Firstmobile has achieved N1.3tr transaction value – First Bank DMD, Shobo

Banking is tough and competitive all over the world. The decline in crude oil price, dollar shortages and economic recession made it tougher for Nigerian banks last year, with non-performing loans rising rapidly to almost N2 trillion.

In this interview with Emeka Anaeto, Economy Editor, Babajide Komolafe & Peter Egwuatu, Deputy Managing Director, First Bank Nigeria Limited, Mr. Gbenga Shobo explains how the bank is weathering the storm and charting a new course of growth with focus on non-interest income especially from digital banking services. Excerpts:

WHERE is First Bank now in the past one year since the new management came on board, in terms of performance in the industry?
New management started off January 2016. There had been a lot of changes on the board and there have been a lot of progress in terms of our performance. When, we started up, there were three main thrust of our strategies. First, we had a credit portfolio which we had to sort out. We have done a great job in working on that issue.
Though, restructuring of some of the debts is very important; also recognising the position in which the loan was in itself given and recognising the effect on our profit and loss statement, we tried to clean up our books and we have been commended by the regulators in that regard.
We have identified those loans and we have started making adequate provision for them in our profit and loss statement. That is an ongoing journey for us, and this will continue until our portfolio is completely clean.
Industry benchmark
The other thing is working on our cost. Of course, we are high and we are working at improving on this in relation to the industry benchmark. Our cost to income ratio was running into about 58 percent, now it is about 48 percent. We started off sometime last year at about 62 to 63 percent; we progress into 57 percent now we are at 48 percent which is better than the average in the industry. So we have achieved that.
The next agenda for us is to realign the way we made money. We are a very loan revenue focused bank, a lot of our revenue and gross income came from loans. What we are trying to do is to switch that into day transactions and making money from fixed non-interest income which we have found to be very sustainable.
This year, we grew gross income by 5percent to about N380 billion, our total asset grew to about N4.8 trillion, that growth was about 27 percent. Our deposit grew about 11 percent to about N3.2 trillion, so you can see that there is progress being made, that’s what happened in 2016.
The growth in top line is necessary, but where is First Bank in terms of Digital Banking?
A lot of our income this year came from digital banking, and we are leaders in that area in the banking industry in Nigeria and indeed West Africa.
The traditional digital product we had initially was the Automated Teller Machine, ATM, and we had about 2700 units, 25 percent  more ATMs than the next bank to us.
For Point of Sales (POS) terminals, we were at the number eight at the beginning of the year, and we are now number four. In 2017, we are anticipating first or second position.
We have 8 million debit cards of which 90 percent are active, and we also have online banking. We are reshaping our online banking, both retail and corporate segments. We have collaborations with offsite locations for ATMs and are moving the ATMs out of our branches for three reasons – to provide convenience for our customers, to decongest the branches, and ensure that it’s easier for our customers to do banking transactions.
Corporate segments
In those ATMs, you can do transfers, check your balance, buy airtimes, and pay bills. These are our traditional channels and we will keep growing.
.About15 months ago, we launched our mobile banking app – Firstmobile. We have the fastest growing mobile banking app with one million customers on this platform. We had done 90 million transactions with over N1.3 trillion transaction value. It’s growing like Wild fire and its very convenient.
The other product we had this year is the USSD banking *894#, and you can do the basic transactions on this platform; we are trying to segment our digital products. For the mass market, you can use USSD banking as you don’t need a sophisticated phone to do this kind of banking; it gives convenience to our customers, and generates revenue.
We don’t have to invest so much on what we put in the branches, digital banking is very important.
How is FBN doing in terms of cash deposit on ATM?
The cash deposit on ATM has not done more compared to the cash depositing in branches. There are basically three types of ATMs banking. The first is the traditional one in the bank branches.
The second type is the midterm agent, these includes those with pharmacy shop, health plus, Mr Biggs, Shoprite and the rest. These are places you can just walk into, where there is kiosk, where you can do your banking transactions. The third type is where you have some full-fledged branches in the rural areas which because of cost, the bank might think of franchising out to reduce overhead cost
We are planning on engaging our retired employees, who are expert and knowledgeable in banking operations to partner with us in ensuring smooth running of the rural agency banking. Since they have worked with us as well as have knowledge of our standards, they will be fit to do the work adequately and professionally. For us, that is the next big thing to do.
What are the challenges in retail space?
Abroad, you have credit records of nearly everybody, as well as the location where everybody lives; In Nigeria we don’t have that, we are building on that. With BVN, we are hoping that a lot of that will improve..
Infrastructure support for the retail business is key, and that is improving. The infrastructure cost of running branches in Nigeria is very high, you have generators to buy and maintain, as well as network challenges, even the cost of broadband is very high, and consumers don’t want to hear that the network is down.
Infrastructure support
We have three networks, and backups and as soon as electricity is off, we switch over. So if one power drops, we switch to another so as to ensure that customers don’t complain about network issues.
What’s FirstBank’s reaction to this emerging technology?
Collaboration with small and nimble entrepreneurs in technology space is very effective; we did a Tech conference in 2016 where we called all the FINTECH. After the conference, we went out to discuss with each of them individually on how we can work together. We have created a department called customer experience and value management; that department has a unit within it which we call Strategic Partnerships Management and their job is to identify companies which the bank can partner with.
Our objective is to ensure that we both use our advantages for the benefit of the two institutions. All this is to ensure that we understand our customers better, identify their needs and provide the requisite products to meet their business needs.