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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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Energy

Africa Day 2022: Energy Key to Ending African Food Crisis – ECP

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Energy Capital & Power (ECP) says enhancing investment and development of the African energy sector will help drive the development of the continent.  

ECP said this on Wednesday while marking the 2022 Africa Day tagged: The Year of Nutrition. It said “Energy is the backbone of every economy. Energy is a fundamental enabler and key driver of Africa’s development. 

“Access to reliable, affordable, and sustainable energy goes beyond simply keeping the lights on, however, but drives industrialisation, agriculture, and infrastructure expansion while improving access to medical, education, and food services,” ECP added. 

Africa’s leading investment platform for the energy sector stated that it remains fully focused on enhancing investment and development across the African energy sector, making a strong case for energy as a key driver of food resilience and climate change mitigation.

According to its official report made available to Investors King, ECP revealed that “Africa is facing a mounting food crisis which has only been worsened by the COVID-19 pandemic. 

“Climate change, political and economic crises, and regional conflict and displacement have resulted in over 346 million people suffering from severe food insecurity while 452 million suffer from moderate food insecurity. 

“While this insecurity continues to have significant consequences on the physical, mental and physiological development of the population, the burden of malnutrition transcends into the socioeconomic space, with the Cost of Hunger in Africa Study estimating that African countries are losing the equivalent of between 1.9 and 16.5 per cent of their gross domestic profit due to child under-nutrition. Accordingly, this year’s Africa Day is being celebrated under the theme, ‘Strengthening Resilience in Nutrition and Food Security on the African Continent,’ centered around the need to strengthen agro-food systems and health and social protection systems for the acceleration of human, social and economic capital development,” the statement added. 

ECP said it believes that ongoing efforts to achieve net zero hunger can be strengthened through the expansion and improvement of energy systems across Africa. Currently, 65 per cent of Africa’s population relies on subsistence farming, and in order to tackle food insecurity, governments across the continent are looking at deploying large-scale modern agricultural systems, systems which require significant energy at every stage of the production stage.

“By scaling up investment in key energy industries, Africa has the opportunity to address two imminent crises: energy and food insecurity. The correlation between improved energy and food security is evident: by strengthening energy access and affordability, countries can strengthen agro-food systems continent wide, tackling food security and driving socioeconomic growth,” said Laila Bastati, Managing Director, ECP.

The African Development Bank Group’s Board of Directors had on Monday approved a $1.5bn Emergency Food Production Facility to help tackle the global food crisis sparked by the Russian-Ukraine conflict. 

Africa’s only AAA-rated financial institution added that the funds will help 20 million African farmers produce an extra 38 million metric tons of food to address growing fears of starvation and food insecurity on the continent.

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Refining Sector Accounts For 3% of Global Emission – ARDA

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The African Refiners and Distributors Association (ARDA) has revealed that the refining sector only accounts for 3% of the global energy sector emission. 

Oil and Refining Research Analyst, Maryro Mendez, stated this at the second Refining and Specifications Virtual Workshop organised by the ARDA and monitored by Investors King.

According to Mendez, “the refining sector accounts for only three percent of the global energy sector emissions. While refineries’ contribution to global energy sector emissions is low, the opportunities for reducing them are significant.

“Refineries globally have started thinking about measuring, monitoring and reducing carbon emissions and environmental sustainability has to be a priority for refiners and Africa is no exception.”

According to her, because fuel combustion accounts for 80% of refinery carbon emissions, fuel source and energy optimization would provide the greatest chance to minimize emissions.

“The challenge is not technical but is commercial with facilities requiring sufficient incentive and capital to invest without impacting on their competitive position”, she added.

The association further revealed that Nigeria and other African countries would need to minimize sulphur levels while noting that upgrading their existing refineries would require at least $15.7 billion.

Anibor Kragha, ARDA’s Executive Secretary stated that adopting a standardized specification will prevent the importation of fuels that do not match AFRI specifications into Africa.

“New process units required are to improve key fuel specifications, especially Naptha Hydrotreater (NHdT), Diesel Hydro-desulph. (DHDS), Benzene Extraction, Sulphur, and Hydrogen Plants.

“Another key focus area is for African countries, especially those sharing common fuel supply chains to develop an integrated policy covering both fuel quality and vehicle exhaust emissions.

“This is to achieve the ultimate objective of clean air in our African cities. Without this integrated and coordinated policy, the objective of clean air will not be realized whether by imports or local production,” he said.

The idea for an African refinery association was conceived in the late 1970s, and the first sub-Saharan African initiative – the Association of Refiners and Distributors of Oil Products (ARDIP) – was launched in September 1980, led by the SIR refinery in Cote D’Ivoire, with counterpart refineries in Senegal, Sierra Leone, Liberia, Ghana, and Gabon.

Mr Joel Dervain, the then Managing Director of SIR, re-activated the campaign for an association to promote technical and commercial best practices among African refiners and their stakeholders in 2006. The African Refiners Association (ARDA) was then created on March 23, 2006 in Cape Town, South Africa, with the help of his colleagues at SONARA, SAR, TOR, SOGARA, and NATREF.

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African Energy Chamber to Host Energy Transition Forum at The 2022 Energy Week  

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African Energy Chamber (AEC) says it will host the Energy Transition Forum, in partnership with public and private sector organisations, government representatives, energy stakeholders and investors in October. 

In a statement made available to Investors King AEC stated that “The Energy Transition Forum will address critical issues such as the lack of adequate funding, the diversification of the energy mix, workforce development, and regulatory reforms necessary to enable Africa to expand its energy sector to address energy security, affordability, access, and sustainability matters”.

“With some 600 million people across the continent living in energy poverty and over 900 million without access to clean cooking, Africa needs to exploit all of its vast natural resources in order to make energy poverty history by 2030. In this respect, stakeholders across the continent are opting for an integrated approach to developing energy resources whereby every resource is utilized in order to kickstart economic growth and electrification. With over 125.3 billion barrels of crude oil, 620 trillion cubic feet of gas, and nearly 16.4 billion short tons of coal, the continent is well-positioned to drive economic growth,” it added. 

Executive Chairman of the AEC, NJ Ayuk, said: “With nearly 66 per cent of the world’s population living without electricity access based in Africa, the continent needs to ramp up the production of all its energy resources including gas, oil, wind and solar to ensure energy poverty is history by 2030. The AEC is honored to host the Energy Transition Forum at AEW 2022 where an African narrative of a just and inclusive energy transition that is fit for Africa will be developed. We will go from Cape to Cairo with a well-defined African message. Africans and the energy sector have a rare chance to define the narrative and we must.” 

The Energy Transition Forum is bringing together investors, regulatory authorities and energy market players to discuss the role of gas in Africa’s energy future and energy transition. The challenges of limited investments in gas exploration, production, and infrastructure development in gas-rich countries such as Nigeria, Algeria, Egypt, Niger, and Mozambique will also be addressed.

According to the AEC, climate change continues to impact Africa, leading to an increasing number of African countries such as Nigeria, Namibia, Morocco, South Africa, Uganda, and Kenya introducing policy reforms and initiatives to scale up renewable energy penetration in Africa. 

Investors King gathered that Nigeria has vowed to achieve climate neutrality by 2060 by increasing the share of natural gas and renewables in its energy mix while Namibia aims to make the development of hydrogen central to its energy policy. At the same time, South Africa has introduced its Hydrogen Society Roadmap to fast-forward the development of local content and hydrogen infrastructure whilst Morocco’s Law 13-09 and Egypt’s net metering scheme aims to expand distributed renewables development.

The chamber added that the AEW 2022, under the theme – “Exploring and Investing in Africa’s Energy Future while Driving an Enabling Environment” will feature high-level meetings and panel discussions where government ministers, investors, academia, and energy market stakeholders will discuss how Africa can attract funding to boost exploration, production and infrastructure development to ensure secure supply while remaining a climate champion. 

The African Energy Week is scheduled to take place from 18th – 21st October 2022 in South Africa at Africa’s premier event for the oil and gas sector.

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