How e-channels earned SunTrust Bank N4.2bn deposits

By Omodele Adigun

Long Before Nigerians keyed into electronic banking, nobody could ever imagine that a bank without a branch could be possible in the country.

But that assumption has now beenlaid to rest as Sun Trust Bank, a bank that conducts business strictly through telephone, mobile and internet banking, recorded a 432 per cent leap in customers’  deposits to N4.2 billion in 2016, from N788.583 million recorded the previous year.

The bank, which opened for business in August 2015, had then vowed to run branchless office, while providing cutting edge banking services to its customers around the country.

Its Chief Executive Officer, Muhammad Jibrin, said the vision of the bank “is to offer high quality retail and commercial banking services in a modern and innovative manner.”

He added: “We will use technology and a new way of thinking to provide banking services to many people in Nigeria for whom access to a bank account has previously been impossible.

“We will offer telephone, mobile and internet banking underpinned by the traditional banking ethics of probity and integrity.”

A year down the line and as a sign of absolute confidence in the management of the technology-driven bank, its customers increased deposits by leaps and bounds, making it possible for the bank to declare pre-tax profit of N343 million, an increase of 160.3 per cent over the N131.9 million reported in 2015. Its income tax expense moved from N10 million to N130.6 million, to leverage profit after tax gain of 74.6 per cent to N212.7 million from N121.8 million in 2015.

With growth in profitability, its earnings per share (EPS) gained 12.5 per cent to 18kobo in 2016 from 16 kobo recorded in 2015. Following this, return on equity (ROE) moved from 1.2 per cent to 2 per cent.

“Banking is no longer where you go, it is what people do. Therefore, the only thing that can stand the future is no longer physical branches, but banking services that would be driven by technology. So, most customers of tomorrow would no longer be the customers that want to go to the banking hall. So, you need to be able to position the institution to respond positively to the needs and expectations of customers of tomorrow. That is at the heart of our own vision and strategy as tomorrow’s bank today,” stated  Jibrin.

This must have driven the bank to grow deposits through its broad range of unique financial services and products offered to individuals, small businesses, corporation and the government despite the 2016 recession. Also, it effectively managed its interest expenses that impacted positively on net interest income in 2016.

Apart from this, the bank also focuses its lending activities on the SMEs, retail consumers, and emerging corporate bodies. It also explores other specialised development finance activities, including the agricultural value chain.

Its CEO recently assured SMEs operators that his bank would ensure that their sector plays its pivotal role in the economy.

Hear him: “In line with our strategy, we are going to drive SMEs transactions certainly… and part of our strategy is retail banking, we want to create a retail bank of choice and certainly SMEs is the engine room for the growth of any economy and to provide financing services, to support the SMEs will be the only way, we can support the growth of the economy and particularly in line with the vision of the CBN and the current administration”

On the outlook for the future, Jibrin said its competitive edge would be the strong reliance on technology and the bank would be encouraging customers to access its services from the comfort of their homes and offices and as such it will not be engaging a proliferation of branches.

“Our services will be available to our customers 24 hours daily, seven days a week and from anywhere in the world where there is a good Internet service. Even our data centre is outsourced, this way we will not have the overbearing requirement to put on the generator at our locations,” he explained.

By adopting a branchless strategy, SunTrust will save between N100 million to N120 million required to build a modern branch and about N2.5 million required to run the generators at a typical bank branch.

According to the CEO, “we will not be emphasising physical security as we are making serious investment in cyber security instead.”

All these may be a cue for its peers in the industry as well as new ones.

Just recently, the National Bureau of Statistics (NBS) said that ATM and instant fund transfer were the favourites of Nigerians when it came to alternative cash settlement.

This, the Minister of Communications, Adebayo Shittu, applauded, saying the growth of the e-banking has  been very fast especially now that several transactions are done via ATM, POS, Internet banking, Mobile Money, and NEFT. He added that today, account opening is now possible on Social Media platforms such as Facebook as result of the emerging migration of financial services and transactions from banking halls of brick and mortar to the clouds.

This is considered a big boon to the promoters of online-only bank in the country.

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