By Babajide Komolafe

Troost

Stanbic IBTC Bank indicated its intention to compete for market share in the retail segment of the market by rolling out an aggressive branch expansion programme, which resulted to opening of 80 branches last year. In this interview, JACQUES TROOST, EXECUTIVE DIRECTOR, PERSONAL AND BUSINESS BANKING (PBB) for the bank explains the philosophy behind the banks entry into the retail segment, the chanllenges of the branch roll-out programme and the bank’s continued quest for increased market share of the Nigerian banking industry. Excerpts

It was widely reported last year that Stanbic IBTC Bank would open 100 new branches across the country. Was that target met? How many branches of the bank are you hoping to have by the end of 2011?

In 2010, we were planning to do 100 branches, but we reviewed the plan. Initially, the biggest challenge was to open the branches but it is becoming business as usual. The challenge is no longer to open the branches because we now know that we can open 100 branches a year, if we want to. The challenge is staffing the branches and to bring them up to productivity. The biggest challenge is the training bit, so we slowed down at a stage last year when we realised that we were running out of capacity from a people point of view.

We did not open 100 branches last year, we opened 80 branches. The benchmark is to open 60 branches this year but we might slow down depending on how quickly we can generate the income to sustain the branches and how quickly we can staff the branches. I do not want to put a number to it but we have a budget for 60 branches. The number of branches that is enough for a bank depends on the market share it wants to achieve. At this stage, if we are to achieve our projected market share, we will need about 300 to 350 branches.

In terms of customer base, we understand Stanbic IBTC Bank has grown significantly across different market segments. What is your target for the next 18 months and what plans have you put in place to achieve those targets?

The SME segment is an important segment and many of our new branches are surrounded by SMEs. SMEs are a huge segment and we have just started tapping into that segment. During the course of this year, we are going to do lots of work in that segment. If you look at agriculture in this country, it is big with government investing huge amounts into this sector. We have started to build on this segment and we are planning to bring in more expertise in the agriculture field to grow this business as well. The same with Sharia Banking; CBN has just started licensing banks to do the non-interest segment.

Therefore, as we start launching more products into these segments, we are going to need more and more branches in areas where we did not have them before. Banks do not always have the right types of SME products. Launching more products and segments clearly indicates the need for more branches to be able to serve the customer in a much wider segment than we are able to at this stage. This is an ongoing process. In the longer term, we will start getting involved in many more of the segments as we grow the branch network.

Stanbic IBTC Bank has plunged fully into retail banking. Can you elaborate on the business strategy driving this quest?

The starting point is that we see ourselves as a universal bank. A universal bank wants to bank all segments, not only the top end but the total market. This is a process because there is still a lot of work to be done in the upper segments. If you look at salary earners, there is a lot we can do there in terms of new products we can launch, and lots of money that can be extracted into the banking system from the upper segment. There are 24 banks in Nigeria and these banks want to grow their market share and profit base. But if you look at the market in South Africa and some of the other markets, at one stage you need to start moving down the pyramid if you want to grow your business. In the next few years, more and more of the banks are going to start playing in some of the lower segments of the pyramid. For us at this stage, we are playing in the profitable top segments while also doing some learning in the lower segments, so that one day when we need to start playing there, we would have attained the learning to help us find our feet quickly in the market. Some of the stuff we are doing is around E.susu, which has huge potential.

By focusing on organic growth through branch expansion, one is left to guess that the much speculated acquisition of another bank is off the table. Is that the situation?

To state that we will never look at another bank will be wrong. Opportunities arise all the time. I think in this market, over the next few years there will be mergers and acquisitions. We will always be looking for opportunities. However, we will do something while we look, which is to grow organically and we know that we can grow 100 branches a year and we will continue to grow organically. We have proved to ourselves that we can do it. We will continue doing that and if an opportunity to acquire another bank arises, we will look at it.

Which is more cost effective, is it organic growth or acquisition?

It all depends on the price that you pay for acquisition and the number of customers you get from it, as well as the quality of the network. You may also have to consider how much has been invested and what will be gotten from the investment. I do not think there is a right or wrong answer; it all depends on what you are looking at.

Your rapid network expansion programme definitely requires huge investments in technology to deliver on your retail portfolio. About how much have you invested in technological innovations in the last one year? Has this resulted in the adoption of new platforms for your operations and a reduction in transaction costs?

The ATM network is a good example. If you look at the number of transactions we do on our ATM network, it is taking a lot of costs off us with people not having to visit the branches. In December of 2010, we paid about N3.6bn from the ATM network that month. If you look at N3.6bn and the average cash withdrawn by customers, we would have needed many more branches, many more staff if people who wanted to collect that came to the branches in December. For instance, Internet banking aids third party payments such as Dstv. You do not have to come to the branch to do that. All the investment in electronics is taking a lot of cost out without any doubt. We will continue to invest in technology and we are able to continue to build smaller branches because all our customers do not have to come to the branches.

It comes as a shock, when one meets you, a non-Nigerian driving Stanbic IBTC’s quest to cover all parts of the country. What has been your experience from other parts of Africa where you have done this compared to what you are seeing in Nigeria?

I was privileged to be part of the commencement of the Standard Bank Group retail business in Uganda in 2002, and there was a lot of learning experience from there. We are in 17 countries in total and we learn from what works in other countries and what doesn’t work. There are some best practices. But also, I am leading a team, a very big team of capable Nigerian colleagues. I have worked together with the team for over three years. I am in my fourth year in Nigeria, so I have learnt a lot about this market and I also have colleagues that have been in this market for the last 20 years. We are a very strong team and all our decisions are taken as a team and I have a very vocal executive committee in the retail segment of the market. Looking at the different experiences of people as a team, we are not only relying on views around the Nigerian market but around 17 other markets in Africa and other parts of the world. I think that makes us a stronger team.