The Group Managing Director and Chief Executive Officer, First Bank of Nigeria Limited, Mr. Bisi Onasanya, has identified infrastructure and lack of strong relationships across customer segments as some of the challenges militating against the growth of retail banking in Nigeria and other Africa countries.
He, however, highlighted the need for banks in Africa especially Nigeria to be more creative in their activities in the retail banking space.
Onasanya, who delivered the keynote address at the West Africa International Retail Banking Dialogue 2015 in Lagos on Thursday, described the continental retail banking space as big and getting bigger.
He said, “There is no doubt that we would need to find more creative ways to tease value out of this space, especially in the light of strong and growing competition, including from non-bank actors.”
According to Onasanya, the main retail banking challenge, which service providers face across the continent, is one of building strong relationships across all customer segments and along each customer’s value chain.
“To this challenge, the following questions present themselves. Do we have enough traction, in terms of our infrastructure endowments to drive these process alterations? Are there cultural processes or values that may assist or hinder use of personal data to drive new levels of customer engagement?
“Are local governance arrangements for data use as strong on customer privacy on the continent as they are elsewhere? What do operators have to do to strengthen the process for collecting, storing, and retrieving data in ways that re-assure our markets to part with these?
Speaking on the need to understand the new dynamics of retail banking in Africa, Onasanya said financial services providers continent-wide had attacked the problem of distance, taking banking services to isolated communities, and the mass market financial services needs of their domestic markets through information and communications technology solutions.
The First Bank boss said, “The poster child of this process is quite clearly the considerable inroads, which the mobile phone has made in East Africa in the delivery of micro-financial services/products.
“Beyond the mobile phone as means of payment and collection, though, we are beginning to witness a portfolio of digital banking services ranging from payment applications on mobile phones and personal computers through the debit and credit cards to the time-tested ATMs.”
The Chairman, The Asian Banker, Mr. Emmanuel Daniel, said a new entrant into retail banking would find the business very expensive because of competition and investments they have to make, while an existing bank with a strong customer loyalty would find acquiring customers much cheaper than a new entrant.
“Retail banking performs an important social function in mobilising the financial resources of large populations. In the more developed countries, retail banking is about assessing a strong deposit base cheaply.
“We think that as competition increases in Nigeria, there would be greater mergers and acquisitions among players. In other words, there would be fewer large players over a period of time.”
Nigeria has to benchmark itself with other emerging markets of similar size and similar per capita GDP levels, Daniel said, adding that “There is a lot to learn and there is a lot share with one another.