E-Financial
Report Predicts New Rounds of Banking Sector Consolidation
A report by McKinsey and Company has stated that digitalisation will enable Nigerian banks to achieve between 25 and 40 per cent cost-reduction.
The report also urged banks to plan for another round of consolidation in order to thrive beyond the crisis by growing their capital base faster than the rates of inflation and devaluation of the naira.
It emphasised that another round of consolidation was inevitable given the need to meet Basel III requirements, manage the possible deterioration of asset quality and some foreign exchange-based commitments to service.
It also called for portfolio restructuring, warning that the Nigerian economy could not afford another portfolio crisis, which is likely to occur.
The report titled, “Nigeria’s banking sector: Thriving in the Face of Crisis and Bold Ideas to Help the Industry Build Resilience and Drive Long-term Sustainability,” also urged the Nigerian banking industry to boldly utilise the lessons it learnt from the COVID-19 pandemic disease interruption to drive sustainability in the industry.
It argued that bold thought and actions were required beyond the crisis, even as it enjoined banks to continue with their adjustment to a remote operating model, revisiting portfolio priorities and some valuable lessons in order to adapt to the “next normal.”
It also recommended four bold initiatives that would enable the lessons of the past few months to drive sustainability in the banking industry beyond the COVID-19 crisis.
The four dimensions, according to the report, are scale, efficiency and productivity, data and analytics as well as talent hunt.
It stated that scale could be achieved either by targeting specific market segment or geography to bring down marginal costs.
“In Nigeria, significant opportunities remain for banks to develop scale across segments–for example by targeting small and medium-size enterprises (SMEs), which have significant unmet needs in the banking sector–or by targeting geographies such as the north of the country, which has been historically underserved,” the report said.
The report also said that efficiency and productivity could be attained by transforming operating models to serve customers as they would want to be served.
“The McKinsey Financial Insight Pulse survey conducted in October 2020 found that most consumers expect to increase their use of digital and mobile banking services even after the crisis, with 53 percent of consumers wanting their banks to make it easy to get a line of credit and 36 percent desiring improved bank websites to facilitate online transactions.
“In Nigeria, we’ve also seen a surge in agent-banking transactions during the crisis, opening up new possibilities for delivering services to more people at lower costs. However, these shifts may reverse unless steps are taken to hardwire new behaviors and attitudes. Now is an opportune moment for banks to revisit and interrogate matters of efficiency and productivity in a disciplined manner.
“Actions taken out of necessity during the lockdown such as online training, virtual performance management sessions, remote working for certain jobs, and adjusted operating hours for branches could be refined for implementation on a permanent basis,” the report said.
The McKinsey stated that rethinking end-to-end digital options for card subscription and renewal, PIN reset, and electronic channel issue resolution, to name a few, could unlock new growth, adding that sales and lending processes, which have been heavily reliant on physical interaction, could be reviewed to identify automation potential, especially for SMEs.
“Ultimately, reimagining these processes in line with consumer requirements will lead to a redefinition of the role (and size) of the branch network and required coverage model,” it said.
The report also advocated for improved data and analytics by leveraging technology for commercial risk and operational effectiveness because rapid shifts in consumer behavior that is driven primarily by physical distancing have led consumers to embrace digital options at a scale and pace not seen before in the country.
“This, in turn, is clearing the way for banks to ramp up their use of data and analytics to enhance services and reduce costs. Previous McKinsey research has demonstrated that data and analytics can potentially increase a bank’s cost advantage by 10 percent and improve cost-to-income ratios by up to 15 percent, even in a recession,” the report said.
It suggested risk and sales as two immediate areas that could be explored and realised through digital marketing by developing new risk models that are powered by artificial intelligence and machine learning that improve accuracy and efficiency and leverage real-time transaction data to understand market and customer dynamics.
It, however, advised banks to find the best talents that could support their shift to digital operations as “the crisis has prompted dramatic shifts in working behavior–notably working from home models– that are opening up new avenues for banks to attract and retain the skills they need to support their shift to digital.”
The report said that banks could attract talents by improving on their employee value proposition, which is often perceived to be less attractive than those of technology companies that are competing for the same talent.
It also advised banks to develop capabilities for identifying and funding viable businesses within the intervention fund category; restructuring their funding base to reflect the realities of the current CRR impact and “use this opportunity to educate the frontline on the implications of CRR and the effective cost of every deposit.”
Africa’s Global Bank, United Bank for Africa (UBA) Plc, has cemented its position as a leading customer-centric institution, emerging among the Top 5 banks, in various survey’s segmentation, in the recently released KPMG 2024 West Africa Banking Industry Customer Experience Survey.
The survey showed that the bank earned an impressive second place in SME Banking as well as a third place in Retail Banking, marking a significant leap in rankings that highlights UBA’s transformation under its Customer First (C1st) philosophy.
Africa’s Global Bank, United Bank for Africa (UBA) Plc, has cemented its position as a leading customer-centric institution, emerging among the Top 5 banks, in various survey’s segmentation, in the recently released KPMG 2024 West Africa Banking Industry Customer Experience Survey.
The survey showed that the bank earned an impressive second place in SME Banking as well as a third place in Retail Banking, marking a significant leap in rankings that highlights UBA’s transformation under its Customer First (C1st) philosophy.
The survey results showcase UBA’s remarkable transformation in customer experience over the past year. For instance, in Retail Banking, the bank rose to third place up from the14th place recorded in 2023, while in SME Banking, it jumped to second position up from 6th place last year.
The bank also made notable progress in Corporate Banking, climbing to fourth place from 8th in 2023. These milestones underscore the bank’s ability to consistently exceed customer expectations and deliver unmatched service across all its business segments.
Speaking on the achievement, UBA’s Group Managing Director/CEO, Oliver Alawuba, said: “This recognition is a testament to our ability to turn aspirations into achievements and challenges into victories. At the heart of this success lies our unwavering commitment to the Customer First (C1st) philosophy. It is not just a slogan but the essence of who we are. Through C1st, we’ve redefined customer satisfaction, delivered value, and earned the trust and loyalty of our clients.”
Alawuba who credited UBA’s success to the dedication of its employees, said, “From retail branches to corporate offices, from technology teams to front-line staff, every effort contributed to this extraordinary transformation. I extend my heartfelt gratitude to our exceptional team for making this possible.”
According to the GMD, UBA has for several years, placed its customers at the centre of its operations, guided by its six pillars of Customer Experience: including Integrity- Building trust through honesty; Resolution- Promptly addressing customer concerns; Expectations-Anticipating and exceeding customer needs; Time and Effort- Simplifying processes to save time; Empathy- Demonstrating genuine care and understanding as well as Personalisation- Delivering tailored solutions.
He added that these principles have reshaped how UBA connects with its customers, fostering trust and deepening loyalty across its diverse markets.
While celebrating this milestone, the GMD disclosed that UBA remains committed to becoming the undisputed number one across all segments, adding that the bank aims to achieve this through deepened customer relationships, strengthened processes, and continuous innovation.
“The world of banking is evolving rapidly, and customer expectations are at an all-time high. To lead in this dynamic landscape, we must stay agile, innovative, and unwavering in our commitment to excellent service. Together, we will set new benchmarks and deliver unparalleled value to our customers,” he stated.
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.
Over 30 disengaged staff of the Central Bank of Nigeria (CBN) have taken the apex bank to the National Industrial Court of Nigeria in Abuja.
They alleged gross misconduct and violation of their constitutional rights.
The staff, who were laid off in a mass redundancy last year, claim that the CBN terminated their appointments without following due process, leaving them in a state of emotional distress and financial hardship.
At the heart of the dispute is the CBN‘s alleged failure to adhere to its own human resources policies and procedures manual, as well as Section 36 of the Nigerian Constitution, which guarantees the right to a fair hearing.
The claimants argue that the termination process was arbitrary, illegal, and unconstitutional, and that they were denied the opportunity to defend themselves against the allegations leveled against them.
The staff, who are represented by Okwudili Abanum in a class action lawsuit, are seeking a declaration that their dismissal was null and void, as well as a restraining order to prevent the CBN from terminating their employment without following proper procedures.
The Punch reports that the affected staff are also demanding their immediate reinstatement and payment of salaries and benefits from the date of termination.
Furthermore, the claimants are seeking N30 billion in general damages for psychological distress, hardship, and reputational harm caused by the dismissal, as well as an additional N500 million to cover the cost of the suit.
Securities and Exchange Commission (SEC) has said that it will intensify efforts to eliminate Ponzi and pyramid schemes, thereby fostering an environment for genuine investment opportunities to thrive in 2025.
Dr Emomotimi Agama, director general, SEC, said this in his New Year message to the capital market community on Sunday that protecting investors remains a cornerstone of the commission’s mission.
Agama also said that the commission would prioritise key initiatives aimed at deepening market integrity, enhancing investor confidence and driving economic growth.
According to him, SEC is positioned with a dual mandate in regulating and developing the capital market in Nigeria.
“Naturally, our top priority in 2025 will cut across the dual mandate. For us, mainstreaming the Nigerian Capital Market into the economy is very vital.
“Enforcement is the backbone of effective regulation. We are revamping our investigative processes to enhance efficiency and hold bad actors accountable more decisively.
“Insider trading undermines activities and dampens market fairness. By revising our regulatory framework, we aim to strengthen detection, prevention, and accountability mechanisms.
“Transparency is at the heart of investors confidence and capital markets. We will introduce measures to ensure greater visibility and trust in securities transactions,” he said.
The director-general added that to resolve market disputes efficiently and fairly, the commission was focusing on enhancing the operations of the Investments and Securities Tribunal (IST).
He noted that these efforts aim to make the tribunal more effective in delivering timely resolutions, thereby improving overall efficiency in the process.
Agama stated that key focus for the commission in 2025 is strengthening the legal framework of the commodities market to enable it attain its full potential of aiding economic development.
The director-general said that taking that comparative advantage to the next level, is something that the commission is proud to be part of.
Agama said this year, SEC would focus on reinforcing the legal and regulatory structures that support growth to create a solid foundation for the vibrant commodities ecosystem, be it soft or hard commodity.
“More so, when we have a plethora of commodities all over Nigeria. SEC as a partner in development will make sure that we make the difference,” he said.
Agama said that these initiatives reflect the commission’s vision for a stronger and more inclusive capital market in 2025, adding that SEC is committed to building wealth, instilling confidence and making impacts.
The SEC boss said: “As we embark on this journey, I invite all stakeholders to work with us in achieving these goals.
“Together, we can unlock the potentials of the Nigerian capital market and make this a defining year for our economy.
“What we intend to do, is to steer the capital market towards a direction that ensures that development gets to the doorstep of every Nigerian.”
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