‘We believe a technology-driven bank branch is the future’ – Babatunde Macaulay
Babatunde Macaulay, Executive Director, Personal and Business Banking, Stanbic IBTC Bank PLC, in this interview with ZEBULON AGOMUO talks about his bank’s digitization aspirations, the journey so far, plans for the future and other issues. Excerpt:
What is Stanbic IBTC Bank’s digital branch about?
As we know, Stanbic IBTC, a member of Standard Bank, is at the forefront of innovation and not only in Nigeria but across Africa. An example of this revolutionary technological innovation is our Personal Teller Machines otherwise known as the PTM which we introduced in 2015; making us the first bank across the whole of Africa to introduce the interactive teller machine in banking. Our fully digital branch situated at the Maryland Mall is our first digital branch in Nigeria, with many more to follow. It is fully machine-driven, fully technology-driven. You can carry out your banking transactions, deposit or withdraw money, open an account, get a debit card, and do many other transactions without any manual intervention, without any human intervention.
Why is Stanbic IBTC investing in digital banking?
A couple of years ago in Nigeria, you could only make telephone calls through NITEL. At the time, NITEL had only about 500,000 lines. According to the most recent data released by the NCC, Nigeria as at January 2017 reportedly had a little over 155 million active lines and that is a huge number to ignore if we want to bring about financial inclusion. Today in Nigeria, apart from the over 155 million active telephone subscribers, many people are becoming more and more socially active on social media. There are about 16 million Nigerians on Facebook. Nigerians interact with their mobile devices about six or seven times a day, spending between 40 minutes to 1 hour every time they interact on phone. So we think technology is the best way to go. You can already see this if you look at even the banking industry. The number of transactions in the branches has reduced significantly whereas digital transactions, whether via the internet, mobile, ATMs, POS, have increased and continue to grow.
We believe a technology-driven branch is the future. This is justified from Nigeria’s demographics and the population is getting younger and younger. We are 180 million people and researchers tell us that about 60percent are under 34 years. This young population interacts with computers. I am sure when I first started working I did not know how to use a computer but my son or daughter, who is in primary school, is already interacting with computers. That is how the world is changing and we believe that digital is the future.
With the unveiling of your first digital branch here on the mainland, we know there will be many more in other parts of Lagos and across the country. How soon will the mass rollout be?
Like I said, this is the first one that we are piloting. Once this is successful, the intention is to roll out in other locations. In fact, we believe strongly that the end of the regular type of branch is near. The way we roll out our branches will be more digital with a combination of humans and machines which we believe will be the model, going forward. It is cheaper to build and cheaper to upgrade. Over time, we will roll out the digital branch in other locations in Lagos and other cities.
How well do you see this branch helping the bank in its deposit drive?
This branch is a model branch that was rolled out not to drive deposits per se. It was rolled out to drive innovation, service and ensure better customer experience. You know you can have two models: a revenue model and a cost-saving model. This branch is more or less a cost saving model and as you can see customers are coming down here to do their transactions. You can open an account and so on and so forth but the intention is to serve our customers in terms of customer experience and not necessarily deposit gathering. If it gathers deposit, fantastic, but the primary objective is to serve our customers.
What are the challenges of digital banking?
One of the challenges of digital banking is infrastructure. For example, ATM uptime is very important to customers. Adoption and security are two important challenges. The two are interrelated because people are thinking is my money safe, what kind of security is behind these, is there going to be fraud in my account, and so on and so forth. These are some of the challenges that we experience in driving digital banking and we can only overcome them through ensuring awareness and implementing adequate cyber securities.
We’ve got more customers coming in for digital training using internet banking. We have increased significantly the number of transactions that we record in internet banking. That shows that customers are getting more and more comfortable on the infrastructure side. We will continue to invest in the latest technology to ensure that we serve our clients well.
What is the future of digital banking for Stanbic IBTC Bank and Nigeria as a whole?
I think that the future is digital. You know people say that banks will no longer be the brick and mortar infrastructure; in other words, no physical structure. I don’t think so. I believe that banking will still be the combination of man and machine. There will be digital infrastructure with human beings to facilitate adoption. This will reduce operational expenses, and over time people get accustomed to using these channels. I think that the number of people that will visit banking halls will be reduced as banks put more and more capabilities on the digital platform. There are people who do not visit branches. Many people have banks in the UK and other countries overseas and they have not even visited their branch in a long time because they do everything on digital platforms. I believe this is the way that banking and every other thing will go.
How do you envisage digital banks affecting jobs? Are we going to see closure of traditional branches and further reduction in the industry’s workforce?
What will probably happen is that people will acquire new skills and still remain relevant in the industry. What we do at Stanbic IBTC is to constantly develop our people and expose them to a variety of skills so they can fit into any area of our business. What I see happening is that people will use the new skills and be deployed in other areas of the bank. I don’t envisage any branch closure. Banks will simply remodel and reuse in future. In summary, I don’t see banks laying off staff; instead, I see movements across the business units and acquisition of new skills.
There certainly is a relationship between innovation and financial inclusion. How do you see this relationship helping to forge true financial inclusion?
Financial inclusion is one key strategy thrust that the Central Bank of Nigeria is driving passionately and Stanbic IBTC and other banks are part of that drive. If you look at some of the gadgets that we have in our digital branch, they are all geared to help achieve financial inclusion. We have a mobile money app (wallet); you can open tier 1 account – as you know, tier 1 and tier 2 accounts do not require much KYC – you can open it instantly here, customers can get a debit card and they can come here and get a wallet. These are all part of helping financial inclusion.
Many phones now have the functionality to help you open an account. This is to ensure that people get banking services, no matter where they are, in cities, big towns or even villages. Apart from the digital branch, we have agents as part of our agency banking offering all around Nigeria where you can receive financial services tier 1 or tier 2 accounts or a mobile money wallet. You can actually go to withdraw money or pay in cash through any of these agents.
In fact, we are one of the banks chosen by the Federal Government to partake in the payment of the national stipend to the poor. We have been given a few states and we are using this same model of agency banking, mobile money to reach out to the people. There are some places we have gone that you have to go both by road and by boat to get there. These are all part of driving financial inclusion.
Many in the rural areas, it seem, still do not fully understand how the agency banking works and this has affected its uptake. Can you shed more light on your agency banking vis-à-vis the Conditional Cash Transfer (national stipend payment) programme of the government?
Agency banking is a combination of two things. The first is we go to the states with our own mobile materials; we take their BVN and fingerprints so that we know we have identified the specific people.
Secondly, we credit their wallets and then they can withdraw cash. But there is no bank in these areas. We have agents for agency banking, like micro-finance banks, mobile networks and filling stations where these people can go to because there are no ATMs there. Even if there is ATM, there is no network connection so they can’t go there and withdraw cash or pay in cash. Agency banking makes it easy for rural dwellers to enjoy financial services without necessary physical infrastructures or a branch.
So on the whole, how many agents will you say Stanbic IBTC Bank has?
I don’t have that figure offhand but that is a bit huge. We partnered with oil companies, downstream, those that have petrol stations all over Nigeria, we partnered with one or two mobile companies that have outlets all over Nigeria and we have also partnered with microfinance banks to widen the reach and get to even the most remote areas of the country.
