More retail expansion, less customer satisfaction

A keen observer of Nigeria’s banking industry can easily see the emerging trend in retail banking expansion largely displayed or represented by branches and cash centres springing up at every nook and cranny of all the cities in the country including semi-urban locations.

Obviously this is a welcome development; if for nothing else, this will help the effort towards employment generation. It is even more heart-warming that multinationals in the industry who have been hitherto indifferent to the retail-end of the financial market have now embraced the vision.

It appears to me that this development in the banking industry is not unconnected to the huge jump in the size of the economy already confirmed by the results of the recent Gross Domestic Product rebasing the country did which placed her on the enviable position of number one largest economy in Africa and the 26th in the world. It is instructive to point out that the fortunes of the economy of any nation are almost always tied to the fortunes of its financial industry.

Though all the banks are displaying great passion for retail banking, we are not sure if they are displaying equal passion towards customer services development by way of committing funds to research, capacity building and the development of infrastructure to harness the vast potential in that segment, which experts say is the future of banking globally.

Commenting on the dynamics of Nigeria’s banking industry Michael Lafferty, Chairman, Lafferty Group, said: “Retail banking is today the foundation stone on which virtually global banks are built while local financial institutions  now make future decisions, structure and success of retail banking in the regions.”

Lafferty had urged local banks to invest substantially in the vast retail and consumer banking market, pointing out that the world’s biggest banks built their financial empire from the mass market.

The local banks, according to him, are now fortunate in being able to benefit from the experience and indeed learn from the mistakes of banking operations in Europe and elsewhere, which now provide them the opportunity to leapfrog into a global phenomenon that has transformed consumer financial services over the past 25 years.

One or two things are instructive of this observation by Lafferty. First, the phenomenon in Nigeria today is a replication of what has happened elsewhere in the world, which means we are not really re-inventing. It also means we have the opportunity to learn from the experiences of the progenitors which Lafferty has already pointed the right direction. Nothing should be swallowed line, hook and sinker.

The expansions should be targeted at considering different business models, potential and approaches to market banks products while also considering ways of building customer trust and loyalty as well as providing an analysis of the consumer lending opportunities in the country.

I dare say that with about 5,000 branches across the country and a little over 60 million customers, the retail banking service is still in the morning of its expansion. The important count is the ratio of the banked to the population. So many Nigerians, about 40 per cent of adult population are still unbanked in the real sense of it. Worse still is the access to credit which is a huge problem that cannot be adequately discussed in several editions of this column.

The banks’ expansion strategy on retail banking should aim to offer timely customer focused services and innovative products through efficient and convenient channels.

It’s rather amazing that queues have returned unashamedly in many of the so called new generation (they are all now old generation) banks and nobody seems to be bordered.

The online platforms are increasingly unreliable with the banks constantly blaming the telecom companies and other services providers. It is important to remind the banks that the customers do not have any relationship with the telecoms or any other services provider. So the blame for sloppy services in the face of aggressive expansion should remain with the banks.