Lafferty Foresees Opportunities in Standalone Retail Banking

Michael Lafferty, founder, Lafferty Group, a financial advisory group based in London has said that Nigeria is on the verge of being the world’s best in retail banking.
He made this known to journalists at a briefing by conference call in Lagos.
Lafferty said there is need for Nigerian banks to give attention to retail banking as it provides financial services to households and small businesses; charging them not to make same mistakes as banks in the West whose profits were majorly from investment banking.
He noted that banks where successes in retail banking have been recorded include Citibank, the first global consumer bank; KKB in Germany, Banco Popular in Spain, Cetelem in France and Bradesco in Brazil.
The Lafferty chairman quoted Boston Consulting Group study as saying that, “In 2008, retail banking activities accounted for 55 percent of the revenues generated by the 140 banks on our database, up from 45 percent in 2006.”
He recalled that retail banking started from retailers providing credit for people to buy goods and banks “mobilizing” savings with government encouragement to lend to “productive industry. He added that the realization that people are “mini – companies” with same need to save, borrow and make payments coupled with growing disillusionment with corporate banking and the existence of informal  savings and loan institutions, all for retail banking.
Lafferty said the mistakes made by Nigerian banks include speculative/deal – making culture at the top, domination of boardroom by corporate/wholesale banks.
Other mistakes highlighted are that many Nigerian banks have no interest in consumer banking and that the greatest mistake of all was Universal Banking. 
“Universal banking constitutes barriers between retail/commercial banking as investment banking disappeared in the 1990s, investment bankers took control of the world’s retail banks and consumers were “used and abused” to serve the purposes of the investment banking divisions as mis-selling and predatory pricing became the other of the day.”
The future of retail banking is “a sacred responsibility which needs an ethical underpinning different from corporate banking and totally different from corporate banking and totally different from investment banking which should be all about knowing the customer,” Lafferty said, adding that it should be “all about relationships, should be profession just like law and medicine with a need for code of conduct.”
“The future of retail banking is the standalone Retail Bank as Nigeria leads the world.”
In addressing the challenge of banks mobilizing deposits without lending to them, he said, there should be investment in government securities and upload of deposits into the money market.
Also, Lafferty sees no reason Islamic Banking should not be thrive in Nigeria as it can be wholesale and retail but that it needs to be developed as it lacks good accounting standards.
The Group is to hold its Retail Finance Convention, tagged Lafferty Retail Finance Convention West Africa 2010 conference between 4 and 5 May at the Mandarin Oriental Hotel, Lagos. “Speakers from around the world, whose own markets share a great deal in common with Nigeria are to provide their expertise and knowledge on how best to achieve progress and success in the retail financial services market,” said Evelyn Hunter-Jordan, general manager of the Group.