Mohammed Jibrin is the MD/CEO of Suntrust, a mortgage institution in transition to a commercial bank. Jibrin speaks on the transition and other issues in the banking sector.
You are transforming from a mortgage institution to a commercial bank. How has the journey been?
We started our journey to becoming a commercial bank in 2009. Its been a very long process. This is the first commercial bank licence to be given since 2001.
We were very clear that we needed to be involved in commercial banking so as to provide an alternative route to those in need of commercial banking.
I have always seen Nigeria’s commercial banking sub-sector as one that has failed to transform itself and actually touch the lives of people.
There is no way any society can develop or grow without having access to finance. That’s very true.
Most of the commercial banks we have in the country, some over 100 years of existence, have some form of challenges. And there are some powerful forces that are transforming this sub-sector. With the BVN that was done, it brought home the fact that the country is still under-banked. We have just about 50million accounts in the country based on statistics. But roughly less than 30million of those customers were verified.
That tells you that in a country with a population of about 180million, an annual population growth rate of about three per cent, certainly, it is clear that the country is heavily under-banked. And if you look at it, the segment of those that are outside banking services are the group that is of young age that are virtually excluded.
What that tells you is that there is a huge opportunity out there to actually provide services to these people and sell other products through those services.
We also realised that there are other locations of the country that really do not enjoy banking services and that, generally, informed, to a large extent, the CBN’s drive for financial inclusion in which it is trying to ensure that people have access to financial services.
For us, having realised that these forces will continue to shape the banking services, customer satisfaction must be high, technological advancement must continue to evolve.
We also believe that the regulatory environment is constantly changing and it is becoming tougher. These forces will continue to shape what happens in that sub-sector.
We have a regional licence for the South South, South West and Abuja. Next year we plan to have branches in the state capitals in these zones. We chose these zones because that is where the money is so you follow the money first, that way you make returns and satisfy the general public by providing services.
At a time when the industry is going through all these challenges, why plunge in?
The first reason is that customers are to a large extent dissatisfied and, secondly, there is no access to finance to most of the people who need it.
The only institutions that will succeed at the end of the day, particularly between now and five years and thereafter are those that will constantly innovate using technology to drive financial services
What are you bringing to the market that will mark you out? Why should anyone leave his bank and come and bank with you?
For us we believe that two major issues are very key. The first is the channels of distribution – what channels are we going to be using in order to provide banking services and what type of products are we bringing into the market. First and foremost we have decided that technology would be the biggest platform that will drive our business. We will focus largely on the retail market. We will be deepening the use of mobile phones as a means of access to banking services. We are also a licensed Mobile Money Bank.
So, in the real sense we do not need a brick and mortar bank to provide banking services. You can open your account on your phone and transact your business.
Most of the unbanked members of the public are not comfortable going into those big commercial banks and that is why we believe that we will fill that gap. Access to funds is difficult and most people will narrate their experiences while trying to get facilities from banks. We plan to make it as easy as possible for people to have access to finance. We will be there for those type of businesses. We are going to follow the mass market and it will be driven by technology.
Wherever you are, you do not need to get to the bank. We will have our staff running around and opening the accounts for those who are not so literate.
We will also be providing banking services to those areas where we believe the services do not get to and, therefore, we will be introducing bank-on-wheels towards the end of next quarter. We will have vehicles that will drive round markets on market days and provide banking services for the next five years or so before we close that business. We believe if we operate this it will go a long way. We are also in collaboration with other financial services institutions so that a large majority will have access to financial service. We believe the market is still fertile.
The TSA implementation has shown that banks will not need to focus on government funds alone.
This idea of bank-on-wheels, have you thought about the security implications?
Yes we have. We would have adequate security; but in any case, we are not going to be moving heavy funds around. What we will be doing is bridge the gap for those customers who even lose money to thieves while in transit from their business places to the banks. We want to relieve them of the burden – just a million or two or three would not be too much.
Do you have the means to match the big banks in terms of resources and providing the technological base?
A bank requires a minimum capital requirement, we have met that. It will interest you to know that technology is not that very expensive; it depends on how you cut your cost and your bargaining ability. The banking application that we have today is also operated by four other banks. We got it cheapest. And it is the same thing from the same source.
Banks have been retrenching or rationalising lately. Why not invest in ICT or agriculture or some other businesses. Where others are having issues, that is where you have decided to go into. So what is the real interest?
People build things based on their competences. My competence has always been in finance and I have spent over 20years in the sector and I’m passionate about it. You see young graduates with ideas but they do not have access to finance. It is painful. All over the world, economies are grown by small scale businesses because once small businesses are doing very well the economy will do very well too. Those who are retrenched in banks are mostly those without access to finance who end up on contract jobs. And again, banking services have been suffering because as you mentioned earlier, the issue of TSA – TSA was the most convenient way of making money because government money is lent to government at interests and then spread for profitability. Meanwhile, some people are willing to work but they do not have access to finance. Every investment carries risks. You have to measure your risk and manage your business in a way that it provides the needed services and it is also profitable.
Your board! Who are your backers? And then there is this issue of the old ways of doing things: How do you plan or hope to contend with that?
(laughter) We have a nine-man board of directors. And if you go to the Corporate Affairs Commission, CAC, you will see who our shareholders are. It is a privately owned company with about 12 shareholders, all private individuals; and a few other companies with stakes. We also reserved some stakes for our staff because we believe our staff should also own part of the bank. We need the energy of the youth and the wisdom of the old so it is not completely feasible to discard some old ways of doing things.
What informed the name, SUNTRUST?
Thats always been a question many people ask. Don’t forget that we were a mortgage financial institution before but two things we are very clear about. First is that you need the energy of the Sun and to take it further, you need to trust that when the Sun sets, your money is safe and when the Sun rises in the morning, you have a bank to go to and which will be ready to serve you.