E-Financial
Banks Halt Branch Expansion Plans over Tough Economy
Deposit Money Banks (DMBs) in the country are cutting down on plans to open more branches as part of cost cutting efforts to cope with the tough times, particularly in the industry and generally in the economy, according to New Telegraph.
According to sources in the industry, in a bid to drastically reduce costs, most lenders have decided to slow down on their branch expansion plans and, in some cases, have even completely frozen such plans.
A general manager with a tier one bank, who did not want to be named, confirmed this development.
He said: “I can tell you that the business environment is so tough now that unlike in the past when banks used to scramble to outdo each other in terms of who has the most number of branches, the focus today is all about reducing costs.
For instance, instead of the four new branches we planned to open in Lagos this year, we have reduced the number to two.
“It is quite expensive to open, equip, run and maintain a branch, so, banks are trying not to do that anymore unless they are very confident that such a branch will start to generate reasonable profit within a short period,” he stated.
Besides, he revealed the bank where he works was now concentrating on opening smaller, self service centres which, according to him, are far less expensive to set up than the conventional bank branches.
“That (self service centre) is the future of banking. I agree that given the level of development of our society, brick and mortar banking will remain prevalent for some time to come, but any bank that wants to survive the current hard times will have no choice but to cut down on its branch expansion,” he said.
It will be recalled that in addition to sacking over 3,000 staff since the beginning of the year, lenders such as First City Monument Bank Plc (FCMB) and Skye Bank Plc have also shut down unprofitable branches. Analysts attribute the development to the fact that both lenders did not grow organically but expanded via their respective mergers and acquisitions.
Significantly, the country’s biggest lender by assets, First Bank of Nigeria Limited, is also reported to be planning to shut down some of its over 800 branches nationwide as part of efforts to reduce cost.
Mr. Babatunde Lasaki, the lender’s head, Media and External Relations, Marketing & Corporate Communications, was reported a few weeks ago as saying that the bank was in the process of meeting regulatory requirements that would allow it to change the designation of some of the branches.
He disclosed that none of the affected branches would be totally shut down, as they would only be converted to cash centres and ebanking centres.
Similarly, FCMB announced last February that in a bid to cut costs, it had laid off staff, as well as shut down not less than 10 per cent of its branches nationwide.
According to Mr. Diran Olojo, the bank’s Group Head, Corporate Affairs, the lender has decided to shut any branch where it has two very close to each other, in the face of rising operational costs.
Even lenders like Standard Chartered Bank, which has only 42 branches in Nigeria, is also said to have concluded plans to embark on rationalisation of its branches.
Industry watchers point out that the branch rationalisation plans of the banks could pose a threat to the Central Bank of Nigeria (CBN)’s target of achieving 80 per cent financial inclusion in the country by 2020.
According to a report by Financial Research Institute, only 30 million Nigerians have bank accounts out of the 90 million sampled. This means that 60 million Nigerians don’t have bank accounts.
Julius Arhebun, the Head of Agency Banking a Nigeria’s leading payment service bank, MoneyMaster, has disclosed that the promotion of financial inclusion is one of the core mandates of the service.
He said this recently as the bank introduced a new 100MB data offer for every transaction made in the offer, which is available for Glo customers using the bank’s USSD banking code, *995#. The initiative is meant to incentivize the unbanked and underbanked population to ease the creation of their own mobile wallet via its USSD banking platform.
According to him, the offer builds on the various financial education “we have been providing online and across our various customer touchpoints”.
He added that “with this new 100MB offer, we want to encourage Nigerians in the unbanked and underbanked pools to be financially included by having at least a mobile wallet. The account number of this mobile wallet is derived from their mobile number, and can be easily recalled”.
MoneyMaster PSB is a leading provider of innovative digital financial products and services that transform lives and contribute to sustainable living.
The PSB has the mission to deepen financial inclusion and has been instrumental in providing financial technology services to bridge the gap between the banked, underbanked and unbanked population.
The payment service bank recently unveiled a 10 percent data bonus for existing and new customers who are on the Glo network for recharges of N1000 or more. The offer has been adjudged one of the best in the country based on the volume of data on offer to customers. The data purchases have a 30-day validity while unused data can be rolled over upon next plan subscription.
As part of President Bola Ahmed Tinubu’s state visit to France, the Chairman of UBA Group, Tony Elumelu in the presence of President Tinubu and the President of France, Emmanuel Macron, signed a landmark business cooperation agreement with the French Finance Minister, Antoine Armand.
The agreement is a significant indication of support by the French Government for the development of UBA’s full banking operations in France.
Speaking at the signing ceremony, Tony Elumelu, the Chairman of UBA Group commented: ”This partnership reinforces our commitment to seamless international banking services for our customers, not just across the 11 Francophone African countries we serve, but Africa as a whole; and French and European customers transacting with Africa.
Expanding into France is a natural progression, with Paris serving as our European Union hub, as we continue to bring Africa and the world together, through innovative financial solutions. Paris will join London, New York and Dubai, as a critical component of our unique global network.”
United Bank for Africa is one of the largest employers in the financial sector on the African continent, with 25,000 employees group wide and serving over 45 million customers globally.
Operating in twenty African countries and the United Kingdom, the United States of America, France and the United Arab Emirates, UBA provides retail, commercial and institutional banking services, leading financial inclusion and implementing cutting edge technology.
The National Pension Commission (PenCom) and the Pension Operators Association of Nigeria (PenOp) are taking steps to integrate workers who are not currently contributing to the Contributory Pension Scheme (CPS) into the Micro Pension Plan (MPP).
The initiative targets workers without any form of pension coverage, including those who have left previous employers under the CPS but wish to join the MPP.
The MPP is designed to allow self-employed individuals and those working in companies with fewer than three employees to contribute towards a pension for their retirement or in cases of incapacitation. Additionally, pension operators are developing incentives to make the MPP more appealing to potential contributors.
At the micro pension plan industry stakeholders’ engagement forum held in Lagos recently, organized by PenCom and PenOp, the Acting Director-General of PenCom, Omolola Oloworaran, highlighted the critical role of the MPP.
She said the event’s theme: “Reimagining Micro Pension Plan: Balancing Service, Policy, and Health” accurately captures the essence of the MPP as a transformative tool for improving the lives of Nigerians.
To maximise the impact of the MPP, PenCom is embarking on several initiatives like market segmentation, rebranding, advanced technology, incentives and others.
Oloworaran pointed out that with over 77.5 million workers in Nigeria’s informal sector, even a small increase in MPP participation could unlock billions of naira in savings, positively impacting individuals and the wider economy.
In his presentation on the “Overview of the Micro Pension Plan,” Babatunde Alayande, head of the micro pensions department at PenCom, emphasised the importance of providing incentives to make the MPP more attractive and accessible to its target market.
Okhueleigbe John, head of the micro pension unit at Stanbic IBTC Pension, stressed the need for tailored policies to promote the growth of the MPP. He also advocated more financial literacy, public-private partnerships, and innovative funding strategies to drive incentives for the scheme. Additionally, he called for a review of the pricing structure of micro pensions to make them more appealing to investors.
Dr. Shem Ouma of Kenya APSA also provided valuable insights, recommending that operators incorporate built-in benefits, ensure flexible payment systems for contributors, and leverage technology to drive the MPP forward.
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