FIT Micro Finance Bank, a new entrant in the system, is set to hit the ground running with innovations.
In this interview, Andrew Okpeh, managing director/CEO of the bank, speaks to Obinna Emelike on the rationale for setting up the bank, its capital base, the difference it is bringing to the market, innovations, products, services, among others.
Why did you venture into the micro finance bank sector?
The unbanked and the under-banked segment of the financial sector largely informed our decision to venture into the micro finance industry. We intend to leverage on digital technology to create innovative solutions to ease banking challenges of these groups that consist of over 65 percent of the banking population in Nigeria.
We have partnered with an IT solution firm, though organic, it is one of the best in the micro finance space, to achieve our goals. We have also deployed a robust Core Banking Application (CBA), to meet our targets.
Who are your target customers?
As the pioneer managing director, I am ready to take on the financial market by targeting the active low and medium-income classes. We have carefully designed products and services that will encourage their savings culture despite the harsh economy.
These products come with appreciable interest rates on the daily savings, group savings and micro credits to help grow the business of MSME. We also offer free financial advisory sessions to help them to navigate the difficult terrain of the present economy.
We are also leveraging on some digital platforms to profile, track and recover credits advanced to our customers, while partnering government MDAs that grant loans to their workers and effectively monitor the repayments accordingly.
What are your products?
Our products are; individual, group and corporate savings accounts with good interest rates. We also have current accounts, investment/fixed deposits, loans and salary advance, overdrafts, cooperative account, daily contributions, POS, ATM, FIT mobile app, salary administration, payment services and housing loan for renovation.
What are your strategies to achieve these targets?
Our strategies include; speed, accuracy, precision and customer satisfaction. These will be achieved by the experienced human capital in our team, strategy managers and the robust IT solution to make banking easy for our customers.
How much have you earmarked to support micro and small businesses in the first two years of your operations?
Our capital for the micro finance bank is N200 million. But we have surpassed that at the moment with about N255 million. The above include the breakdown of people that have both fixed and intangible assets. But by the regulation of the Central Bank of Nigeria (CBN), it is not supposed to be in excess of 20 percent of that amount.
So, what we set aside for the business is in excess of N150 million from micro credit to medium small businesses.
We still have projections because we are looking to further grow our deposit base. So, for the next one year, we are looking forward to creating quality risk assets in excess of N200 million. Our funds are going to come in from prospective investors who are the parent owners of the company. We are targeting high network customers within our axis, who we have started meeting already and they are pledging their support as we take off. In the next one year, we are looking forward to an excess of N150 million.
How are you going to handle competition in the saturated micro finance bank system?
Most MFBs have stayed long in the system and their operations are mundane. But we are leveraging digital innovations to reach out to the unbanked and under-banked within the system. The above is a very wise thing to do in the Nigerian financial system because the unbanked and under-banked comprise about 65-70 percent of the banking population.
How are you going to achieve the above?
We have partnered with a global Information Technology company with over 20 years experience in microfinance bank software. This allows us to function like what we have today in MoniePoint, Opay, PalmPay among others. Our vision is to compete at that level because in all the states in Nigeria, one does not see any branch of MoniePoint, but a whole lot of work is going on. Digitally, they are up there. Their systems are seamless. We are patterning our operations towards that too. At this stage, we are leveraging technology to reach out to these areas. For our internet service provider, we went a step further to launch through StarLink. It is a guarantee that with StarLink, the uptime is over 95 percent. Then in the next one year, my projection is that we too will leverage on the point of sales (POS), not less than N50,000 to reach out to all nooks and crannies of Enugu State, the entire South East and beyond. This is where the real money is. Every South East operator that is using you on the site is an e-branch. From there, they can open accounts and do what we call payment services that transfer to further banks. They do cash transactions too and we support them. There are those charges that will be shared between NINs, service providers and the bank itself. So, we are looking at the fact that for every transaction our POS operators do, out of N100.00 or above, we will be earning about 45 percent of that money. It may look small, but cumulatively, depending on the total transactions per day, you will be arriving at a very substantial amount of money. MoniePoint’s recent capital base is in excess of N1 billion. We want to leverage on that because we have capacity to reach out to the unbanked and under-banked. With this, in one year, FIT Micro Finance Bank will be the number one in terms of technology and innovations in the entire South East.
The artisans and market women will be reached out to. We will deploy and stream our marketers with a device on their android and they can get to a shop owner with their device, get the owner on board and the account details, with minimal requirements to open an account.
How do you intend to go about this?
The android phone is empowered and digitally inclined to capture the customer’s deposit and post, then get the SMS alert of the credit of the money given to those agents in the field there and you get an alert immediately credited into your account.
At that point, when they come back, we now reconcile the account and balance up their books. We will provide security for them as they go on field. For the insurance, NDIC is there with them. For other insurance against theft and burglary, we are with Leadway Assurance already and our transactions are cloud free.
Also, we are putting up a strong Nigerian Data Protection Council (NDPC), our IT head here is CISCO satisfied. He is on training with the NDPC to up his itinerary to see how our data, while even in the cloud, are well protected with firewalls.
We cannot easily be hacked in. We have also deployed our websites where customers can get information about the bank, download forms and templates from there, and subscribe to so many of our products and services. One must not visit our location to assess our credit facilities. We are leveraging technology.
Soon, I will consolidate my discussion with IPPIS authorities because when we give federal workers credit, and even the low-income and middle-income earners can access our source, we will deduct ours as a partner of IPPIS. We are looking forward to offering innovations. The problem with the microfinance space, which is a bonus, is that every customer has an identity, for one to do any banking related transaction in Nigeria; one must have a Biometric Verification Number (BVN). BVN is one of the best collaterals in Nigeria now.
How is BVN a unique identifier?
Everyone has just one BVN, even with ten accounts; all are linked to one BVN. This BVN is one of the best collaterals because even if one takes a loan from us but has funds from other banks, yet refuses to pay; at the point of taking this loan, you would have signed an agreement that we can deploy every means both technological and legal to recover our money. Unlike other Fintech agencies that would be scandalizing one’s name and broadcasting, we are a responsible bank and will not do that; because we will be breaching the confidential agreement between our customer and us, which is a legal issue. So, what we intend to do is to use the new software called ‘recover’ that has been developed organically in Nigeria to digitally and legally recover our funds. So, wherever all your accounts are in Nigeria, that are attached to one BVN, we use that BVN to trigger it. On the day we will trigger the account, it will visit all your accounts in Nigeria and mop up all the cash in those accounts and deploy them to us.
Read also: Biometric Authentication in Fintech: Ensuring Security in Digital Transactions
Do you think that micro finance banks are threatened by today’s economic realities and what should the government do to stabilize the industry?
I disagree because if one sets up a bank, which is running smoothly, and is also guided by the policies and procedures of the regulatory authority, and working in tandem with what is happening, the bank will grow. You have money and you have been trading over the time, if you follow the rules by the book and do the right thing, there is a tendency for you not to fall into the pit. The reason some micro finance banks went under is because they are not mindful of what the regulatory authorities tell them. Most of them were one-man business that does as it pleases. The family members can come and take loans based on his approval and not based on credit approval. Then when they do not repay, it becomes damage control. Your bad loans are not supposed to be more than 7 percent of the capital to which one does business in the bank. Contrarily, their percentages are in double digit, which is a red flag already. Most of them already have liquidity issues in fixed deposits they are using to trade. FIT Micro Finance Bank will not be like that. We tend to play by the books and profitably. That is why we are deploying every necessary technology to our advantage. The worst case scenario is when it gets bad, one deploys legal means, which could take another dimension like a legal court arbitration, then both parties re-negotiate new terms to which that loan would be paid. At this point, what one is supposed to do as a banker is to stop every interest on that loan because it has gone bad. All penalties that will increase the amount the customer has taken and what he has taken before as differential. Then, it will be spread to a thin line to which one will be able to meet the obligations and finally clean the books.
Many keep money at home or with fintech firms due to the failure of technology and cashless policy. Is that the best customers can do?
I am sure that before you put your money in a bank, you google to find out more about the bank. There are some banks in Nigeria that are very unhealthy. One should not take their money to those banks. Such customers are at their peril.
Of course, banks do not want the customers to know this and that is why I said that we should not be carried away by emotional blackmail to deposit money in a bank that is about to go under. Now, before you put your money in a bank, make inquiries about the bank to find out how healthy it is. There are some banks that have not submitted their audited financial statements in the last three years, which is a red flag already. The Central Bank is aware and the bank is willing to pay the fine to the CBN because once they publish their audited statement and run their AGM, it will be in the public domain and the public will know that the bank is not healthy. The fault is not from the banks, but from the regulatory authorities because if the bank is not doing well, they will tell you that they are protecting the bank.
So, I understand their fears. Any bank that is constantly sacking their boss, GMD, saying they are injecting fresh funds into the system, look at that bank very well, do not take your money there. There are new banks that are coming up, very strong, check out their capital base, monitor them at the end of every financial year, and find out the necessary things. Some banks have been removed from the stock market while their gigantic buildings are still there. The world is a global community, and fintech drives the banking industry. I do not know where the offices of Monie point, Palm-pay and OPAY offices are located to make complaints.
Some of those gigantic buildings claiming they are old school are deceptive. My staff strength in FIT Micro Finance Bank will not be more than 12, all computer literate. We work seamlessly, digitally and do everything humanly possible to keep the bank going. Then, your idea of innovation should be where to invest and when not to invest your money.
Recently, the Federal Government released the sub-treasury bill for the month of November, which is very sound. Instead of leaving an idle fund of about N150 million in an account that will not generate anything, buy a treasury bill of N90 million, that in three months will be about N60 million. At the end, one would be getting about N2, 3 or 5 million, which will add up to the year’s profitability. Most MFBs that are going under did not play by the rule. The CBN rule is clearly stated that they should not give more than N2 million loans to an individual or even a corporate account in MFB. If you want above that, then approach a commercial bank. You will see some MFBs giving between N8-10 million loans to an individual; they have breached the policy even from inception.
Then, you cannot even cry to the CBN because it is sanctionable for breaking the rules. In the banking sector, you are either a small fish in a big fund or a big fish in a small fund and that is the way it is. That is why bankers talk about the Jim Ovia and Tony Elumelu’s of this world as the juggernauts in the banking sector. Note that they did not start as big fishes, though they have their merits and demerits. Then, if one wants to be a big fish, he or she should learn to swim with the sharks. The customers are the sharks because they will be here when we launch, they will deploy all their money to impress us, but by the time they take the loan, we chase after them to recover.
What are your strategies for loans and their recovery?
With my experience over the years, as customers are coming when we open, my loan to them will not be in excess of 18 months. After three months, if you are not paying immediately, I will come after you. Loan monitoring is key because most microfinance banks do not monitor their loans until they get bad. If I took a loan from you and did not meet up in the first month of repayment and second month, I should be able to tell you that your account is in debit, please kindly call me.
If I do not see you within one week, I will ask what the problem is. This is the secret we learnt from the commercial bank called ‘Stop I-falsification’ which means the business must be visited for evaluation of what you have and the amount you are requesting for. I will take stock of what you have to know what to give to you. For example, if you are in a building material business and belong to an association, I want to see your membership and how current you are with them. If you are the owner of the shop, I will get a document as collateral. It does not end there, I will legalize the document and change it to the name of my bank. So, if you fail to pay, you will be the one chasing me because I will not incur the cost of the legal team to chase you. I will put a notice for 30-days, if you do not pay, we sell off your shop and credit your account. We will bring an estate valuer to value your shop and everything will be documented, legally we go to court and get our judgment. When we sell the shop, if the value of the shop is in excess of what you owe us, we credit the account, and then you withdraw the balance. Not to scare our customers, but just that we are technologically driven and an eco-friendly bank.
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