sekibo, managing director/CEO, Heritage Bank, in this interview with Hope Moses-Ashike recounts the successes, challenges and the way forward for the bank. Excerpts:
Impact of Heritage Bank on the banking industry within one year
The greatest impact of Heritage Bank on the Nigeria banking landscape, modestly I will say, is our contribution to the consciousness of channels for distribution of financial services beyond the brick and mortal. It made other banks to see the importance and the need to continually improve on their distribution. Every one of us, all the banks, suddenly had to rethink their strategy.
Because the question was simple, what was Heritage Bank coming to do, if they are not going to have 300 branches that everybody was running for, 1000, highest number of branches, how can they survive. And it dawned on everybody that the only way Heritage Bank could survive is to drive channels basically on the e-banking platform. And off course, they had bigger pockets, so they quickly jumped on it. But, honestly, that has being our modest contribution.
The second impact, I will take, is the restoration of confidence in the financial sector, that people see a bank go down after about 10 years and still have their money come back to them. This gives them hope that Savannah Bank will also come back. That hope it (Heritage Bank) gives to people, that confidence it engenders in people is very important for financial service delivery and continuous sustainable banking services.
How has the bank coped with competition?
I have had to say this over and over again. I have not focused on competition, rather we have focused on the little things we can be able to do, and let competition bother on what we are doing. Like we came out boldly and say we would be looking at SMEs, we want to grow SMEs of our own, we want to empower that sector, and off course the whole market reacted to it. We said we want to deal with channels, the whole market reacted to it.
So the truth is, we have remained focused on the things we can do well and let competition bother about what we are doing. Again, we say we are going to look at different point of presence, that we are going to roll out Automated Banking Centres (ABCs), again the market jumped at it and started looking at how to roll out ABCs, and now some banks are planning to roll out their ABCs, because it is the best way, the cheapest and easiest way to get financial services to the unbanked.
Progress of the bank in terms of branch network?
Yes, we started out at one branch, then we went to six, and now at 10, hopefully we would end this year with about 33 branches. That is our organic growth pattern. We believe that for us to achieve our three to five-year plan, we should have about 150 branches, which will effectively serve our strategy of hub and delivery of financial services. We have a hub, and just around it, you have ABCs that allow you to use your ATMs, allow you to open your account, allow you to do your transfers, allow you to do all kinds of financial services, on those ABCs.
What have you done in terms of e-payment platform?
Modestly, we did invest a lot in IT, and like I said, that is one of the strategies we brought to the platform, that what you are thinking about, it is not just a thought thing. It must be the way of life. For us, our e-payment platform is the way of life. It is the only way we have been able to stay in the industry and in the market in the face of all the competition. That we are participating in every activity that every bank could undertake have been because of the robustness of our e-payment platform. It is very robust and we intend to improve on it.
What is your experience with SMEs?
Our experience with SMEs is that they are a group of people that are well driven in terms of ideas, in terms of how to turn their ideas into product services, wealth creating opportunities. But there are certain ingredients that are lacking. One, because of the way we are traditionally structured, that one man must own everything, and so rather than work in partnerships and in teams, people like to go it alone. That makes them very un-bankable, that makes them high risks, and it makes them easily default when they are looking for funds. In fact, they are unable to access capital to fund their projects. What we then did to overcome that challenge is to create what we call a SME Clinic. What does that do for them? It makes them know that there is a lot of value in partnership, there is a lot of value in knowing what your business requires to survive and what you require to survive.
Impact of monetary tightening on the bank and the response
I will say it is the way it is. The impact has been very severe on us as a bank. We have had to struggle most times to deal with it. Given what we inherited from our predecessor organisation, they were very heavy in public sector. So, the residue of what we took was largely public sector. But we also know that it was not sustainable to go in that direction. So, we went out seriously to do the SMEs. You see, when you are on space of SME, you are not worried much about CRR. But that does not mean we did not feel the impact, all of us felt the impact. It is a major drain to our liquidity. That is on one side. As a national economic goal of curbing inflation, of defending the naira, of dealing with exchange rate issues, what was happening was also not sustainable. Where we take public sector funds and go and buy treasury bills, and borrow the same money to the government who gave the money to us. That business model is also not sustainable for the country. Should it be a CRR of 75 percent, 100 percent of 25 percent, it is neither here nor there.
Involvement of the bank in the real sector and power sector
Yes, we have been involved in the funding of the distribution companies. We are also involved in the funding of the IPP projects, which also are been put out in Lagos and outside Lagos, and we would keep on being part of that process because it is a growth area, including telecommunication. We have always been part of the oil and gas sector providing funding for logistics and supplies. We have also been in that, and it is also important and that is key. We have also been part of one or two projects that have to do with infrastructure that are being put in place. Yes, we would continue to do that. That is what our job is as a bank; to be the intervention, to be the support to such projects that will make economic meaning to the generality of the people. We are mediators; we collect deposits and lend it to those who have the need for the money. All we have to do is to secure the money, to ensure that what we take from the depositors are not lost by putting up all the necessary risks and control to make it possible that we don’t waste it.
How successful have you been with depositors of Societe Generale Bank of Nigeria?
That is one success story that I am not sure we have told very well. Before we started, we, regulators, everyone expected a major run. And we did and planned for that run, but we are shocked that with a combination of regulatory support, our ability to talk to the clients that we are stable, we have capital, they just did not see the need to come and rush away with their money. They worked with us and they truly worked with us, giving us the support to safeguard their money and today most of them are better off for it.
The few that came to take their money returned them in one form or the other. So, in deed it is a success story.
