Obeahon Ohiwerei is the Group Managing Director/CEO of one of the fastest growing financial institutions in Nigeria, Keystone Bank Limited. In this interview with International Banker Magazine, UK, the banking guru speaks on the achievements of the bank in the last few months since assuming office. In less than one year of AMCON’s divestment from Keystone Bank, the lender has experienced tremendous transformation in all ramifications. Aside revamping all its branches across the country and bolstering its workforce, it has invested substantially in technology and developed fully integrated service models that enable customers access banking services through a wide range of channels. The bank for the quarter ended March 2018 recorded a profit before tax of N3.72 billion, compared with a loss of N2.79 billion over the same period in 2017. Excerpts:
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.
The bank’s Pink Account is a special account for women that gives access to an online digital-marketing network, among other features. What made you believe that such a service was needed?
In its Financial Inclusion Overview updated April 20, 2018, the World Bank noted that “around 2 billion people don’t use formal financial services and more than 50% of adults in the poorest households are unbanked”. http://www.worldbank.org/en/topic/financialinclusion/overview. In Nigeria, multiple surveys by EFInA Access to Financial Services confirm that about 36.9 million adults are financially excluded, of which 57.9% are female while 42.1% are male. Against this backdrop, the Central Bank of Nigeria has in recent years actively pursued a holistic financial inclusion strategy across the country http://www.efina.org.ng/assets/DidYouKnow. On our part, the Pink Account is designed to meet the needs of our female working class and SME customers and provides such benefits as access to attractive loans, customized electronic debit cards and access to discounts from partner stores while the pink network is an online forum that empowers our female entrepreneurs with free mentorship and capacity building sessions. Women from different walks of life can network, share ideas, inspire each other and develop mentor/mentee relationships on www.PinkNetwork.ng while the Pink Marketplace www.marketplace.pinknetwork.ng provides an e-marketplace where they can buy, sell and advertise for free/
We noticed that your corporate-banking division has a sector focus 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 US and 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 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 & Existing Customers that activate accounts on our Mobile App or USSD and actually execute at least 5 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 (3) transactions on our ATMs. 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.
As I understand, 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 15million 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
• Our Interactive 24/7 Contact Centre
• Customer Loyalty & Reward schemes
• 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
• Leveraging the extensive geographical spread of government agencies to co-locate and in the process bring financial services within reach of the populace
I understand that the 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 96.4 million 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 CBN and other federal government agencies
• Co-locating with NIPOST (the Nigerian Postal Service) to reach both rural and semi-urban dwellers at minimal cost
• 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.
• 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 Central Bank of Nigeria (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.
As I understand, the bank is in the process of launching an exciting new digital financial-services platform. What are some of the platform’s key features? And how will customers benefit more from this platform than from what they have currently?
The proliferation of digital banking in the retail space has made branchless banking a strategic and compelling proposition especially in the retail value-chain.
Keystone Mobile Banking App has introduced a new level of Banking with exciting offerings and features most of which were hitherto non-existent across the entire banking industry. These include:
• Zero-Data Banking – which allows customers to transact using our mobile app even without data on their phones
• Chat Banking service – which allows customers to transact while they chat via Telegram and Facebook
• The “Meet Account Officer” feature – which introduces customers to their assigned account officers and allows them to interact directly on the platform
• Foreign Currency (FCY) Transfers – where customers are able to make transfers to banks across the globe right from the mobile app
• Movie Tickets – which allows customers view available movies and book tickets
• Standing Instructions – which allows scheduling of recurrent payments and transfers
• Self-booking and liquidation of Fixed Deposits
• The Enabling and Disabling of cards – which can be a useful safeguard in the event that a customer loses any of our electronic cards
Our new USSD code *7111# also allows customers to transact from just about any type of mobile phone, offering such exciting features as bills payment, airtime top up, account opening, account reactivation.
As part of the bank’s digital strategy. How much of your existing IT infrastructure do you expect will be overhauled in order to make way for new systems and technologies?
Our Digital Transformation journey is for us a key strategic initiative and as such we are undertaking a holistic and far-reaching overhaul of our current IT infrastructure to drive this effectively.
If I’m not mistaken, the 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.
You recently launched your Keystone mobile-banking app, if I’m not mistaken. What are some of the unique features of the app? And how well-received has it been so far in terms of customer response?
Overall, feedbacks from customers across all touchpoints have been quite impressive both on our VOC (voice of customer) surveys and app store reviews while our current rating on the google play store is 4.2 on a scale of 1- 5.
What aspect of the bank’s digital revolution do you think will be most well-received by your customers? Mobile banking, or something else?
Mobile Banking naturally comes first as a significant portion of our active customer base are millennials: These Generation X, upwardly mobile and digital citizens also constitute a sizeable percentage of the mass and affluent markets. The ability to attract and keep them is hinged on seamless services delivered via mobile platforms. Furthermore, statistics show that there are a lot more mobile phones than there are personal computers across board. It therefore follows that a lot more market share would be captured using mobile platforms.
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
• Accretion of external reserves on the back of increasing oil revenue
• 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% 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 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.
Your corporate-social-responsibility programme seems to cover a wide variety of important issues, including health, education and women’s empowerment. Of all your initiatives, which would you say has been the most effective and successful, and why?
To date, our youth and women empowerment programmes have been the most successful in the bank, both as independent initiatives and as partnerships with reputable organizations. Our focus is to empower indigent youths and women through training, education and other forms of learning, to achieve sustainable job creation and income generation. We have consistently won awards in recognition of these initiatives, the most recent of which was the 2018 Global Impact Leadership Award for: “Best Bank In Women Entrepreneurs Empowerment Category.” At the award ceremony in New York on March 25, 2018, the organisers noted that it was in recognition of Keystone Bank’s leadership role in expanding access to funds for women entrepreneurs in Nigeria and the rest of Africa through its subsidiaries.
How conscious is Keystone of its environmental footprint? Does the bank take any specific measures to try and reduce its impact on the environment?
Keystone Bank is conscious of its environmental footprints and we have an Environmental and Social Management System in place, which sets out the principles and arrangements for maintenance of a safe and sustainable environment during all the bank’s business activities and operations respectively. The ESMS helps us understand our environmental impact and through proactive management, reduce the risks that our operations may pose to our employees, communities in which we operate and to the environment. The 3 ‘R’s; Reduce, Reuse, and Recycle are enshrined in corporate culture of the bank.
What is your view of artificial intelligence and machine learning? Do you think such technologies will play a major role in Keystone’s operations during the coming years?
Artificial Intelligence (AI) strategy is already playing a critical role in driving Keystone’s operations via the adoption of Chatbot functionality, named Oxygen both on Facebook and Telegram. The AI technology allows us to improve customer experience by turning several transaction steps on internet Banking and the Mobile App to simple conversations in a chat environment, achieving huge time-saving and convenience for busy customers who are already frequent users of social media.
What do you consider to be the most essential personal quality or character trait one must possess in order to be an effective, successful banking leader such as yourself?
It is often said that hindsight vision is 20-20 and I quite agree. While there are no two identical playbooks for any aspiring banker, there are some character traits that largely guarantee success such as:
• Entrepreneurship: This speaks to that ownership mind-set that would rather face personal inconvenience than allow service failure and the loss of customer confidence or patronage that comes with it
• Passion: This refers to being highly motivated; a hunger and passion to make a mark and that audacity in going for what may have been termed impossible
• Innovation: This is what I describe as a creative yet responsible approach to problem solving; a mind-set that says “how can we make this work” rather than “here is a list of reasons why it cannot work”.
• Effective Corporate Governance: This goes beyond personal integrity to taking responsibility for the overall ethical posture of the bank in the eyes of the public; it is about placing a strong demand on oneself to stick with ethical behaviour in making decisions on behalf of the institution.
How do you describe your own personal leadership style, Mr. Ohiwerei? And what specific philosophies do you adopt in order to get the most out of your workforce?
To be honest, it is very difficult for me to see any goal or target as impossible. Some say I am audacious to a fault; maybe they are right but it’s just not in me to set mental barriers to what I can achieve in life. I guess this translates to my leadership style as well; I challenge my colleagues to pursue audacious goals believing they can achieve them. Personally, I set goals for myself every five years and more often than not achieve them within three years. While I do not micro-manage people, I am by nature excited by the challenge of execution and that makes it easy for me to engage hands-on with them in working-through any major challenges that may arise along the way.
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
• 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
You currently have about 150 branches nationwide in Nigeria. Are you satisfied with this level of coverage?
We actually have 154 active branches in Nigeria with strong presence and multiple locations in key commercial nerve centres in the country such as Lagos, Kano, Kaduna, Port Harcourt, Onitsha, Aba and Nnewi, to mention a few. However, over the last nine months we have progressively changed the narrative from merely having physical presence to achieving effective presence in the minds of our customers, through a massive yet sustained deployment of ubiquitous digital and agent platforms that are literally within reach of our customers such as the mobile app, the USSD platform, the revamped internet banking interface and our contact centre. For us it is about taking the bank to our customers and not just building structures and expecting then to come to us all the time. Where we need to complement our brick and mortar network, we shall deploy nimble yet effective touchpoints that fit with our customers’ businesses and lifestyles, such as e-centres and galleries, Fixed Agents in the local grocery stores and Teller Implants, all of which still take banking to the customer as much as is practicable
Are there any plans for Keystone to expand its presence into other countries in the region?
Currently, there are no immediate plans for expansion into the West African sub-region as a major fallout of our prolonged bridge-bank status was the decision to divest from our subsidiaries in the sub-region namely Keystone Bank (Sierra Leone) Ltd and Global Bank (Liberia) Ltd with negotiations currently at an advanced stage. While not denying the economic potentials in selected West African countries, we shall adopt a measured approach towards harnessing these opportunities in the medium to long-term, as we re-invent our business model.
As a banking leader with many years of experience, what advice can you give to a youngster looking to forge a successful career in the Nigerian banking industry?
I will emphasise three key areas:
• Emerging bankers should constantly expand their knowledge about the workings of the economy and the banking sector, within the our overall socio-political context
• For every transaction they should be passionate about maximizing profit yet deeply conscious of the boundaries of sound ethics and corporate governance
• In all interactions with customers, they should do whatever it takes to remain responsive, professional and always within reach
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.”