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Jubrin: Sun Trust Bank is Part of the Tectonic Movement in Banking

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Managing Director/CEO of Sun Trust Bank, Muhammad Jibrin, tells why the new entrant’s game plan is anchored on tectonic shift in banking with emphasis on the retail customer, the small and medium business sector.

Can you give an insight into your optimism attracting 30 million or more new customers to your data base?
I said earlier we have 30 million bank accounts only, okay? And we have looked at it and seen that in a population of 180 million, 150 million people are excluded from the banking population. Let’s agree that 50 million of that population is our target; the idea still is to add value to the existing number of the bankable population. Here we are trying to attract or accommodate about 50 million people excluded from having banking services; that is one.

Secondly, statistics have shown that of all the transactions executed today, not only in Nigeria but worldwide, more than 90 percent of such transactions are electronic; so it is just this very insignificant ten percent that is being projected to be accommodated in the tectonic banking plan; That was why we were very clear about this policy from day one, which is that any institution that thinks the branch banking is still at the core of its brand network is not ready for the customer of tomorrow. The customer of today is executing 90 percent of his transaction electronically, and we are not even talking of the customer of tomorrow.

Does that suggest physical branches would no longer be there?

No, I don’t think so. We will still have physical presence; people need to interact; nobody wants to talk to machines from time to time but when we tried to test our systems, people did come with cheques to cash them and we asked them why they need the cash and they replied they needed to make a withdrawal because someone has given them a cheque and they wanted to pay it into their accounts. I asked them to give me their account details and after giving me the account details, I transferred the money to their accounts immediately and they received their alerts and then thanked me for saving them from some problems. Seriously, this is exactly what we need now and all it takes is to educate the customer.

Will Sun Trust run minimum across the counter transactions?

There will be zero behind-the-counter transactions. Absolutely; what we are driving is powered by the electronic movement. But even in the U.S. Bank of America, Chase, Citi et al still operate across-the-counter transactions?
Look, there will still be one or two such activities but we don’t want to do that. Apart from the banks you mentioned, there are still financial technology banks that don’t even have any physical presence.

Today, you don’t need to come to SunTrust to open an account, you don’t need to fill a physical form to open an account, all I ask you to do is go to the website, go to the personal banking page of the website and you will be able to fill your account opening form online, submit it online and the next morning you will get your account number, cheque book and data.

So what if I have a million naira to deposit in cash, what do I do?

We will collect it and take it to the Central Bank, we can collect it but you will not see a physical counter.

And if I want to draw cash, I go to the ATM?

You go to the ATM, why do you need to carry one million naira? It’s risky because your demands would not be up to that.

What do I do when I am depositing my cash?

We can take it from you and send it to the Central Bank. There are four major drivers of the economy in the building block today, which will continue to change the future of everything; one is mobile penetration, that has been achieved in Nigeria as there is huge mobile telephone penetration in this country, the next is the broadband penetration as there is huge and ongoing broadband penetration in Nigeria especially with the deployment of various fibre-optic technology n the system across the country and the sub-region. When these things happen, the next big thing is where we are, which is the small and medium enterprise or the mass market, this is what I call the mass market.

How is a technology driven bank’s function different from what we know?

It is a matter of emphasis and reaching out to a larger population because over ninety percent of transactions today are executed electronically. Here at Sun Trust we do not have counter, teller and cashier cubicles. This is because there is no need for them. Any institution that believes that physical branches are at the core of its brand is not prepared for the customer of tomorrow who neither wants to go to the physical branch nor wants to go and carry out a transaction over the counter either in cash or cheque. On the contrary most customers today would rather execute their transactions electronically; at the minimum if they need cash they will go to an ATM.

So banking is no longer where you go to today; it is what you do 24/7 and this is at the heart of our philosophy and if you believe in this then there is no need for you to have physical branches. At the heart of our strategy therefore, we agreed that this bank would be known as a financial technology bank, we are going to drive and deliver banking services using technology, and this is the future of banking. We need to ensure that people have access to ATMs and businesses are working very well and that people can do mobile banking; once we are able to deliver these services there is really no need for a bank to speculate how honest a bank is with the customer.

The truth is that quite a large number of the populace has been excluded from having access to financial services, so our target market would continue to be the small and medium enterprises and the retail ones but more importantly we shall focus on them, on those that are in the South and those that are excluded from financial services and I will tell you why I said so. If you look at it, after the bidding exercise that was conducted by the Central Bank in conjunction with the commercial banks, you would agree with me that the total number of bank accounts in the system that we have seen is not more than thirty million; Nigeria’s population is about 180 million; it is growing at an annual growth rate of about three percent and when that is compounded over the next ten years Nigeria would not be less than 220 to 230 million people.

Now more than 70 percent of that population largely made up of young people, is excluded from financial services. When you analyse the demography, if you categorize the population, you will notice that about 70 percent of this population consists of the youth and therefore looking at it today our youth population would be more than double by 2020 and when this happens, we shall be looking at a population that is technologically savvy and very agile when it comes to the issue of technology.

Sadly they are the ones excluded from financial services, what you and I take for granted, services that easily give us access to all types of transactions, payment of our bills, saving for a rainy day and even borrowing on very reasonable terms from banks. This group does not have that access and the Central Bank of Nigeria is trying to ensure that there is financial inclusion; so given all these things together and looking at where the economy is going, where the country is going, where the growth is, we believe that we should target the youths as tomorrow’s beneficiaries of the larger network of electronic banking technology.

Will this innovation mean a shift of emphasis on collaterals?

Our target market is the retail customer, who is a very difficult customer but in these very small and medium enterprises you can clearly see an engine room for growth and development and you can put them in clusters, in cooperatives and in groups and therefore be able to provide credit to this particular group of people and when you do this peer pressure would be on each and every one to ensure that you settle your obligations to ensure that the next person gets access to credit.

Does that mean your security network here is moderately designed?

Absolutely, we don’t have a forest of police men guarding this place because I don’t have anything in physical form that you can come and take but I have a cyber security network and that means you cannot break into my system, that is the issue that we are selling because rather than spend money on physical security, I spend more money on cyber-security as a financial technology bank. Of course, we have adequate security for the premises; there would always be a good measure of security.

Who are your correspondent banks abroad?

We are working with Citibank, Barclays in China, ICBC, Deutsche Bank and the normal banks; of course we are going to focus on trade and work with those banks we need for our trade and other transactions.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Flashing Green

Oil prices have rebounded strongly over the last few days – up around 10% from the lows – buoyed by the prospect of a lower price cap on Russian crude

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By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA

We’re seeing green flashing across the board on Thursday, with sentiment buoyed by positive signals on Fed rate hikes and China’s Covid response.

While it could be argued that Jerome Powell’s comments on Wednesday were relatively balanced – slower tightening now but rates high for longer – the last year has proven that anticipating the path of inflation even a short period ahead is incredibly difficult. Knowing what the Fed intends to do next is far more valuable than what it thinks it may do 6-12 months down the line.

And anything that is perceived to reduce to possibility of an interest rate recession is going to be a positive for equity markets. The Fed has every opportunity to tighten more in the months ahead if the data doesn’t play ball. What’s far more difficult is undoing the damage caused by moving too fast now with little to no visibility on how impactful past tightening has been.

Positive signals

The signals coming from China also look very positive. While we shouldn’t expect a dramatic shift in policy from the leadership, particularly before the March Congress, any modest softening in its Covid-zero policy will and should be welcomed. The approach has been extremely damaging to growth and confidence and the protests highlight how public opinion towards it is changing.

We shouldn’t be naive to the fact that a move away from the policy won’t be easy and there’ll be plenty of setbacks. But it’s certainly a step in the right direction that, along with the measures announced to revive the property market, could put the economy on a much better path.

A huge few days for oil markets

Oil prices have rebounded strongly over the last few days – up around 10% from the lows – buoyed by the prospect of a lower price cap on Russian crude, another large production cut from OPEC+ this weekend, and China’s evolving Covid stance. There remains considerable uncertainty surrounding all of the above though which will likely ensure prices remain volatile going into the weekend. That could carry more risk than normal if the OPEC+ meeting does go ahead as planned on Sunday and the EU hasn’t agreed to the price cap level by the close of play Friday. The range of possibilities on these two things alone is huge which will make rumours and speculation over the coming day or two all the more impactful.

Gold testing range highs

Gold bulls were particularly happy with Powell’s comments on Wednesday with the yellow metal rallying strongly to trade at the upper end of its recent range. It faces strong resistance around $1,780 though which was a significant level of support in the first half of the year. With so much data to come over the next day or so, it may not prove particularly resilient if traders are given further hope that rates will rise more slowly and peak lower.

Some relief for cryptos

The risk relief rally is coming at just the right time for bitcoin, helping it to recover from the lows to trade around $17,000. This is around the highs of the last few weeks since it settled after its latest plunge. Whether it will be enough to revive interest in the cryptocurrency, I’m not sure. The FTX fallout is continuing to weigh heavily on the space and the prospect of more contagion or scandals is hard to ignore.

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Crude Oil

Oil Revenue into Foreign Reserve Dropped From $3bn Monthly in 2014 to Zero in 2022

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The official foreign exchange receipt from crude oil sales into Nigeria’s official reserves has dried up steadily from above US$3.0 billion monthly in 2014 to an absolute zero dollar today, the Central Bank of Nigeria (CBN) governor, Godwin Emefiele disclosed.

Speaking at the 57th annual bankers’ dinner organized by the Chartered Institute of bankers of Nigeria (CIBN) in Lagos, the CBN governor noted that there has been a significant loss in foreign reserves due to the naira’s struggle and the rise in demand for forex. 

He added that the sharp increase in the number of Nigerians who are seeking education in foreign countries particularly the UK has resulted in an unprecedented demand for foreign exchange. 

According to him, the number of student visas issued to Nigerians by the UK alone has increased from an annual average of about 8,000 visas as of 2020 to nearly 66,000 in 2022.

Emefiele also lamented about the level of crude oil theft in Nigeria which has significantly affected the country’s oil production. He noted that crude oil theft has adversely impacted the Country’s foreign exchange reserves.

Investors King had earlier reported that Nigeria has lost its coveted position as Africa’s largest oil producer after oil production dropped below the mark of 1 million barrels per day. 

Nigeria currently trails Angola, Libya and Algeria to the fourth position. 

Meanwhile, on the Naira-4-Dollar scheme which the CBN introduced to boost migrant remittances into the Nigerian economy, the CBN governor noted that the scheme has largely been successful. 

“I am happy to note that, so far, the Naira-for-Dollar scheme has been successful in increasing remittance inflows through our registered International Money Transfer Organisation (IMTOs),” he said.

Emefiele also noted that the introduction of the National Domestic Card Scheme (NDCS) will help to reduce the operating cost incurred by commercial banks while using foreign cards. 

It could be recalled that the CBN earlier announced that it planned to introduce Nigeria-made transactional cards to replace well-known cards such as Visa and MasterCard.

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Crude Oil

Crude Oil Gained 2% as U.S. Oil Inventories Dipped Last Week

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Crude Oil - Investors King

Crude oil appreciated on Tuesday on signs global supply is declining amid better-than-expected optimism on Chinese economic recovery and a weaker dollar.

But the likelihood that OPEC+ will leave output unchanged at its upcoming meeting limited the gains.

Brent crude futures rose $2.06, or 2.48% to $85.09 per barrel by 1044 GMT. The more active February Brent crude contract rose by 2.02% to $85.95.

U.S. West Texas Intermediate (WTI) crude futures climbed $1.69, or 2.16%, to $79.89.

Support followed expectations of tighter crude supply.

U.S. crude oil stocks dropped by 7.9 million barrels in the week ended Nov. 25, according to market sources citing American Petroleum Institute figures on Tuesday.

Official figures are due from the U.S Energy Information Administration on Wednesday.

And the International Energy Agency expects Russian crude production to be curtailed by some 2 million barrels of oil per day by the end of the first quarter next year, its chief Fatih Birol told Reuters on Tuesday.

On the demand side, further support came from optimism over a demand recovery in China, the world’s largest crude buyer.

China reported fewer COVID-19 infections than on Tuesday, while the market speculated that weekend protests could prompt an easing in travel restrictions.

Guangzhou, a southern city, relaxed COVID prevention rules in several districts on Wednesday.

A fall in the U.S. dollar was also bearish for prices. A weaker greenback makes dollar-denominated oil contracts cheaper for holders of other currencies, and boosts demand.

Fed Chair Jerome Powell is scheduled to speak about the economy and labour market on Wednesday, with investors looking for clues about when the Fed will slow the pace of its aggressive interest rate hikes.

Capping gains, the OPEC+ decision to hold its Dec. 4 meeting virtually signals little likelihood of a policy change, a source with direct knowledge of the matter told Reuters on Wednesday.

“Market fundamentals favour another cut, especially given the uncertainty over China’s COVID situation … Failure to do so risks sparking another selling frenzy,” said Stephen Brennock of oil broker PVM.

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