In less than one year, the new management of Keystone Bank has changed the narrative, returned the institution to profitability and brought dynamism into the banking sector. In this interview with some journalists, CEO of Keystone Bank, Obeahon Ohiwerei, speaks on the banking industry, the economy and some innovations the lender is using to stay ahead of competition. Tony Chukwunyem was there
Your corporate-banking division has a sector focused on oil and gas trading. How significantly has Keystone’s earnings been impacted by the slump in oil and gas prices over the last three years or so?
In reality, the negative headwinds on the sector were two-fold. Globally, increased output both from shale oil in the United States (US) and the Organisation of Petroleum Exporting Countries (OPEC) countries impacted negatively on price, while domestically the federal government prioritised its re-engineering program in the sector to plug income leakages and improve overall accountability. This additional level of scrutiny though laudable, brought with it a major downside risk to the banking sector in general, with the recurrent spectre of delayed payments to oil marketers and their resultant inability to effectively service their loans. Prior to this, Keystone Bank had significant loan exposures in the petroleum downstream sector and a strategic decision was taken to consciously wind down these exposures and diversify actively into other trade sectors.
Overall, while the slump in oil prices had some impact on our earnings, our cautious and largely bearish approach to risk asset creation in the sector moderated this as well.
Keystone aims to partner with more than 50,000 SME sector players as part of its strategy to become the fastest growing retail bank in Nigeria. How exactly does the bank go about partnering with such a large number of companies?
Globally, SMEs are established drivers of even the strongest economies and Nigeria cannot be an exception. With over 15 million SMEs dotting the Nigerian landscape, we are poised to ensure our customers in this segment actively grow their businesses through our partnerships and focused initiatives in the segment.
We shall continue to partner with the government and other developmental agencies in making intervention funds available to the segment.
Our SME proposition is the “Growbiz Account” with three variants that address their cycles of growth from infancy through maturity and stability. We are also empowering SMEs through our Agency Banking initiative by signing them up as agents for basic off-site cash-in/cash-out services
How does the bank strive to differentiate its customer-service strategy from that of its competitors?
As earlier noted, our customer service strategy is to deliver such unique customer experience at every touchpoint that it engenders customer loyalty, repeat business and ultimately greater customer lifetime value.
Ours is a paradigm shift from simply a transactional mind-set to one that is focused on achieving enduring relationships with our customers at the attendant financial benefits. Our major drivers for this are digital channels and platforms, particularly our Mobile App and Internet Banking. Other are our Interactive 24/7 Contact Centre, customer Loyalty & Reward schemes as well as metrics & Information-Driven Feedback Processes that help us tap-in effectively to the voice of the customer.
Part of your retail-banking strategy appears to be aimed at the country’s underbanked and unbanked populations. How do think access to finance can be improved for the underbanked and unbanked in Nigeria? What specific measures are you taking to attract these groups?
Financial Institutions, Fintech companies, government and other developmental partners need to sustain the momentum by continually driving and funding research into relevant behavioural dynamics of the unbanked and underbanked segments, creating incentives for the unbanked to see value in being part of the formal sector, developing suitable savings propositions and appropriately-priced micro-loan products that realistically address their needs.
Also by leveraging the extensive geographical spread of government agencies to co-locate and in the process bring financial services within reach of the populace.
Keystone Bank is also focused on enabling greater financial inclusion during the coming months. What specific measures are you taking to improve access to finance?
Nigeria currently has about 96.4million adults (EFInA) and Keystone Bank is focused on driving an all-inclusive retail growth structure from the underbanked through High Net Worth Individuals. We are currently deploying a range of solutions to serve the unbanked population, which include deployment of ATMs to locations with little or no access to financial services, deployment of our Agency Banking solution under our direct plan called KeyServ Agency Banking and in partnership with the Central Bank of Nigeria (CBN) and other federal government agencies and co-locating with NIPOST (the Nigerian Postal Service) to reach both rural and semi-urban dwellers at minimal cost.
We are also partnering with other strategic organisations to ensure our agent network is spread across Nigeria in the next 12 months, leveraging digital platforms for account opening and other financial services. Also, our USSD Banking service *7111# re-launched recently, allowing customers to perform basic money transfers and airtime purchase among other things.
A major component of your corporate-banking business model seems to involve trade finance. Given that trade finance is among the most hotly anticipated businesses to be transformed by blockchain, do you envisage utilising this technology in the future for such a purpose—or indeed, for any other parts of your business?
Blockchain with its mechanism of distributed and secure validation, has the capacity to subject every party to a high degree of accountability, forestalling missed transactions, human or machine errors, or transactions occurring without the consent of relevant parties.
Nevertheless, the peculiar demands of banking transactions require that we implement a measured approach to adoption.
The CBN has advised financial institutions in the country to stay action on the use of this technology for now and this prudential safeguard is not unconnected with the risks currently associated with it. We shall follow the lead of the CBN regarding integration into our operations.
Keystone’s stated vision is to “set the pace in financial services delivery, creating utmost value for our stakeholders”. What exactly do you mean by “setting the pace”?
The statement referred to above is actually our former vision statement and as part of our re-engineering process it has since been replaced. Our current vision is “to be the preferred platform for delivering convenient and reliable financial solutions”. In doing, so we shall consistently leverage people and technology to deliver superior customer experience and enhanced stakeholder value. In my view, the word “preferred” takes us above the fray; it elevates the discussion beyond traditional metrics of balance sheet size, asset base and the like, which are still important to us. However, it commits us to delivering such excellent service in all we do that customers repeatedly trust us, desire to do business with us and are always willing to give us the benefit of the doubt.
Keystone Bank has recently partnered with CeLD Innovations Limited, a Cash Reward as-a-Service Company, to launch the product CashToken. What are the main benefits of this product?
At Keystone Bank, we already know that today’s businesses are not only susceptible to technology disruptions but are under a bigger threat when they fail to place a premium on their share of the consumers’ “emotional equity”
Across all sectors, consumers are forcing the narrative that achieving customer-centricity is no longer a differentiator, but a key determinant of business survival or leadership.
This informed our partnership with CELD to launch the Cash-Reward-as-a-Service product named the “CashToken”, which can be won by new and existing customers that activate accounts on our Mobile App or USSD and actually execute at least five Fee-Earning Transactions (Instant Transfers & Bill Payments); active customers who maintain a minimum balance of N10,000 at least 30 days to their birthdays; both customers of Keystone Bank and non-customers that do at least three transactions on our Automated Teller Machines (ATMs) and active customers can win between N5,000 and N100,000,000 at our periodic draws as well as access General & Health Insurance Benefits subject to specified terms and conditions.
Furthermore, agencies of government can also leverage the Cash Token to incentivize conscientious tax and related statutory payments.
Keystone Bank’s digital-technology platforms are being designed to be especially geared towards young adults (the Millennial generation) in Nigeria. How exactly are you doing this in practice?
Our goal is to be the “youth friendly and upwardly mobile bank” that is constantly responsive to the needs and demands of the millennials of today. That is the reason we design our digital platforms with them in mind.
For example, our mobile banking app has lots of exciting features that appeal to their desires, such as movie-ticket purchase and the ability to use the app even when they run out of Internet data. That way they have unrestricted banking access even when on-the-go.
Furthermore, Chat Apps are rapidly replacing emails and other media for customer engagement and at Keystone Bank we introduced the Chat Banking (OXYGEN) also targeted at the youths and millennials
In terms of design, we offer a uniform experience to customers across all touch points, leveraging our Omni-Channel platform.
As part of the bank’s digital-banking strategy, have you given much thought to forming strategic partnerships with the fintech sector? If so, in which area of banking would such a collaboration most likely end up taking place?
Partnerships form a major part of our strategic growth imperatives, especially with FinTechs in Nigeria and this has introduced new dynamics that are fast replacing traditional payment structures. These new frameworks ensure transactions and payments are done efficiently and transparently.
To date, we have collaborated with FinTechs in different areas ranging from agency banking, online payments, mobile platforms, loyalty schemes to retail loan creation using data analytics.
Our focus is to collaborate more with fintech companies in ways that can further boost our propositions and better serve our customers.
How much focus are you placing on growing the bank’s social-media presence? And what do you think can be achieved by having a well-planned social-media strategy?
As part of our efforts towards building a digitally-driven bank, we are focused not only on growing our social media presence, but on integrating our digital services into social media in order to make product access and support available to our customers online.
We believe that a social media strategy, which sits at the heart of business strategy will drive customer engagement and increase uptake of products by customers & non-customers alike.
As Keystone CEO, how serious a threat do you consider cybercrime to be to the bank’s overall health? What measures does the bank have in place to combat cybercrime, and are you satisfied with those measures?
Globally, incidents of cyber-attacks both in the commercial and political spheres have made cybercrime a major risk factor in the overall financial health and reputational standing of institutions, banks in particular.
At Keystone Bank we have taken a holistic approach to this, leveraging not just technology but people and processes to build the culture, knowledge and hands-on skills required to proactively identify and forestall such attacks.
In addition, we are currently in the process of building an enterprise Security Operations Centre (SOC) that comprises threat monitoring, forensic investigation, incident management and security reporting. The proposed SOC will enable us identify, monitor and manage security risks.
Do you think Nigeria’s 2016/17 economic recession is now firmly in the past? And if so, do you think Keystone is well-positioned to capitalise on the recovery?
Despite fragile growth quarter-on-quarter and subsisting vulnerability to global shocks in commodity prices, I believe it is safe to say that the recession is past and barring any major socio-politic upheavals, it is unlikely to recur, at least not to the scale witnessed in 2016 through 2017.
Moreover, the Federal Government has taken active steps towards reinforcing growth and widening its revenue base, particularly from the standpoint of driving increased tax compliance and plugging any identified areas of income leakage. Other fiscal and structural factors that should strengthen economic growth include: the Presidential Enabling Business Environment Council (PEBEC) set up in July 2017 to remove bureaucratic constraints to doing business in Nigeria; increased diversification of the country’s economy through multiple intervention programmes in the non-oil sectors and accretion of external reserves on the back of increasing oil revenue as well as steady moderation in inflation.
As a bank, we are well poised to capitalise on this recovery and on our assumption of office in Q3 2017, my executive team and I embarked on an extensive restructuring process aimed at achieving greater operational efficiency, extensive process improvement and the re-alignment of skills and competencies to areas of best fit, both at senior and middle management levels.
We have also remodelled our digital platforms for collections and payments, to provide increased convenience and value-addition to our customers’ lifestyles and business. So far the market response has been positive and our customer deposits have grown in excess of 40 per cent over the last three quarters.
Given the growth in the global regtech sector, is the bank at all utilising innovative technology in order to more effectively deal with regulatory challenges?
Yes, we are indeed leveraging technology to enhance regulatory compliance and our solutions cut across Fraud Management, Anti-Money Laundering (AML) Tracking, Customer KYC and due diligence.
Essentially, they detect and deter non-compliant conduct as well as retroactively investigate and create audit trails as may be required.
The bank has also invested in solutions that screen customers at the point of account opening against designated terrorist lists such as those of the Central Bank of Nigeria (CBN), US Office of Foreign Asset Control (OFAC), UK (HM Treasury/Bank of England), the EU and the UN. While these solutions also screen transactions and transfers against such lists, our other solutions monitor and report suspicious transactions and activities on customers’ accounts.
By the time you end your tenure as CEO of Keystone, what is the one goal, above all others, that you hope you will have achieved during your time in charge?
I would love to leave with a sense of satisfaction that I delivered on the mandate of our investors by making Keystone a Tier-1 bank.
I also want to leave behind a tested and proven team of passionate and highly motivated people that refuse to see any barriers to what they can achieve; people that are able to compete shoulder-to-shoulder with any leading bank in the industry.
At the end of my tenure, the recurrent customer feedback should be “my bankers are highly professional solution providers, responsive and always within reach.”
How do you see Nigeria’s banking industry changing over the next few years?
Over the next few years, I expect to see increased competition for customers’ confidence and share-of-mind. I expect to see banks compete more aggressively on such subtle yet potentially profitable indicators as increased account activity, customers’ ease of transaction across touch points; scale of digital spread and partnerships (as against number of physical branches); incentives for repeat business and greater customer life-time value and overall business efficiency.
I also expect to see banks increasingly leveraging data analytics to better-predict customer behaviour for effective marketing and retail loans creation.
Finally, while the retail and MSME sectors should remain the main focus for banks, I expect to see this drive replicated strongly in the corporate banking space with unique offerings to tap their downlines and value-chains.
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