Herbert Wigwe has piercing eyes that tell of his brilliance as a businessman, his experience as a leader and an unfettered desire for innovation and growth of the African Financial Industry.
Just before the Knowledge Sharing Session to rub minds with entrepreneurs and young professionals on the ongoing Access Bank and Diamond Bank merger, Damilola Oyewusi had a quick chat with the banking icon.
By Damilola Oyewusi
After thriving through the Soludo N25 Billion capitalization era, the recession, and six successful mergers, there can be no doubts in the minds of industry experts, Nigerians, and Africans that Access Bank is currently a top player in the financial sector with an appetite that can only be satiated with continuous improvement.
What started as a 78th ranking in 2003 is today one of the most reputable institutions in the country. With six mergers and acquisitions both in Nigeria and in their other African subsidiaries to their credit, we wondered if mergers and acquisitions had always been a part of the Bank’s business strategy.
“When we started our entrepreneurial journey in 2002, it was clear to us that the industry was going to consolidate. We knew that getting to where we wanted would be a combination of both organic growth and inorganic growth.”
To understand the full ramification of inorganic growth, the company engaged and sat under the tutelage of one of the top banks in the world – HSBC (Hongkong and Shanghai Banking Corporation). This foresight and preparation ensured a quick and fortuitous acquisition when the CBN increased the capital requirement from 2 Billion Naira to 25 Billion in 2005, as the bank was already primed for inorganic growth through mergers and acquisitions.
The goal for the bank has always being to scale fast while improving the services offered to customers. As Herbert explained, the institution has always been aspirational and focused on achieving and maintaining international standards.
“The idea was never to create a bank that was just Nigerian. It would be Nigerian in ownership but global in nature, following best practice.”
Following the capitalization exercise that made Access Bank one of the top ten in the country, they went on to the next level of increase in scale and efficiency by raising one billion dollars through a GDR. This allowed for business expansion in London and several countries in Africa.
Despite the growth experienced by the Bank and in the Nigerian financial sector as a whole, becoming one of the top banks in Africa still eluded the institution. As he notes about a country as big as Nigeria, “We don’t have more than 40 million or 50 million unique bank accounts. And you have a population of about 200 million people. This constrains the size of the market because a lot of money has not been brought into the system. If you compare us to South Africa with a slightly lower GDP than Nigeria, their banks are bigger. For us to dominate or grow bigger than most banks in Africa, including South Africa, we need to do things that will give us the appropriate scale and scope”
This need to grow bigger is the key reason for the merger between his bank and Diamond Bank.
Access Bank had built a strong wholesale business and had in its corporate strategic plan a goal to have a global enterprise that would be known as Africa’s gateway to the world. This meant that the company would be handling payments across the continent and increasing trade between African countries. With a formidable trading capability through its presence in London, India, China, Beirut, Dubai and other parts of the far, east, the bank turned its attention to strengthening operations locally, dominating, and growing bigger in the context of Nigeria.
“Our goal is to keep growing our customer base. We can hit thirty-five million customers in five years and keep growing to fifty, sixty or even seventy million customers. We would have done all the work needed to be done and that would enable us to compete favorably in profitability, and balance sheet size with the South African banks.”
Fortunately, Diamond Bank was also thinking about the same thing. He highlighted their complementary strengths. While Access Bank has a strong wholesale and value chain business, Diamond Bank has a strong retail franchise.
“We reasoned – What’s wrong with bringing ourselves together to create a formidable platform that would provide the basis for getting stronger and taking a more dominant position on the continent? And that’s the reason for this partnership”
One of the goals of the partnership is to increase trading activities between countries and companies across the continent, and technology will be one of the key factors for growth. With the rise of more fintech companies and the increasing activities of telecoms companies in mobile money solutions, we asked Herbert if he thought of these as competition.
“We embrace change. When I tried to sell debit cards twenty-five years ago in Nigeria, it was impossible. But today, debit cards are going out of fashion because people are making payments via telephone. Cheque leaflets are almost obsolete. We have to reconfigure what we think about money and the things we do. What we’ve done is to pull our digital businesses close to us, so that if there is any disruption, it will be coming from us”
He said they also collaborate with the Fintech businesses, noting that compliance issues like KYC, anti-money laundering and other best practices remain important to the bank even as they seek to innovate and work on groundbreaking technology.
“In a few years, you may be able to drop your card and phone and make payments with your biometrics. We already do this with our phones. We could just configure your details to your retina. Mankind has learned more about itself in the past twenty years than all of the thousand years preceding that twenty. Things are changing fast and we are excited to be a key player with that”
The partnership also aims at becoming the largest retail service provider in Africa and as such would pay key attention to young businesses and entrepreneurs. He gave an insight into some of the challenges experienced by SMEs and the solutions they already provide and are looking to provide to this market in the coming months and years.
He began with enunciating the need for training on things like finance and bookkeeping and generally, building capacity. Next to this is the lack of access to capital, noting that most financial institutions don’t pay attention to them. He explained that the larger institution intends to create a framework that would support these businesses in a manner that is affordable.
“Training and funding many businesses at once will be challenging and even, ineffective. We are looking at ways to automate the process or have them in batches”
He pointed out some of the ways they have supported SMEs, giving the example of how the GSM companies’ entry into the Nigerian market created business opportunities for young Nigerians, who were supported by the Bank. He also noted the special attention paid to female entrepreneurs through the Gender Empowerment Movement in the early 2000s which ultimately evolved to the W Initiative, as a total package provided for female customers.
Giving an example of how the management capabilities of women enable them to be excellent homemakers, he enunciated that female entrepreneurs hold the potential to take the economy to new levels when provided with the needed support. He told the story of the first move made towards this empowerment, with a commitment to support fifty women and take their businesses from nothing to fifty billion Naira. The success of this project led them to shore up efforts and begin exploring a holistic approach to providing female entrepreneurs and women in general with the right support for success.
He further explained that the package was targeted at women for various stages of their lives, including providing assistance to families experiencing trouble with completing their families.
A third challenge he notes is the lack of courage and commitment to the process on the part of the entrepreneurs themselves. He went on to share some of the principles that have kept him through his entrepreneurial journey.
The first of these, he says is “Focus. Focus. Focus. It doesn’t matter what you do. If you do it well, you will do well”.
“The second is competence. You have to be knowledgeable and competent enough to deliver what you promise. Because with that, you’ll be able to navigate through the difficulties that go with any entrepreneurial endeavor. It doesn’t matter what business you are doing, the entrepreneurial risks are the same. To ensure success, you have to be competent”
“The third, of course, is your confidence in yourself and you’ll be tested several times. And the most important is God’s, Divine Grace. Very important. Some people do not think it is important but I think God needs to order your steps in the right direction.”
For someone who has spent almost three decades in the industry, we wanted to know if anything has challenged his resolve and how he would describe his experience so far.
“Well. I’ve been tested in several ways but not to the extent of having my resolve broken. My experience has been thrilling, fulfilling, and exciting. It is a rollercoaster but you know what, I enjoy it.”