Banks and the Regulator should brace up for Disruptive Change in the Retail Banking Space

Jeff & O’Brien is an international, Africa-focused technical knowledge development firm involved in training, corporate retreats and seminars. We believe strongly that the challenge of Africa is the fact that people are concentrated more on what is inside the ground rather than what is inside the head. It is an answer to the pressure that we need to train our people and bring them up to par with world-class best in line techniques and strategies to building and managing businesses.

I recently read a book titled “What brought you here will not take you there”; Most Nigerian banks are using the strategies of yesterday and insisting that it works for them today and tomorrow. Unfortunately they are in a system that is international.  Banking is an international business. It did not start in Nigeria. Original owners of the concept of banking have stopped and recalibrated. There are banks in the UK that have no physical office you can see. Yet people are building branches all over in Nigeria and in Africa. If you ask them they will say they want “presence”. If you insist, they will say that only a marginal percentage of our local markets are computer literate. As good as that may sound, the truth is that you never allow the problem to determine your strategy. You don’t allow the negative to determine your strategy, the solution should. Who taught you to use the iPad? Who sought your opinion about mobile phone? Today you can’t imagine living without the mobile phones. This is the challenge to the banks. It is time for practitioners of the banking business model to break the mould to create another one. A lot has happened that should make the forward looking banks to stop, think, recalibrate to adopt the new models today or insist that these models will remain their strategies for tomorrow, and then the inevitable will happen. I am not talking of incremental growth; I’m talking about disruptive and by extension transformational growth. It will be something that the market has not seen before. That is why the conference was called ‘Rethinking’; in fact somebody said it should be “unthinking” the Retail Banking Architecture and Infrastructure.

The Jeff & O’Brien Conferences and Events is an international platform created out of the Jeff & O’Brien international franchise to engage with senior executives who for one reason or the other are busy trying to run the shops. We get them to a place where they will be open for discussion on international best practices. We have done roundtables on Public Private Partnerships (PPP), Private Banking and Wealth Management and many more. The retail banking roundtable conference is one of those areas we believe very strongly that if it is properly harnessed it will be a major game changer for the banks and for the economy. Remember, government is very interested in financial inclusion. Financial inclusion or capturing the base of the pyramid is very critical to retail banking. We are challenging practitioners to develop deliberate Retail Banking architecture and infrastructure that can propel the economy to higher heights. Our demographics clearly indicate that the preponderance of our population is in the youth category. Existing Retail Banking infrastructure and architecture cannot support the aspirational and service needs. The size of the market is too tempting, a 180 million people, that is by any stretch a tempting market. We want them to look at what is being put in place and what should be put in place in order to run a profitable Retail Bank.

I read another book called ‘Competing for the future’ authored by Gary Hamel. It spoke about incumbents and new entrants in an industry. It said that anytime you get into a business, after twenty-four hours you become an incumbent. In other words, the person who is waiting in the wings to come into that business will learn from your mistakes twenty-four hours after. Technology is the major source of disruption in the modern age. So disruptive technology or thinking is a terminology that is common and that drives innovation.

It is a major catalyst that forces you to question your old strategy yourself before others begin to question it. So if you bring that to the banks, for instance the first mechanical device that dispenses money was produced in 1937 by a bank in the US and I think Barclays Bank brought the first ATM 30 years later. That equipment reduced the number of people that go to the cashier to draw cash; it reduced the queues. So the ATM was a disruption when it came in. As time went on the ATM started collecting checks and cash. People are still reinventing around the ATM up till date. What we are saying is that, while we are celebrating the ATMs here, banking has gone beyond that. People are talking about digital money. The value chain has taken away cash. There is a lot of thinking that is important and you need to put your money where your thinking is. But instead of people to think digital, they are acting physical; you are thinking digital but all your activities are all physical. You are buying bank branches, hiring more people and at the same time you are notinvesting the kind of resources you need to invest in the kind of infrastructure that you require to make it really digital.

Jeff & O’Brien offers Retreats, Executive and Organisation renewal sessions and of course, training to banks in various aspects of Retail Banking covering retail lending techniques to SMEs, Retail Banking Risk Management, Customer Centricity and Buyology and Retail Banking Delivery Channel Programs. I am sure you know our offerings also go into Corporate & Investment Banking Management.

Our flagship event in all this is the aligning of institution’s corporate strategy to their retail banking strategy.

One thing that Jeff & O’Brien is known for is her pool of world class, first rate knowledge development mentors, what you will call trainers. Our mentors are skilled both in the board and in the classroom. But we believe there is room for more. More of the banks have need to seek more quality of capacity building that we provide. Your business is as good as the capacity of the people that work in or for it.

We try. However the banks have what they call the Bankers Committee. It is an amalgam of the practitioners and the regulators. We still seek partnership with it. There should be a better understanding between the regulators and the practitioners. They should come to the place where there is a mutual understanding and agreement. They are the different sides of the economy. We have training courses for the regulators. We have run courses for the Central Bank of various countries in Africa with regulator-specific programs ranging from Stress Testing to reporting standards and managing the calculation of CAR, There is nothing happening in Nigeria now that is not international and has not happened before. The difference is the people managing it.

All over the world the people that drive disruptions and new thinking are the practitioners. The regulators will look at what you bring out as innovation and come up with policies that will protect the market. The regulators are not given to disruptions. When you saw the BVN which brought a major revolution in the banking sector, it was for the regulator to know everybody. It was a regulatory control measure. The major challenge of financial inclusion is identity. 50 per cent of the trouble is identity. So both regulator and practitioner should invest in identification. There are many identification platforms in Nigeria that are not linked together. First everybody must be known. Data is critical. We must invest in it to know how many we are, who we are, where we are in order to ensure that we can plan. Another challenge with Nigeria is in its planless environment. People just wake up and they act. There must be rigor in policy formulation.

What we are trying to do at the end of the day is having begun this intense conversation; we want to take it to another level. That individually, banks will call for executive sessions, present what they have on the table as the retail architecture & infrastructure. They can then ask, “Does our retail document fit in? Can you help us to think it through?” We are a muse. A muse is what is what makes you consider things thoughtfully and gets you back on track.

While we are glad to note that we have added a voice to the conversation on financial inclusion at this conference, the 3^rd Africa Retail Banking Roundtable & Conference will hold in Kigali, Rwanda. This will be where the East meets the West in terms of knowledge and experience sharing across the African Continent.Registrations and Sponsorship are now open.