CEO IN­TER­VIEW If you can run a home, you can run a busi­ness – Di­a­mond Bank CEO

Uzoma Dozie, the CEO of Di­a­mond Bank, is an as­tute ad­vo­cate of lever­ag­ing on tech­nol­ogy for fi­nan­cial in­clu­sion. In this ex­clu­sive in­ter­view, he speaks of how ac­cess to dig­i­tal bank­ing ser­vices is chang­ing the bank­ing cul­ture in Nige­ria. Ex­cerpts:

Daily Trust - - NEWS - From Sun­day Michael Ogwu, Lagos

More and more Nige­ri­ans are tak­ing to dig­i­tal de­vices by the day, what plan does Di­a­mond Bank have for such peo­ple?

What peo­ple want is con­ve­nience and con­ve­nience has many fac­tors. Cost is a con­ve­nience and time is a con­ve­nience. For us there are two parts: We are pro­vid­ing bank­ing ser­vices and we are look­ing at the most cost ef­fec­tive way to do that. It cer­tainly can­not be peo­ple walk­ing into a branch, leav­ing what­ever they are do­ing, even if it is just re­lax­ing at home - look at even the jour­ney, the search for where to park your car, then go­ing through our ma­chines, then wait­ing to get ser­vice be­fore leav­ing...

In the past, if we did 20 trans­ac­tions in the bank, it meant 20 peo­ple walked into the bank. To­day by pro­vid­ing con­ve­nient ser­vices, you can in­crease trans­ac­tion count.

Peo­ple do trans­ac­tions ev­ery day, but how many bank­ing trans­ac­tions do they do? So by pro­vid­ing a plat­form that al­lows them to do their trans­ac­tion, whether bank­ing or not, it means that, you are now lay­ing a big role in their life.

So for us, it is not just in the mid­dle class but for all of us. The think­ing for us is how to use this same plat­form to pro­vide ser­vices for peo­ple at the ru­ral ar­eas that we could never have reached be­fore. That is where the op­por­tu­nity is not even the mid­dle class, which is a small per cent of the Nige­rian mar­ket. The ru­ral area is the mass mar­ket that is un­der banked, and dig­i­tal ac­cess al­lows you to pro­vide ef­fec­tive ser­vice, in a cost ef­fec­tive and scal­able man­ner and you can make money from it. The ques­tion is in the num­bers and mar­gin.

Even in the mass af­flu­ence base, we have seen a suc­cess­ful shift. Right now, we have two and half mil­lion peo­ple on our mo­bile app. We have nine mil­lion peo­ple who have opened ac­count us­ing the Di­a­mond Y’ello.

In the mar­ket place, we have said, you know what, these peo­ple are never go­ing to come to a bank be­cause the bank is 9 to 5 and their busi­ness is 5 to 9. It’s a one man busi­ness, so who is go­ing to man the store. So we de­cided to take the mo­bile ap­pli­ca­tion to them since they have mo­bile phones.

The in­no­va­tion in dig­i­tal tech is hap­pen­ing more in Africa than it is hap­pen­ing in other parts of the world that even have bet­ter in­fra­struc­ture.

How do you man­age the deficit in in­fra­struc­ture, es­pe­cially in reach­ing the un­banked in the ru­ral ar­eas?

Once you have a mo­bile phone with a sig­nal, you have the ba­sic in­fra­struc­ture. The bank­ing need of some­one in the vil­lage is dif­fer­ent from the bank­ing needs of some­one in the ur­ban area. It is ei­ther peo­ple to peo­ple or busi­ness to peo­ple in those ar­eas.

Ev­ery sin­gle day, we are see­ing in­no­va­tion that makes it easy to pro­vide these ser­vices. To­day we have mCASH which al­lows traders to get a USSD merchant code and get in­stant value.

There are things we don’t just have to copy but we can leapfrog. We can leapfrog point of sales be­cause with your bank ac­count, I can trans­fer money to you im­me­di­ately. You can’t do that in the United King­dom, you have to pay for that ser­vice. In Nige­ria, if I charge you ex­tra, you prob­a­bly re­port to the cen­tral bank. I don’t like point of sales be­cause it cost me money to bring it into the coun­try. It is a great tech­nol­ogy but I don’t need it any­more. We have in­vested in enough in­fra­struc­ture to leapfrog that.

Re­cently, some­one was talk­ing to me about the ATM and I said, this is the 50th year of the ATM. But apart from cash, what does it do that my mo­bile app does not do. I see its im­por­tance while we are still wait­ing for Nige­ri­ans to move from dumb phones to smart phones but even then, we are be­gin­ning to see some USSD ser­vices that hith­erto were done only on smart phones. So I am even con­fused to the fu­ture of ATM, but we have a mo­bile first phi­los­o­phy.

How does this whole dig­i­tal space in­te­grate the ac­tiv­i­ties of the SMEs es­pe­cially with re­gards to ac­cess to fi­nance?

The fu­ture of Nige­ria’s de­vel­op­ment or suc­cess is the SMEs. The key thing in ev­ery suc­cess­ful coun­try is that the SMEs are the big­gest con­trib­u­tors it’s GDP (Gross Do­mes­tic Prod­uct) by 70 per cent. They are also the big­gest em­ploy­ers of labour, not gov­ern­ment. That is what we are af­ter. The op­por­tu­nity is in those 70 mil­lion peo­ple that are not banked.

I al­ways say if 17 or 20 mil­lion busi­nesses em­ploy five peo­ple each, then you have solved our unem­ploy­ment prob­lem.

I think par­ents are be­gin­ning to strip there minds of the men­tal­ity that ev­ery­body must be a doc­tor or a lawyer or even a banker, be­cause those peo­ple are not mak­ing money. Peo­ple are go­ing into re­tail, food and agri­cul­ture be­cause that is where the op­por­tu­nity is. So we need to start pro­vid­ing ser­vices for those ar­eas.

There is a lot of money in Nige­ria. I al­ways say that, the cap­i­tal in­vested in en­trepreneur­ship is more than the money avail­able to bor­row. Money is not a prob­lem, but you must be in a state of readi­ness to use money. You would not let some­body drive if he does not know how to drive, same way we will not give peo­ple cash if they don’t re­spect cash.

It is also about ac­cess to ad­vi­sory ser­vices, ca­pac­ity build­ing and ac­cess to mar­ket and aware­ness for you. So we do, through our pro­gramme, a 5-month ca­pac­ity build­ing ex­er­cise for en­trepreneurs at the end of which five peo­ple get seed money for their busi­nesses.

We usu­ally start with about 100 of them. At the end of the day, those who did not win will tell you, they now see busi­ness dif­fer­ently.

We are in the sev­enth sea­son of that pro­gramme and the chal­lenge is how to up­scale. So for this year, we will cap­ture the mo­ment, so that if you are not part of it, you can learn from oth­ers. Peo­ple who have data will watch it on our plat­form.

Pro­vid­ing op­por­tu­nity for women in busi­ness is an­other area for us. No mat­ter what a n y b o d y says, women are very good, as­tute busi­ness peo­ple. If you can run a home, you can run a busi­ness be­cause the house hold is a busi­ness.

We try to cre­ate op­por­tu­nity for women be­cause the way they do their busi­ness might be dif­fer­ent from the way a man wants to do his busi­ness.

Since we have pitched our camp in the re­tail space, we have to play a role in de­vel­op­ing that mar­ket through ad­vo­cacy or through pro­vid­ing an en­abling en­vi­ron­ment for busi­nesses to thrive.

With your phi­los­o­phy, con­cerned mo­bile aren’t about first you cy­ber- se­cu­rity and con­sumer pro­tec­tion is­sues, es­pe­cially be­cause of the lit­er­acy level of our peo­ple?

If I look at the fraud rate in dig­i­tal com­pared to cash per trans­ac­tions, cash is dan­ger­ous. The best anal­ogy is be­tween fly­ing and us­ing the road. More peo­ple die from road trav­el­ling than fly­ing but when there is a crash, it is more dra­matic and peo­ple make a lot of noise about it but peo­ple die ev­ery day on the road.

In Di­a­mond Bank, 80 per cent of our trans­ac­tions are dig­i­tal. One small fraud and there is a large noise, mean­while, there has been a cash fraud, cheque fraud, cash suppression amongst oth­ers. For us, there will al­ways be risk but the risk in dig­i­tal is far less than in the non-dig­i­tal trans­ac­tions.

When MTN first started, they came with the anal­ogy that, these peo­ple would not un­der­stand SMS, let’s make it zero naira and N35 a minute for voice call. One month later, Nige­ri­ans were us­ing SMS at zero naira to com­mu­ni­cate sim­ple mes­sages. The adop­tion be­came even much higher than in Europe.

It took us 35 years to grow six mil­lion cus­tomers through our 200 branch net­work but it took only us one year to get six mil­lion cus­tomers through Di­a­mond Y’ello.

One of our stud­ies re­vealed that 70 per cent of mar­ket women have smart phones and in­ter­est­ingly, 70 per cent of them had data. They had data be­cause they were us­ing What­sapp and it’s cheaper than SMS. And they can also get calls from abroad so it’s a no brainer. Where there is op­por­tu­nity, peo­ple will learn very quickly.

What are you do­ing in the agric space?

We are lend­ing though an out­grower scheme but that is not enough. We be­lieve that agri­cul­ture is a very pro­duc­tive area for banks. If you look at Amer­ica, apart from the tech peo­ple, the rich­est Amer­i­cans are peo­ple who own farms. They sup­ply all the food chains.

The in­fra­struc­ture, like stor­age and mar­ket, still needs de­vel­op­ment. In Côte d’Ivoire, they are very big on co­coa, so at the be­gin­ning of ev­ery farm­ing sea­son, the pres­i­dent goes out on na­tional tele­vi­sion to name the price of off-take. So it makes fi­nanc­ing avail­able be­cause the banks through his­tor­i­cal in­for­ma­tion, know their pro­duc­tion ca­pac­ity.

Tech­nol­ogy has also made it pos­si­ble to es­ti­mate yield based on es­ti­mated rain­fall and soil test­ing. Just like oil, if the pro­jected yield is 70 per cent, I can fi­nance 30 per cent and you bring 40 per cent.

We have seen a con­sis­tent surge on the pur­chas­ing Man­ager In­dex, what is your pro­jec­tion of how we will fare in the sec­ond half of 2017?

I look at neg­a­tive but I also look at pos­i­tives. If I look at the prob­lems six months to one year ago and I look at the in­di­ca­tors now, they are mov­ing in the pos­i­tive di­rec­tion. The big­gest con­cern to the mar­ket was the price of the naira and we have seen some sta­bil­ity. Avail­abil­ity of forex for raw ma­te­rial is also see­ing some liq­uid­ity. We have also seen sta­bil­ity in the pro­duc­tion of oil and the price has been fairly sta­ble and that gives us com­fort.

The growth in the non-oil sec­tor has been up and up. If we can just main­tain po­lit­i­cal sta­bil­ity, it tells us that we are in the right di­rec­tion. I am in a more op­ti­mistic frame of mind than I was, six months ago. And off course, peo­ple are be­gin­ning to bring money to Nige­ria, which was not there be­fore be­cause they were not cer­tain about a num­ber of things.

We have also re­alised that the econ­omy is frag­ile. Like the Amer­i­can na­tion, when the au­to­mo­bile sec­tor was chal­lenged, they came to­gether to say, we can’t watch this go down. We saw that here in the Eti­salat is­sue. We re­alised that this was a key player in the econ­omy and we must make sure it sur­vives. This proac­tive ac­tion gives peo­ple con­fi­dence. The var­i­ous arms of reg­u­la­tors came to­gether and said, there is im­pli­ca­tion, we can’t fold our arms. It is not what you do dur­ing dif­fi­cult times but what you do dur­ing good things.

These ac­tions are re­as­sur­ing be­cause, if we can do this, then we can go through the hard times.

Di­a­mond Bank’s as­set base leapfrogged to N2.7 tril­lion, what is your mes­sage to share­hold­ers of the bank?

The econ­omy is still frag­ile. It is not yet a profit mak­ing en­vi­ron­ment. But two things are im­por­tant, to have liq­uid­ity and cap­i­tal and pro­vide ser­vices that would make your cus­tomers come back. We must be adding value to you to con­tinue to do busi­ness with us and it shows in the num­ber of new cus­tomers that we are adding to our books.

We are try­ing to man­age our cap­i­tal well. Two years ago when we had ex­cess cap­i­tal, we were go­ing places but now we are look­ing at those cap­i­tal and say­ing some of these as­sets that we have, how do they help our busi­ness? If they don’t, give it to some­body else.

We are also talk­ing to peo­ple who like the Di­a­mond Bank story, our re­tail strat­egy and all we plan to do, to see if they will want to in­vest in our long term pro­grammes. So we are do­ing enough to make sure we have ad­e­quate cap­i­tal.

We be­lieve our strat­egy is in line with what the gov­ern­ment is try­ing to do but we have taken that first move ad­van­tage and it has given us com­fort.

For our in­vestors’ per­spec­tive, div­i­dend and yield may not be much this year, but def­i­nitely, once Nige­ria goes through this, we are cer­tain of a plat­form to jump.

The CEO of Di­a­mond Bank, Mr Uzoma Dozie

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