Olanrewaju: In Challenging Environment, Bottom-line is Important

The Managing Director/Chief Executive Officer of Baobab Microfinance Bank, Dr. Kazeem Olanrewaju in this interview with Eromosele Abiodun explains why the bank premiered four e-channels and its contribution to the Nigerian economy via loan disbursements

Given recent development around the world, companies have had to rely on technology to drive their business. Where are you in this regard?

You are very correct that given the recent events around the world especially concerning COVID-19 that things have changed. People call it the new normal, it is new but it has been normalized. Well, Baobab is not an exception, and I can tell you that COVID-19 has had its impact on our business, and of course we responded accordingly. First is that in February before COVID-19 actually started in Nigeria, we suspected it may come, and so we had our management meeting to review and to plan what we would do in the event we have the issue of COVID-19 in Nigeria. So, I can say that even though it was new, but we prepared ourselves. On what we did, some of the customers have already spoken, we responded accordingly by helping them restructure their loans.

You know there was a total lockdown so how did we do it? For the staff, we were working from home; hence we relied on technology to be able to do this. While we were not opening the branches, we still had our business activities going on.

We decided to start testing some of our platforms, to see those that would support what we were doing. But it is important to mention at this moment that even before COVID-19, most of our transactions were done online every time. Everything is done via mail.

So you see the approvals that are done via mail. So if you go into the office you hardly see anyone moving around with papers. So it was already part of the culture to do things without having any physical contact. I think COVID-19 only helped to reemphasise the fact that we should be able to work without necessarily having physical interactions.

For the customers, provided a few platforms, where in one, they can access smaller loans, and then where they can make repayments. It worked, because even during that period we were able to get some repayments using those alternative channels and platforms to get some of the collections.

Overall, the COVID-19 had its effect but it wasn’t 100 per cent shutdown of the business. We were still able to do at least skeletal business, which by the time we quantify it, it was almost about 30 per cent of the usual activities that we do during normal times. So this was how we managed through the COVID-19 lockdown.

How has the effort you put in place affected your bottom line?

In a challenging environment and times like this, bottom line is very important, but that is not the most important. What I can say is that, we were able to secure our assets. The loan books were properly taken care of. So you see a default rate that is less than five per cent.

I think this is very important because that also affects what happens in the bottom line. And then you see our liquidity growing by reason of the plans that were put in place.

People will expect that there will be a kind of ruin on the bank, people will come and withdraw money or stuff like that. However, our deposits continue to grow even in this period.

Talking about the issue of profitability, we remained profitable but less than what we have planned in the year. So our previous years, all through the year, we normally do about 65 to 80 per cent of our plan. This year, we had barely doing about 50 per cent of our plan. We are still making profit but not at the same level we expected it to be.

So we can say that COVID-19 has taken its own impact and then maybe because the way we responded to it, we are still profitable, and like I said, even in terms of the balance sheet, we have done more than 30 per cent despite of COVID-19. And this is expected to continue till the end of the year. So truly there is impact of COVID-19 but it’s not a total disaster altogether. We still remain very liquid and profitable all together. In fact, we are more liquid this year than we were last year.

We understand you have just introduced new e-channels, can you tell us about them
Even before COVID-19, we have had it as part of our plan, that by 2020 we would be introducing alternative channels to grow our business, and that’s why we created the digital transformation department for which we hired an It expert.
So this department is to be able to provide a system where whether you are within our premises or on your own, you can do a banking transaction as if you are in the bank. So we have launched our cards. We have our debit cards today, which are connected to these accounts, so customers can be able to have access to their funds at anytime, anywhere via the ATM. And of course they can make transfer.

And we also have the USSD. This we are partnering with Interswitch to be able to deliver this. Of course we’ve been able to do cash in, cash out too on our system. This we are partnering with Nigerian Interbank Settlement System (NIBSS), to be able to help customers move around their funds. So it’s either the fund is coming to you or you are sending it to someone.

We also have things like quick-teller that you can use to do transfer on the spot. These are just to help people to be able to access their funds, make payments and be able to do a whole lot of transactions.

Of course our Internet banking is undergoing pilot test too. So you can actually login on the Internet and be able to make transactions on your account. So these are the different channels that we have put forward, that we are working on. Some of them are 95 per cent, some of them are even 100 per cent completed. Some are still maybe around 67 per cent completed.

The most important thing is that we are not at the same level as we were last year, in terms of alternative channels.

And in 2021, it’s going to take a major priority in terms of resource allocation, time, expectations, and the direction that we want to go. The digital channels will play a lot of role as well as our agency banking. The new channels will make our transactions smarter, more efficient, effective and in line with the new normal in view of the COVID-19 protocols. We are basically premiering four new products. We have also partnered with reputable financial technology companies to designed platforms tailored to the needs of our customers. The first of the channels is our quick savings channel, which is known as USSD. For our USSD, the magic code is *322 *348. We have partnered with Interswitch to come of with this transactional platform. With this, you can do funds transfer from the comfort of your home or anywhere, you can do funds transfer, make balance enquiries, buy airtime and pay bills. We are also introducing our Baobab verve card known as Baocard, it is a debit card that allows you to do financial transactions from the comfort of your plastic card. The cards are linked to our customers account at Baobab and as our customers do their transaction, their account with us is automatically debited and for every transactions you do you are going to get notifications. With the card customers can do cash withdrawals at an ATM, buy airtime at ATM or wed service, make bills payment. Our cards are multi channels meaning customers can use it across a number of platforms. We have also partnered with commercial banks to introduce what we call the Paydirect Branch. This channels is a multi-account and multi bank collection solutions, it basically allows you to go to any participating Paydirect commercial bank in Nigeria, at any of their branches and make a direct credit into your Baobab account. The beauty of this is that our customers do not need to look for our own branches to do their transactions like loan repayments or do deposits into your account. We have also launched our mobile app, a digital channel that customers can operate with their smart phones. All they need do is download the app and do the necessary things are they are live. With this, they can do account enquiries, customers are also able to check their loan processing information. The App is designed to prompt our customers on when next they will repay their loans. For those who have been using our other channels like our Taka platform, they can disburse their Taka loans through the mobile App. This App is the first version, in the next few months we are coming with version two, which will be transactional, it will allow our customers to do funds transfer to any commercial bank in Nigeria or any microfinance bank. It can also allow our customers make payments into wallets, buy flight tickets.

During the lockdown, agency banking became the go to, tell us how you further intend to utilise this?

Well, you know it depends on the kind of agency banking that you are looking at. The one that we wanted and still love to do involves human -to -human interaction. These are people who have kiosk, shops, supermarkets, we can walk-in, and be able to do a transaction.

We also felt that it was not the best time to launch such. Now we have an app that we are working on which all those agent are going to have, and of course, customers are able to have and they will be able to do transactions without necessarily walking into any shop.

That is where we are and that is going to happen in the second quarter of next year. Because we felt that all these other channels that we have pushed a little before now, it is better for us to conclude them-like the USSD, quickteller, Internet banking, which of course is almost concluded. Now we will be focusing on the issue of agency banking in 2021.

Going forward, what should your customers be expecting in terms of product, technology, service delivery and efficiency?

In terms of product, we will be launching few products. Among them will be consumer products, and you know up till now, we do only business loans.

Then we will be doing group loans, which is for small request for loans for a group of persons who may want to come together. And them we are also working on our agric loan to support agriculture. All those are things that we want to launch in the year 2021.

In terms of digital platforms, I have already explained them. It’s just to enhance what we already have now in terms of our internet, the card, USSD, internet banking, quick teller, and all the other platforms as we have today; work on them and make them and make them more robust to be able to support our customers.

So you may see more gravitation to technology in 2021 based on our plan and the resources that we have allocated to this area. Things like pay direct etc. All these are available within the system, it’s either we are partnering or we are developing it ourselves.

Our loan app is ready. Today it’s been used. We have what is called ‘Tune Loan’, with this, you can go to the field, you take pictures of everything, like every documents as required. So you don’t need to start carrying physical document.

Take the picture of the building, etc. As you are working it’s connected to the main server at the office, so all the work that you are doing is going to the core banking application that we have.

So this is already ongoing as I am talking to you. It’s happening in all our branches across the country. It’s just that we have them in stages. The first stage is to be able to open account for customers, check their balances and request loan. As we go further, they can actually make transfers on that platform. They can initiate any payment on the platform. But of course, it’s one step after the other.

Before now your customers forum are held in a hall full of people, today you were able to bring over 100 people together using technology.

In terms of relating with the people, it sounds good, but I can also tell you that our activity presence is not comparable. Of course we are happy that we can use technology, at least, to be able to communicate, to be able to relate, but of course it’s not the same thing as having the people in the hall were you will sit down together, gist together, talk together, play music, and things like that.

Of course we miss those fun that goes with customer forum. Hopefully soon we can overcome this COVID-19, so we can begin to do things normally. But, I am also happy that we are able to have this discussion. I put down every question that they ask. For me, these are things that can help us to be able to develop our strategy, understand what the customer needs are, work our people towards that, amend our training curriculum and look at areas where probably we are not doing so well.

So the feedback we are getting is very important, whether physical or through platform like this, we are getting a feedback and that is what is very important. And then, we use all those information we get to be able to work on our system, to be able to deliver better service as we going into the New Year.

From feedbacks you have gotten from customers, what are the key takeaways that excites you the most?

First of all it is that, I think that a lot of the strategies that we deployed at the beginning of this year have been working. I have heard customers say, your loan is delivered in time, it’s very fast, it’s prompt, we are very happy.

That is very exciting for me. Then we have a mandate. Part of the mandate is social. You know if you go through them, we have three bottom line; financial, social, and environment. If you hear some of the people, they talk about the fact that, they have been able to build a house, do their business, start their business etc. So for me, this is part of our mandate, and I am happy that a lot of our customers have this testimony.

And then you come to the issue of culture. You can hear a customer say, I gave your people money (gratification) but they refuse to take it. So it also shows that the training we give to our staff is going a long way in making them very professional.

You know, you don’t hear these kind of stories too many times in a place like Nigeria. It shows that the staff really listened during training, they imbibe the culture of the company and they are carrying it to the market place to just distinguish themselves. For me, it’s heartwarming.

Again when you hear people talk about the fact that, your managers are available, accessible and can be reached at any point and they will respond promptly. For me, it’s very heartwarming.

Now we are going to a level where we will have 25 branches. The question will be, as the CEO, can you see what everybody is doing, the answer is no. But when you have good managers, good branches, you can be sure that the business will go very well. And I am happy to hear such things from the customers.

In fact, some of them that looks negative, I am also happy to hear it. Where you will say that they were disturbing you for repayment. This is what we trained them to do. Repayment should come in as at when due and they must not give room for default. So it is part of what we trained them to do, because this is the only way the company can survive.

That we give a loan out, somebody pays back, so we can give to another person or at least on that basis, we are able to look for more funds to deploy to the market.

So even for the once that made it look like they are reporting the manager, it is a very good thing that the managers are up and doing, they aren’t taking excuses, etc. This is part of the training that was given to them. And overall, the fact that people believe that Baobab is helping them to unleash their potential is making me happy because this is our slogan and tagline; that we will help customers to unleash their potentials. This is a common denominator from all the customers that spoke.

I think my final point will be our contribution to the economy. It’s very clear from the testimony of these people that what we set out to do is working. So today, our loan book is a little around N15 billion. Small, but you could imagine where we are coming from as at 10 years ago when we were talking about N1 billion. So today we are talking of N15 billion and a balance sheet that is almost about N25 billion. It shows that we have been able to provide our products and services to so many people. I am sure you listened to the testimony of how a new customer accessed our loan for the first time and was given N10 million within four days. Of course she has long been in business but it’s the first time she is coming to us and she was surprised that she was issued the loan, and even within four days. So those testimonies makes my heart glad.

I will like you to speak to the issue of gender equality and promotion in your organisation

We are very gender sensitive. Today we have about 22 branches, and almost about eight branch managers that are female. So we are deliberately grooming them. We have a lot of women in our management cadre. And that is working well.

And I can tell you that we are not just giving them because they are women, they are also managing some of the best branches; Ikorodu, Sango, Bodija, Wuse etc. All those branches are doing very well. So there is no regret in putting women there. Our intention is to try to balance the gender within the system, especially top management and it is working.