News Column

Oguntayo - Cashless Policy to Reduce Banks' Operating Costs

August 3, 2014

Mr. Timothy Oguntayo who last week officially took over as the Group Managing Director/Chief Executive Officer of Skye Bank Plc spoke to Obinna Chima on his goal to focus the bank towards increased small and medium scale enterprises lending

What are your plans for Skye Bank?

My plan for Skye Bank is for the institution to become a major force to be reckoned with in the industry and for it to become that bank that touches on the economic growth of this country.

We have played very well in the corporate segment of the market, but we think it is also time for us to focus more on the small and medium scale enterprises (SMEs) and retail customers. That is what we have set out to do. It doesn't mean we are going to abandon the corporate banking segment, that is, dealing with the large companies.

We would continue to play actively in the oil and gas, telecommunications, power sectors. However, we must build the SME space which in any economy is a major employer of labour and a catalyst for economic growth.

With a lot of reforms that the government is putting in place, especially if the power sector reform goes according to plan, it would have multiplier effect on economic growth as well as on the SME sector and their ability to succeed.

You know the ability of small scale businesses to afford big generators is less than that of large companies. So, we think the environment will get better as we move along and therefore the access to banking facilities would also go a long way to complement the efforts of the government.

So, Skye Bank would help to improve the economic well being of the citizenry as well as become a more profitable and financially sound organisation. That is my aspiration and plan for the bank.

Talking about SMEs, what was the performance of Skye Bank in that segment before you came on board?

We have always had SME customers in the bank. But what we are trying to do now is to create a deliberate focus on that segment. You know you can have something, but if you don't focus on it as a deliberate policy, you may not do as much as you would have loved to do. What is important to SME operators are not too dramatic things.

They need accessibility to banks, they need less costly banking services and they need access to credit. So, what we have done is that we have designed products for them. We have various accounts that are not as costly as regular accounts that a larger companies would use, which would make their ability to have account(s) with a bank much better.

We have also improved on our information technology platform. We give them access to our platform from the comfort of their offices, they can carry out their transactions and do some level of record keeping on the platform that we have built. Also, the process for them to get through to us, either to carry out transactions or to access credit has been refined. So these are some of the things we are doing in the SME space.

With the responsibility of driving the bank now on your shoulders, how do you intend to motivate your members of staff to ensure peak performance?

Well, motivation is a two way thing - you motivate your staff members to do better and they also motivate the bank to do better. One of the things we have started doing is to make sure we reward performance. If a staff member performs at optimum level, the bank would make profit and the ability to pay better salary, the ability to give bonus and the ability to take care of the welfare of the worker would be improved.

Recently, we reviewed our salary package and we have announced that to the system. A number of people that were due for promotion have been announced. We have introduced some extra welfare packages to our staff members. So that is the first step.

The second step is also to ensure that the reward system is transparent and efficient. Therefore, if there are three or four of us, it should be clear for everyone to see who is performing and who is not performing so that when you want to reward, either by monetary compensation or promotion, it should be obvious to everyone around. So, we make sure that our reward and appraisal system is open and transparent and the reward is given on timely basis.

What would be your management philosophy in your role as the chief executive of the bank?

I like to lead by example. It is not about do what I say and not what I do. I believe in doing what I preach. If you want people to be up and doing, you also must be up and doing. If you want people to be professional in what they do, you also must be professional.

I maintain an open office. Staff members from all cadres have access to me through phone calls, e-mail, etc and I encourage free flow of information. So, I lead by example. So if you say people should attend to customers properly, you don't just say it, they must see you doing that.

It is just like parent, when we tell our children not to tell lies and they see us doing that, they would believe more of what they see us doing. So that is my philosophy in life. You must be a practitioner on what you say and I think with that, there should be no problems.

The central bank recently expressed concern that some banks are not adhering to the segment of the sustainability principle for the banking that borders on human and workers' rights. What is the situation in Skye Bank?

Every worker has the right of association, but others are contractual rights. If I employ a worker, there is a contract, but human rights have to do with the right of association. In Skye Bank we don't stop people from associating.

All our staff members are registered with the relevant unions. In the banking industry there is an association for senior staff members and there is also an association for junior workers which all of them are free to belong. We don't discriminate.

If you don't have any intention to carry out anti-labour practices, why should institution stop workers from joining an association? It also gives you a better platform to address their needs because you have the executives to go to. For instance, if you have about 3,000 junior workers, how will you reach them when you want to talk to them?

But if they belong to an association, you know the executives and so you can easily reach them. Even if you want to carry out a policy, there is somebody you can consult to gauge the reactions of workers and there would be a healthy relationship.

The cashless policy has been extended nationwide. What has been the experience of your customers in those states where the policy was recently extended to?

What we seen is not different from what has happened in the pilot states. But with time, it would reduce the number of cash transactions that we are doing and also reduce our operating cost as a bank because you don't need to have 10 tellers any more.

The amount of cash to be counted would be reduced; the amount of bullion vans that we put on the road would be reduced. That is why we have taking a step to invest in internet banking. What we do today is that every account that we open comes with an internet banking facility. We make available to customers along with an automated teller machine card.

So, if you don't have an internet facility, you have you ATM card and if for example, you want to pay school fees, you don't have to leave your location because we have mobile banking application that can also be used on our platform. We think it is going to help everybody, you don't have to move around with cash and you can conveniently transact business from your house, which is what most bank customers want to do.

Consumer lending in Nigeria is still low. Why is Skye Bank and other financial institutions not focusing in that area?

Well, I will tell you that almost all the banks do consumer lending. The point is that we are not doing at the level at which we should be doing it as a nation given our population. The reason is not far-fetched. If you go to Europe or America, there is the unique number. In the United States, everything revolves around the driver's licence. In Europe, there is the social security number.

But we don't have anything identifying anybody in this country. I am Timothy Oguntayo as we are speaking, but if I go out now, I can decide to adopt another name. So, I can walk in bank A, answer Timothy Oguntayo and go to another bank and answer Emmanuel Akpan.

So, if you want to lend to somebody, it must be people you know and can identify. You must lend to people that you can verify their address. So, what we do in Skye Bank today is that because we administer payroll for a good number of organisations, both public and private sectors, we lend to such people.

We would like to lend to self employed people as well, even though we do, but not at the level we lend to those under salary. So, that cuts off a substantial number of people out of the consumer platform. But I believe that as we go along and with the biometric project that the central bank is championing which commenced effectively this month, which would help to improve consumer lending.

This is because every customer of the bank is expected to be enrolled on the biometric and even if you change your name, you can't change your fingerprint. So that would help consumer lending to a great extent and I know that the National Identity Management Corporation (NIMC) is also working seriously to ensure that it captures as many people as possible. So, once we can resolve the issue of identity, so that if you move from bank A to bank B and if you default on a loan in bank A, then you can't go to bank B and take another loan. That would encourage banks to lend.

With the bank verification number being introduced, what would be the role of credit bureaux?

Credit bureau would use the information to be provided. If I go to bank A and say I am Timothy, that is the information that would go to the credit bureau. I can also go to bank B and say I am Benjamin.

Today, apart from my official identity card, I can carry a passport, I can carry a driver's licence and we have found people that have four different means of identification with different names. So, the credit bureau would only rely on the data that the bank captures from the customer. So, the problem is, what is the integrity of the information that customers are giving to the bank?

As we move towards the end of the third quarter of the year, what are the expectations from Skye Bank in terms of its financial performance this year?

Our expectation is to do better than what we did the previous year. We should be able to make our customers better so that they can do more business with us and ultimately that would translate to better profitability and make our shareholders happier.

Above all, we also want to be a good corporate institution that operates within the rules and regulations of the central bank and all other regulations in the country


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Source: AllAfrica


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