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

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muhammad-jibrin

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.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Crude Oil

Oil Prices Hit Multi-year Highs on Monday

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Crude oil - Investors King

Oil prices hit multi-year highs on Monday buoyed by recovering demand and high natural gas and coal prices encouraging users to switch to fuel oil and diesel for power generation.

Brent crude oil futures were up 59 cents, or 0.7%, to $85.45 a barrel by 0900 GMT, after hitting $86.04, their highest level since October 2018.

U.S. West Texas Intermediate (WTI) crude futures climbed 90 cents, or 1.1%, to $83.18 a barrel, after hitting a $83.73, their highest since October 2014.

Both contracts rose by at least 3% last week.

“Easing restrictions around the world are likely to help the recovery in fuel consumption,” analysts at ANZ bank said in a note, adding that gas-to-oil switching for power generation alone could boost demand by as much as 450,000 barrels per day in the fourth quarter.

Cold temperatures in the northern hemisphere are also expected to worsen an oil supply deficit, said Edward Moya, senior analyst at OANDA.

“The oil market deficit seems poised to get worse as the energy crunch will intensify as the weather in the north has already started to get colder,” he said.

“As coal, electricity, and natural gas shortages lead to additional demand for crude, it appears that won’t be accompanied by significantly extra barrels from OPEC+ or the U.S.,” he said.

Prime Minister Fumio Kishida said on Monday that Japan would urge oil producers to increase output and take steps to cushion the impact of surging energy costs on industry.

Chinese data showed third-quarter economic growth fell to its lowest level in a year hurt by power shortages, supply bottlenecks and sporadic COVID-19 outbreaks.

China’s daily crude processing rate in September also fell its lowest level since May 2020 as a feedstock shortage and environmental inspections crippled operations at refineries, while independent refiners faced tightening crude import quotas.

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Crude Oil

Oil and Gas Companies in Nigeria

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Oil - Investors King

Nigeria is an oil reach nation with several oil and gas companies operating in Africa’s largest economy.  However, only ten oil and gas companies are listed on the Nigerian Exchange Limited (NGX).

Before we discuss in detail each of the listed oil and gas companies in Nigeria. A short background on Africa’s largest economy will help throw more light on the significance of the oil and gas companies or the entire oil sector to the Nigerian economy.

Nigeria is a petrol-dollar economy, which means Africa’s most populous nation, sells crude oil and use its proceed to service the economy. In fact, the Nigerian Naira is backed by crude oil like Canadian Dollar and other commodity-dependent economies.

But because the Central Bank of Nigeria (CBN) pegged the Naira against its global counterparts, the local currency does not reflect succinctly the fluctuation in global oil prices like other crude oil-dependent currencies.

Since global oil prices rebounded with the gradual reopening of economies, the oil and gas companies in Nigeria have also rebounded from the 2020 record low of $15 per barrel. The oil and gas sector has gained 62.76 percent from the year to date, according to the NGX Oil and Gas Index.

The index gauge price movements in 10 listed oil and gas companies in Nigeria.  However, there are several oil and gas companies in Nigeria not listed on the Nigerian Exchange Limited.

Oil and Gas Companies Listed on the Nigerian Exchange Limited (NGX)

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Crude Oil

Oil Prices Extend Gains on Friday After Saudis Dismiss Supply Concerns

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Oil

Oil prices extended gains on Friday after Prince Abdulaziz bin Salman, Saudi Energy Minister dismissed calls for more crude oil supply on Thursday.

Brent crude oil, against which Nigerian oil is priced, rose to $84.92 per barrel at around 8:31 am Nigerian time. The U.S West Texas Intermediate crude oil also responded positively to the comment, rising to $81.56 per barrel on Friday.

Prince Abdulaziz had stated on Thursday that OPEC plus efforts were enough to protect the oil market from wild price volatility seen in coal and natural gas markets.

“What we see in the oil market today is an incremental (price) increase of 29%, vis-à-vis 500% increases in (natural) gas prices, 300% increases in coal prices, 200% increases in NGLs (natural gas liquids) ….”

He further stated that the Organization of the Petroleum Exporting Countries and allies led by Russia, have done a “remarkable” job acting as “so-called regulator of the oil market,” he said.

“Gas markets, coal markets, other sources of energy need a regulator. This situation is telling us that people need to copy and paste what OPEC+ has done and what it has achieved.”

Prince Abdulaziz explained that OPEC plus will add 400,000 barrels per day in November and do the same in December and subsequent months. The increase will be gradual he said.

“We want to make sure that we reduce those excess capacities that we have developed as a result of COVID,” he said, adding that OPEC+ wanted to do it “in a gradual, phased-in approach”.

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