As the Nigeria’s economy nosedives with dwindling foreign exchange earnings, resulting in a free-falling Naira value at the forex capital market, Nigerian banks would have to, additionally, grapple with regulatory reforms — implementation of TSA, zero COT, etc.
While these seek to stabilize the economy, they invariably affect significantly their key sources of revenue. In this situation only forward-looking banks can wither the storm through winning strategies to adjust to these unprecedented changes. One of Nigeria’s financial institutions — Unity Bank Plc – has evolved a strategic framework to respond to these changes. Indexing this framework is its planned relocation of its headquarters from Abuja to Lagos, the commercial hub of Nigeria, nay the West Africa sub region, aimed at increasing its competitive advantage.
With this move, Unity Bank, which has much of its origins rooted in Northern Nigeria, is poised to claim its rightful position in Nigeria’s financial marketplace, to effectively rub shoulders with its peers. It is quite clear that keeping the bank headquarters outside Lagos all these years, after the bank had been successfully transformed from a regional giant to a national behemoth, was more influenced by sentiments than business sense.
This is because, in terms of market penetration and outlets, Lagos is where is should have had its headquarters.
But all that has now changed for the better, with this bold and strategic decision.
Here’s some lesson that business, especially of the banking variety worth its name, shouldn’t be run on emotions but on hard realities of positive returns on investment.
A bank has three principal stakeholders’ interest to diligently and profitably serve — the shareholders; the customers and it staff. It needs to make profit to offset its liabilities and rewards its owners with handsome dividends. To achieve these, there is a need for strategic thinking, robust business and market policy and harnessing of both its comparative and competitive advantages. And, more importantly, there is need for understanding when the market trends and dynamics shift.
It is incontestable that Lagos has many advantages businesswise over all other states in the country. It was once the capital of the country, which accounts for its well developed critical infrastructure such as motorways, airport systems and seaports.
This has helped cluster manufacturing and trading activities which necessitated the silting of the headquarters of virtually all financial institutions, such as commercial banks, insurance companies, and a major component of the CBN as well as the Nigerian Stock Exchange (NSE), etc, in the metropolis, where availability of the required skills is guaranteed.
In effect, Lagos is where all the major decisions by the shakers and movers of the Nigerian economy are taken.
The net effect is that Lagos accounts for 35.6 percent of the country’s GDP.
And the state has an estimated population of over 21 million residents, which is an opportunity for the growth of the Unity Bank’s consumer banking SBU (Strategic Business Unit).
The most recent GDP computation at N12trillion (US$81billion) makes Lagos metropolitan area the 4th largest metropolitan economy in Africa. This makes Lagos the principal finance city for not just Nigeria but West, Central and East Africa. It is foolhardy for a bank to keep a distance from this theatre of money-making.
In this context, the decision to move the head office is timely and strategic. Moreover, it surely aligns with the Bank’s strategic business focus in retail banking.
As Lagos is the attraction for FDI in the country, the relocation will give the bank’s brand the visibility it needs to outperform its competitors. Such brand visibility will lead to increased recognition of the brand, which will in turn increase market opportunities in commercial, SME as well as consumer banking businesses. All these will aggregate to the bank’s achieving its objective of being a retail bank of choice in Nigeria’s banking industry.
The physical movement of the bank headquarters, although strategic for all the reasons advanced above, will not be enough to ensure rapid growth until further strategies are fashioned out to address challenges facing the retail banking business not only in Nigerian but globally. Key challenges include mobile technology, the social media revolution and adoption of what financial experts call new core banking platforms.
The rapid growth of smart phone usage –an estimated 20 million are now in use in Nigeria — has introduced a new dimension to financial transaction. Financial experts believe banks such as Unity Bank will require mobile strategies which go beyond just making online banking available on cell phone devices. At the same time the emerging social media explosion requires banks to monitor and take advantage of what is being said about them and take advantage of this fluid, yet potent, channel to build brand loyalists. Similarly, as customers demand real-time information and services, it is time to replace all aging non-integrative legacy banking systems both at the front and back offices.
The Bank’s new premises located at Plot 42, Ahmed Onibudo Street, Victoria Island (VI), is a well chosen location. Victoria Island is home to big businesses in the oil and gas, constructions, five star hotels, and expensive commercial real estate. Majority of the Nigerian banks have their head offices here. VI is the main residential area for the upper middle class elites and established expatriate communities who feel at home working and living here.
In a nutshell, reflecting the reputation of Lagos as the financial capital of the country means, all key financial institutions are physically present there. To stay out of Lagos is to lose being part of this mosaic of financial key players at best; at the worst, it risks engendering a public perception of a bank with limited scope, even though Unity Bank holds a license to operate as a national commercial bank. In other words, the bank was not taking full advantage of the privileges its license carries.
With this move, Unity Bank plc is poised to gain lost ground and give its competitors a run for their money.
- Ibrahim contributed this piece from Abuja
MUSA IBRAHIM
