By Rafiq Raji, PhD
Adesola Adeduntan, CEO of one of sub-Saharan Africa’s oldest and largest private sector banking groups, reviews the dominant trends of the sector in Nigeria and the wider West African region and discusses the relationship between the banking industry and the increasing number of telcos which are providing alternative financial services. Interview by Rafiq Raji.
What are the notable banking industry trends in Nigeria and wider West African region you’ve observed over the past year?
Within the past year, banks across Nigeria and West Africa have made good progress towards being more customer-centric. There is a greater emphasis on putting the customers at the heart of business decisions and actions. Significant number of Nigerian and West African banks have been deliberate in accelerating the implementation of their digital transformation agenda. This trend is supporting the drive towards turning banks’ operations into more agile, strategically focused and technologically-driven organizations.
There is increased focus on leveraging artificial intelligence and robotics to drive improved customer experience as well as internal operational efficiency. Many of the banks are making strategic investments in data and analytics as data has been tagged ‘the new oil’. Overall, we have observed an increase in the deployment of digital banking platforms, artificial intelligence, robotics and analytics capabilities.
We have seen many banks setting up digital and innovation laboratories as a means of institutionalizing new ways of working and serving customers. As the industry and its ecosystems continue to evolve, Nigerian and West African banks are embracing innovation to achieve institutional agility. Banking industry players are also collaborating with key partners within the broader ecosystems to curate lifestyle banking solutions for various customer segments from wealth management to a bouquet of digital retail products that will improve financial inclusion. As these transformations continue to shape the way that banks transact, numerous trends will continue to emerge within the banking sector.
With respect to revenue generation and profitability, we have witnessed a significant drop in the rate of return on government securities in Nigeria and other West African economies over the last one year. For instance, we have seen Nigerian treasury bill rate drop from about 19% to below 13% over the last 12 months. In other West African economies such as Sierra Leone, Gambia, Ghana, etc, we have seen rates drop from over 20% to as low as single digital. This trend has made it imperative for Nigerian and West African banks to refocus their business strategies towards growing risk assets portfolio by funding quality wholesale transactions and aggressively driving consumer lending.
How do you see the banking industry evolving over the next year or so; in Nigeria, Ghana and broader West African region?
Over the next year, we envisage an upsurge in fully digitized bank operations that target digital customer segments with increased collaborations with FinTech. The overall outcome will be increased emphasis on innovative banking products from micro-lending on mobile platforms to enhanced retail banking offerings for the mass market leveraging social media platforms. Generally, the goal would be to ensure that the users of financial products can carry out self-service banking services across several platforms. Additionally, with improved use of analytics and customer relationship management tools; the industry will experience a shift from generic banking products to customized products that directly address specific customers’ needs.
For Nigerian, Ghanaian, and wider West African customers, I see a future where the industry players will reinvent traditional banking and the way services are offered to customers. A future where customers can acquire over 80 percent of banking products online, have access to automated credit, peer to peer lending, one stop shop for small and medium scale businesses and other banking product innovations driven by technology. I also see a future, in Nigerian and other West African banks, where there will be increased focus on deploying and leveraging omni-channel capabilities to improve overall customer experience.
Interview was first published in the first quarter 2019 issue of African Banker magazine