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Fintech Focuses More on Payments, Not Wealth Creation—Ecobank

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Patrick Akinwuntan Ecobank Nigeria

By Adedapo Adesanya

The Managing Director of Ecobank Nigeria Limited, Mr Patrick Akinwuntan, has challenged financial technology companies in the country to endeavour to create wealth for their customers.

The banker, while at the Fintech in Nigeria: State of Play, pointed out that the fintech industry was currently more active in payments than in wealth creation, which he said is the ultimate goal for financial inclusion.

He, therefore, called for greater collaboration among banks, telecommunication companies, fintech companies and respective regulators to stimulate the Nigerian economy and enhance savings and lending in the financial landscape.

According to Mr Akinwuntan, these will help to generate activities in the economy and expand wealth creation, stating that the Central Bank of Nigeria (CBN) has been proactive in providing a regulatory environment for the collaboration of players with an emphasis on customer protection which has improved customers’ trust in using digital channels.

Mr Akinwuntan who commended the role fintechs play in facilitating payment, said “there is need to deepen their presence in lending and savings. This is why I maintained that collaboration between Fintech and banks is valuable.

“We are not at the stage of competition yet; we are at a situation where although we have our profitability interests, we will actually gain much more by collaborating”.

He added that “in the area of savings and lending, be it to the agriculture sector, the creative sector or the young graduates setting out to be entrepreneurs directly, the ability to save even in little bits creates a profile that would be able to attract lending that you can translate into economic value.”

Specifically, the Ecobank Managing Director stated that the Fintech industry rose to the situation especially in the payment space and increase in lending and savings during the COVID-19 pandemic lockdown in the country.

He noted that “between March and April, the number of transactions in the payment space for Fintech grew in multiples of close to 800 per cent. We saw significant participation of the Fintech industry in actually reaching more of the underserved in the market by reducing the cost of access and making these services available all the time either by using traditional banks or in collaboration with government agencies.”

Further, Mr Akinwuntan explained that Ecobank had uninterrupted banking services for its customers through its digital platforms and agency banking during the lockdown.

“We had invested significantly in our digital platforms; given the nature of Ecobank as a pan African institution, the only way we could reach every household was to leverage the digital platform.

“We saw a marked growth in the number of digital-based transactions as our customers continued in their way of life depending on these platforms. And most importantly is the use of our social media to drive advocacy with the stay safe campaign where we educated the masses on safety guidelines. We were ready for the situation giving the nature of our franchise. And with our agency banking push, people do not need to go beyond their neighbourhood to do a transaction.”

Also speaking, Director, Payment System Management, CBN, Mr Musa Jimoh, said the apex bank’s regulation is driven by innovation.

“We have come up with regulations that will enable all the participants to behave symbiotically. Our payment system directive will be driven by innovation in the banks. We don’t know what will happen in the future in terms of technological development, therefore we follow innovations and prepare a ground for all the participants to work symbiotically. A new innovation is studied before we provide the needed intervention in terms of policy derivative that will help everybody to participate”.

He observed that the coronavirus pandemic-induced lockdown provided an opportunity for banks to sell digital products, test their back up and business continuity processes and explore the technological services available and push for their financial services, noting that CBN is backing up these areas with relevant regulations to ensure all the participants with the payment and financial service space can actually conduct their service responsibly.

On priorities in the regulatory space especially those championing Fintech, Mr Jimoh said the apex bank currently operates both sandbox and the open bank regulation.

“The sandbox provides a regulated environment for startups who don’t have the financial strength to take authorization from CBN to go through the entire process of licensing to test their innovation.

“We are working hard to showcase an environment where startups can come to the regulatory sandbox to test their innovation and services without having the license yet,” he added.

He said further that “open banking regulation is a principle that will allow third-party to leverage on the existing bank accounts with the banks to get information and provide services. More like democratizing financial services where a person chooses the service provider that will provide services and the kind of services provided. As a Fintech, you will be able to connect to banks to provide value-added services.”

Fintech in Nigeria: State of Play is an Economist Intelligence Unit Research which examines key trends in the fintech sector in Nigeria and assesses both industry drivers and impediments to further growth.

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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Banking

CIBN Tasks Ecobank Management Trainees on Integrity

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ecobank retail bank

By Aduragbemi Omiyale

The need to uphold integrity has been emphasised by the Registrar/CEO of the Chartered Institute of Bankers of Nigeria (CIBN), Mr ‘Seye Awojobi, to the graduands of Ecobank Nigeria Academy.

The Ecobank management trainees were also charged to imbibe the ethics of the banking profession because it is one of the things they will need to excel in the industry.

“You should really be grateful and count yourself lucky for this platform extended to you by Ecobank to make a life career.

“Know that a career is not an activity but a journey; a marathon, not sprint. Keep a tenacity of purpose; remain focused, be ready for challenges and enhance your skills and knowledge to excel in this profession,” Mr Awojobi said at the virtual graduation of the Ecobank Management Development Programme (EMDP) Batch 3 trainees in Lagos.

He commended Ecobank Nigeria’s various initiatives targeted at building the capacity of its workforce, noting that over the years, the bank has accorded priority to various learning and development initiatives which expose staff to new career development within the banking industry.

“Such competency improvement is important for the banking sector; it aligns with the current dynamics of the industry and global best practice,” he added.

In his remarks, the Managing Director of Ecobank Nigeria, Mr Patrick Akinwuntan, reiterated that the bank’s deliberate policy to train and equip its workforce was in line with its transformation drive to make the financial institution the most preferred in the country.

He admonished the graduands to remain ethical and diligent in the delivery of the vision of the bank to become the most preferred financial services payments brand in Nigeria to support the economic development of households and growth of trade, manufacturing and commerce in Nigeria and Africa.

“My advice to you is to imbibe the values of this great institution. Live the values of Respect, Accountability, Customer Centricity, Integrity, Excellence and Team work as encapsulated in RACEIT.

“Be courageous, rise above fears and do what is right at all times. Be ready to learn and unlearn to reach your envisaged destination.

“To make a difference as a banker, you must have willingness to adapt and take ownership of yourself. Keep your bonding and use it positively not only professionally but in your personal life and be a good Ecobanker at all times,” he stated.

Also speaking, the Group Executive, Human Resources, Yves Mayilamene, represented by Group Head, Talent Learning and Organisational Development, Simon Rey, advised the graduands to always strive for excellence in their respective roles.

While assuring them of the bank’s support to grow in their career, he tasked them on sustainable results.

Welcoming the graduands to the bank, Head, Human Resources, Ecobank Nigeria, Kunle Adewuyi, emphasised that Ecobank is a performance-based organisation, urging them to focus on their job and be result oriented.

“I want all of you to look at the future and decide where you will be in the next five years or so in this great institution. I see future managing directors, Treasurers and others among you. But you have to decide that from today. You must imbibe the culture of the bank and I can assure you that the future is bright,” he added.

The EMDP batch 3 comprises 16 graduates who were trained at the Ecobank Nigeria Academy for 21 months. The EMDP programs develop officers and young graduates to become experts in the financial industry and model citizens of the country.

As of December 2020, 55 graduate trainees and 70 management trainees respectively have been placed in strategic roles across the bank.

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Banking

DLM Capital Acquires Microfinance Bank for Expansion

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DLM Capital

By Dipo Olowookere

The desire to enhance its growth trajectory in the financial services sector has pushed a leading developmental investment bank, DLM Capital Group, to acquire a microfinance bank in Nigeria.

DLM Capital prides itself as a foremost developmental investment bank in Africa and functions as a sole arranger to more than 80 per cent of structured finance transactions in Nigeria with 100 per cent of all securitisation transactions in the market currently.

But in order to maintain its leadership position in the space, it has acquired Links Microfinance Bank Limited, which has its corporate head office in Yaba, Lagos.

A statement made available to Business Post explained that the deal will give DLM Capital the mandate to operate small scale banking services in Nigeria.

This will also allow the successive launch of its star digital lending brand, Sofri, in the second quarter of this year, it added.

According to the lender, the acquisition, combined with its many fintech efforts already underway, will position them to deliver even more value for corporates and consumers.

“We are particularly excited about our acquisition of Links MFB and how it enhances the growth trajectory of our business.

“This highly strategic acquisition represents another significant milestone for us on our journey as a resilient and well-capitalized financial institution with advanced scale and capacity to deliver sustainable and best-in-class financial services within the Nigerian market.

“We are confident that this decade will be bullish for Nigeria’s tech space and are ready to work with the fintech community in strengthening the solutions necessary to meet consumer needs,” the Corporate Communications Manager at DLM Capital, Chinwendu Ohakpougwu, stated.

It is believed that the acquisition of Links Microfinance Bank by DLM Capital represents both an entry into new businesses and complementary enhancements to the institution’s existing subsidiaries.

First, this prospect opens new market opportunities for the bank on the African continent.

Second, the transaction will enable the institution to exit its ‘legacy bank’ visibility and work more closely with the fintech community to build a ‘challenger bank’ brand that proffers innovative technological solutions for the Nigerian market.

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Banking

Consolidation to Reduce Microfinance Banks in Nigeria by 44%—Agusto

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Microfinance Banks

By Modupe Gbadeyanka

There are strong indications that the number of microfinance banks in Nigeria will reduce by 44.4 per cent by the time the recapitalisation exercise of the sector by the Central Bank of Nigeria (CBN) is concluded in April 2022.

This information was contained in a report on the Microfinance Industry in Nigeria released by a foremost research and credit rating agency in the country, Agusto & Co.

A summary of the report made available to Business Post revealed that the over 900 microfinance banks operating in the country may be pruned to around 500 through consolidation activities as well as failures to meet the new requirements.

The apex regulatory agency in the nation’s bank sector, the CBN, is embarking on a two-phased increase in the minimum capital requirements for all categories of microfinance banks to take effect in April 2021 and April 2022.

As a result of this, the number of operators is expected to reduce and Agusto expects the microfinance industry to fare better in 2021 supported by the global roll-out of COVID-19 vaccines, accelerated digital transformation of microfinance banks and businesses in general, a renewed focus on essential sectors and government support for MSME businesses.

“The industry, however, continues to have a high level of susceptibility to macroeconomic challenges as was witnessed in 2020,” the agency said in its outlook for the year.

In the report, the credit rating agency paid attention to the impact of the COVID-19 pandemic on the sector and non-performing loans (NPLs), an assessment of the new capitalisation requirements for microfinance banks, analysis of the financial performance of microfinance banks and a detailed assessment of the major impediments to growth in the industry.

The pandemic and the technology gaps

Many microfinance banks in Nigeria, like in most developing countries with relatively low penetration of e-channels, witnessed a doubling of obligations that were past due for up to 30 days (PAR 30) during the first wave of the pandemic and lockdown restrictions in early 2020.

Despite up to N5 billion spent by the major national and state microfinance banks in Nigeria on the implementation of internet, mobile and USSD banking services, the industry remains heavily reliant on brick-and-mortar branches for the acquisition of customers and disbursement of loans and the collection of notes and coins for repayment. Given the low technological literacy in the country, collections from Micro, Small and Medium-Scale Enterprises (MSMEs) ground to a halt during the six-week lockdown, even in sectors categorised as essential and in regions not otherwise facing restrictions.

The economic environment also did not lend itself to loan disbursements given the sharp decline in business activities while many microfinance banks were caught off guard by the pandemic with few having the infrastructure in place to lend to MSMEs digitally, the report stated.

Microfinance banks rising NPLs

Agusto said the doubling of non-performing loans witnessed by the Nigerian microfinance industry in 2020 was exceptional in the light of the pandemic, thus many operators had to provide some forbearance and also restructure loans for clients with difficulty repaying as restrictions were gradually lifted.

One of the primary strategies adopted by operators in the sector to drive recoveries in 2020 was to promise customers who met all outstanding obligations access to new loans.

Subsequent to the six-week lockdown, many microfinance banks shifted focus to providers of essential goods and services and also existing customers to drive disbursements. The growth in the industry’s loan book was, however, depressed with the portfolio remaining flat as operators adopted a more cautious approach given the heightened credit risk of MSMEs in key sectors such as education, supply of non-essential goods and services, transportation and hospitality.

Agusto expects to see improvements in the microfinance industry in 2021 as the global and domestic economies rebound and operators adjust to the new realities with a 5 per cent growth in the loan book and a 400-basis point drop in the non-performing loan ratio from an average of 12.6 per cent for major operators.

The pandemic has raised the stakes for payment infrastructure

Microfinance banks in Nigeria have been given a loud wake-up call by the COVID-19 pandemic to accelerate investment in digital channels for loan disbursement and collection.

Many operators have since developed web portals for loan applications and are actively exploring the use of payment services such as Remita, Paystack and ultimately mobile money for collections.

The efficacy of such channels in Nigeria may, however, be limited by the low digital literacy of the unbanked, underbanked and low-income target market of the Microfinance Industry. Having a strong physical presence in various geographical locations remains the major driver of success in the microfinance industry in Nigeria.

The largest microfinance banks have branches spread across the country and are easily identifiable to the target market of low-income earners and MSMEs operating in the surrounding area.

Agusto said it believes the future success of digital channels in the microfinance space (critically for collections and consequently disbursements) will be strongly dependent on the adoption of digital payments by low-income earners and MSMEs in everyday purchase and sales transactions. On the contrary, if the underlying economic activities continue to be executed in notes and coins, then the fundamental challenge of converting collections to a digital transaction would remain.

Notwithstanding, the licensing of three payment service banks (PSB) – Hope PSB Limited, 9 PSB Limited and Moneymaster PSB Limited – may offer a possible solution in the mould of Safaricom’s popular M-Pesa platform in Kenya.

Users of the M-Pesa platform in Kenya and other East African countries are able to pay digitally from and to a mobile telephone number for groceries at a market stall, for public transport or for the services of an artisan, for example. This “mobile money” can be used to settle loan obligations using the same platform, thus facilitating digital collections.

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Cyber Crimes: CBN Fortifies Banking Sector Security Framework

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CBN IMTOs

By Modupe Gbadeyanka

The Central Bank of Nigeria (CBN) has said it was strengthening the security framework of financial institutions to prevent the proliferation of cyber crimes.

The Deputy Governor in charge of Financial Systems Stability at the CBN, Mrs Aishah Ahmad, made this disclosure at a recent webinar themed Cyber threat Landscape: Financial services, 2021 and beyond.

At the event organised by the Information Security Society of Africa, Nigeria (ISSAN), Mrs Ahmad, who was represented by the Director of Information Technology (IT) at CBN, Mrs Rakiya Mohammed, stated that the conversation around cyber threat could not be more important than now.

“The financial sector is particularly susceptible to cybercrime, given its crucial roles in financial intermediation in a highly connected financial system.

“CBN is committed to strengthening its regulatory and supervisory framework for cyber risk and vulnerability testing for the banking sector,” she said.

Also speaking at the event, a US-based cybersecurity expert, Dr Austen Ohwobote, advised that as the pace of digital disruption accelerates and innovative new technology reach the market, organisations should put measures in place to check cyber-crimes.

He listed the different cyber-attacks such as web-based attack, third party attack, insider threats attacks, and advised organisations to put resilient structures in place in order to understand the nature of attacks and when attacks are about to happen.

Mr Ohwobote submitted that for financial institutions to adequately check cyber-crimes, they must adapt and implement cybersecurity as a guide, recognise cybersecurity as a big issue, appoint cybersecurity ambassadors, raise customer awareness, emphasize strong password and Multi-Factor Authorization (MFA), adding that cybersecurity expert should be a member of decision making and re-emphasize third-party vendor management.

In his presentation, the Managing Director of Ecobank Nigeria, Mr Patrick Akinwuntan, noted that Artificial Intelligence (AI) can be deployed to predict security threats and proffer solutions.

He described AI as a game-changer, stressing that the manual and semi-automated techniques of monitoring and responding to systems issues of the past were grossly inadequate to take care of the risk of the future.

“Technology has evolved and has changed the way we operate. COVID-19 only further accelerated the adoption of technology. Artificial intelligence, automation, internet have all created opportunities for business to unlock more values, but cyber threats have also increased both in complexity and volume,” Mr Akinwuntan said.

He added that, “The new normal of working from home has further exposed institutions to cyber-attacks and data breaches. Endpoints for remote access must be secured or else institutions are exposed to attack by a mismanaged endpoint. There is also the aspect of insider threat and exposure of password.”

Further, the banking executive identified other threats faced by financial institutions and organisations across the world to include cloud security threats and supply chain attack, stressing that a breach on one vendor could have ripple effects on the organizations.

In his submission, the president of ISSAN, Mr David Isiavwe, called on financial service providers and other organisations that handle large data of customers, to consider putting the right measures in place in order to safeguard their operations. He stated that the advocacy group will continue to create cybersecurity awareness and data handling.

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Banking

Wigwe Lauds Effectiveness of Access Bank 5-Year Strategy

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herbert wigwe Access Bank

By Dipo Olowookere

The group managing director of Access Bank Plc, Mr Herbert Wigwe, has disclosed that the 5-year business strategy deployed by the management has continued to show effectiveness.

Mr Wigwe said this in reaction to the strong performance of the financial institution last year despite a challenging economic and regulatory landscape caused by the COVID-19 pandemic.

Access Bank 2020 performance

In the year, the lender improved its gross earnings by 15 per cent to N764.7 billion from N666.8 billion achieved in the comparative period of 2019.

This was driven by significant improvement in the retail banking arm of the business.

In 2019, the financial institution merged with the defunct Diamond Bank, one of the leaders in the retail end. The transaction was entered into to make Access Bank one of the forces to reckon with in the segment and last year, the dividend of this deal was visible for the blind to see.

Business Post reports that the retail arm of the business recorded revenue of N177.2 billion in 2020, 64.4 per cent higher than the N107.8 billion achieved in the 2019 fiscal year.

This was buoyed by a 5.8 million growth in customer sign-on during the year, especially through the bank’s financial inclusion efforts.

As a result, the bank’s customer deposits grew by 31 per cent to N5.6 trillion with savings account deposits standing at N1.3 trillion.

Similarly, net loans and advances grew by 18 per cent to N3.6 trillion in comparison to its FY 2019 figures of N3.1 trillion.

At the close of business on December 31, 2020, Access Bank had a profit before tax of N125.9 billion, higher than N111.9 billion in 2019, while the profit after tax closed at N106.0 billion versus N94.1 billion a year earlier.

Dividend payout increased

To reward its shareholders, Access Bank Plc increased its final dividend payout for the year 2020 by 37.5 per cent or 15 kobo to 55 kobo from 40 kobo.

In the financial statements for the year ended December 31, 2020, the lender said it intends to pay a final dividend of 55 kobo on Friday, April 30, 2021, to shareholders whose names appear on the register of members as at the close of business on Thursday, April 15, 2021.

CEO speaks

Access Bank’s resilient performance “is testament to the effectiveness of our strategy and capacity to generate sustainable revenue,” Mr Wigwe was quoted as saying in a statement made available to Business Post.

According to him, “The strategic actions that the bank has taken over the past 12 months evidence a strong focus on retail banking and financial inclusion, an African expansion strategy and a drive for scale for sustainable value creation.”

The respected banker noted that, “In 2020, Access Bank proudly opened its doors for business in Kenya and Mozambique, further increasing our footprints across the African Continent.”

“Access Bank Zambia also concluded the acquisition of Cavmont Bank Limited in January 2021 and the group recently announced the approval by relevant regulatory authorities for the acquisition of Grobank Limited, creating an inroad into the South African market in the realization of the group’s strategic ambitions,” he added.

Mr Wigwe stated that, “In view of the opportunities that exist in the market, we will be transitioning to a HoldCo structure.”

Already, an approval-in-principle has been received by Access Bank from the Central Bank of Nigeria (CBN) for the restructuring and the new entity will consist of four subsidiaries in order to tap into the market opportunities that are available in the consumer lending market, electronic payments industry and retail insurance market.

“Going into the fourth year of our 5-year cyclical strategy, our focus remains on consolidating our retail momentum and expanding our African footprint in a sustainable manner,” Mr Wigwe said.

As the bank intensified its recovery efforts, it undertook significant write-off and leveraged its robust risk management practices. As a result, its asset quality improved to 4.3 per cent compared to its 2019 report of 5.8 per cent and this is expected to continue to trend downwards as it strives to surpass the standard it had built in the industry prior to the merger with Diamond Bank.

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Banking

FCMB Records 73,385 Excess Charges, Dispense Error Complaints

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By Dipo Olowookere

In 2020, one of the mid-level financial institutions in Nigeria, First City Monument Bank (FCMB), witnessed a surge in the number of complaints it received from its customers.

The analysis of a document released by the lender by Business Post showed that some of the outstanding complaints were from failed bill payments, dispensing errors on other bank terminals, excess charges, amongst others.

Last year, many organisations, including banks, were forced to operate remotely and this made many residents of the country to carry out financial transactions with the use of technology, especially mobile phones.

The use of phones to complete transactions meant that customers would be charged, while the Automated Teller Machines (ATMs) became more active because banks limited their operations at the banking halls.

It was not a surprise that banks, including FCMB, witnessed such an increase in the period under review.

In the 2019 accounting year, the number of complaints FCMB received from its customers stood at 33,705, indicating an increase by 39,680 or 117.7 per cent.

However, a critical look at the document showed that FCMB put in place an effective and responsive complaints management process.

With 1,473 unresolved complaints from the previous year added to the year under consideration, which brought the total at 74,858, the lender resolved 72,984, with seven of the unresolved in the year escalated to the Central Bank of Nigeria (CBN) for intervention, while 1,867 complaints were pending as at December 31, 2020.

Business Post observed that the value of the complaints received last year by FCMB stood at N1.6 billion, lower than N6.6 billion in 2019, while the amount refunded was N25.6 million, lower than N40.7 million in the preceding year.

Meanwhile, the management of FCMB has advised customers with complaints to lodge them with the Complaints Officer at complaints@fcmb.com for necessary action.

In the year under review, FCMB said its gross earnings increased to N199.4 billion from N181.3 billion and the various cost-effective strategies put in place by the team ensured that the profit before tax grows to N21.9 billion from N20.1 billion in 2019, while the net profit stood at N19.6 billion compared with the previous year’s N17.3 billion.

This enabled the board to increase the dividend payout for the 2020 financial year to 15 kobo in contrast to the 14 kobo paid in the preceding year.

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