Banking Beyond Tomorrow

In its new five-year strategic plan, Access Corporation intends to aggressively push its businesses beyond Nigeria in order to strengthen its presence in the continent and diversify its earnings writes Obinna Chima

The banking landscape is a rapidly changing dynamic environment. The sector has seen pervasive developments such as the increasing adoption of technology as well as lifestyle banking. These developments, which all come with challenges, require financial institutions to be positioned to always meet the needs of their customers.  

This requires organisational planning. Indeed, strategic planning allows organisations to anticipate things that are most likely to happen and prepare accordingly. In addition, it helps to define the direction in which an organisation must go and also helps in establishing realistic objectives and goals that are in line with its vision and mission.

For Access Holdings Plc, developing a five-year strategic plan has been part of the bank’s tradition in its almost 21-year history. In line with this, Access Corporation last week unveiled a new five-year strategic plan, in which it outlined plans to deepen financial services across Africa and extend its services to the continent’s large unbanked population. The five-year strategy document is for 2023 to 2027. Its target is to become one of the top five banks in the continent by 2027.

The Group Managing Director/Chief Executive Officer, Access Holdings Plc, Mr. Herbert Wigwe, explained that the institution has consistently followed its five-year strategic plan, which according to him, is responsible for the success it has achieved over the years.

The institution has since transitioned into a holding company (Holdco) with five verticals to capture the opportunities in the African market. They include Access Bank Limited; Hydrogen, which focuses on delivering integrated payments solutions; Oxygen, which focuses on digital and consumer loans; Access Pensions Limited and Access Insurance.

Clearly, Access Corporation has positioned itself to be at the centre of financial flows in the continent. Its six key priorities are retail banking, focus on being digitally led, being customer centric and focused, analytics-driven insights and robust risk management, global collaboration and building a universal payments gateway.

Access Corporation’s target for the next five years would be supported by seven key enablers. These enablers would ensure that Access becomes a top five financial services institution in the continent by the end of the strategic cycle in terms of revenues, asset base and on a balanced scorecard basis.

“The records over the last 20 years show that we have consistently followed our five-year strategic plan and there is no reason to suggest that we would not achieve same by 2027,” Wigwe said.

He added, “In 2002, we were number 65 in the market and we shared with the market then how we were going to be among the top 10 banks and by the end of that five-year period, we became number nine.

“We went into the next five-year corporate plan – 2008 – 2012 – and if you recall, that was when Prof. Charles Soludo increased banking sector share capital and we shared with the market how we were going to move from being one of the top 10 banks in the country to becoming one of the top five banks, which we did.

“We said we were going to be one of the top three in the market by 2018 and then we did a capital raising; with the money we raised, we were able to transform the bank. Today, we are seen as the most profitable African bank and one of the top 20 African banks in the United Kingdom.”

He stressed that Access Holdings prides itself in the fact that it serves well over 52 million unique customers, which is different from bank accounts. The CEO of the holding company explained that unique customers mean individual accounts.

He also disclosed that Access has over 62 million accounts with presence in over 17 markets worldwide, with network of about 600 branches and over 6,000 professional staff.

“We are still in growth phase; people keep asking us that. So, you will continue to see increasing spread in terms of our branch network and countries in which we are present. We are an established leaders as long as environmental, social and governance (ESG) is concerned,” he added.

By 2027, Access Corporation expects its Nigerian bank to be contributing about 52 per cent of revenues compared to about 82 per cent (nine- month 2022). The new verticals would also be contributing about 12 per cent of total revenues, as revenues from African subsidiaries is expected to double over the next five years.

In addition, Profit Before Tax contributions from Nigeria bank is expected to reduce from about 63 per cent (9M’22) to about 33 per cent, while the new verticals are expected to contribute about 19 per cent of the profitability by 2027, while its African subsidiaries would contribute about 20 per cent as their footprint grows across the continent.

Additionally, by the end of 2027, it expects to have presence in at least 26 countries and in at least three organisations for Economic Co-operation and Development (OECD) countries supporting trade (United Kingdom, France and United States of America). Access also projected that its customer acquisition drive would hit 100 million for the Retail Business by 2027 and would continue as it migrates majority of customers to digital platforms by 2027 across all touchpoints.

According to Wigwe, “Our primary focus on trade is to leverage established presence across trade and financial hubs across the world to continue driving trade outputs. Presence in London, Dubai, Hong Kong, Lebanon, Beijing, Mumbai, etc. and extensive footprint across the continent.

Today, we have an operation in China, which we are going to convert into a branch because the new ordinance allows us to do that because of our size.

“As part of our desire to position ourselves as Africa’s gateway to the world, we have now basically placed ourselves in the critical trade hubs across the continent and that has helped us as far as a correspondent banking and payment is concerned. More than any African bank, we are laying the groundwork for that real growth, linking the entire continent, which I think will see us get to where we want to get to. Until we have more African institutions thinking like us, we would continue to have a situation where they would be treating us like second fiddle from outside.”

He pointed out that the combination of Access Bank and the then Diamond Bank, played a vital role in supporting the growth of the institution.

He explained, “Diamond Bank was well ahead of its time as far as its digital endeavour is concerned and had put in place what was required to build a proper digital bank. Obviously, the issues it had to deal with were so heavy that the combination had to take place. But we don’t think we are where we are supposed to be right now, given the scale of the enterprise that was created.”

Speaking further, Wigwe said, “We don’t want to be seen and known as just a dot in any country. So, if you go to countries like Mozambique, we have done further acquisitions. People keep asking: why are you doing all of these? But you need to get to the critical mass before you become profitable. You need to get to the critical mass before you are able to employ the right management, technology and scale, otherwise you cannot compete.

“So, the idea is that if you are going into a country, you make sure that you have the right scale. We built on partnerships, and one of the things you will see is that the contribution from our various subsidiaries is growing and is providing a natural hedge against Nigeria, which has a soft currency as we speak.

“Just before I got into banking, the exchange rate was 80 kobo to $1.  I was fully a banker when it was N4 to $1; I was a Manager when it was N82 to $1; we saw exchange rate go to N88 to $1 to over N200 to a dollar and now to N450 to a dollar.

“One of the things we want to be known as, is as a global player with an African heritage, and one of the things that mitigate against anybody trying to achieve that is if you are in a soft currency country. We are a growth company and we will continue to invest in our future. So, we would continue to invest in countries that have inflation rate lower than that of Nigeria. What does that mean? It means that in the short-term, we would see elevated cost in terms of technology and people.

“For us, the future is more important. In the next five years, what we have done is to look at Africa first of all as our continent. You have to be strong at home first before you go out and ask ourselves where are the opportunities in the continent, then you ask yourself what is there to be done internationally. Finally, what we then told ourselves is that the world is going through significant shift and changes with respect to technology, demographics.”

He stressed that the bank would continue to take advantage of the huge number of Africa’s unbanked population to drive its retail business, the growing opportunities in trade within the continue due to the Africa Continental Free Trade Area agreement, remittances, cross border trade and digital payment.

In his assessment, the Managing Director, Access Bank Limited, Roosevelt Ogbonna, stated that across every financial metrics, the commercial banking arm of the business has done exceedingly well.

He pointed out that, “if you look at our gross revenues, they’ve beaten the market. Average market growth rate is about six per cent across Africa, Access Bank grew by 21 per cent. If you look at our profit before tax, that grew, compounded over a four-year period, starting from 2017, by about 30 per cent, compared to a market that was lagging at about 14 per cent.

“Our total asset and our total deposits grew by about 30 per cent and 27 per cent each, again almost twice the growth rate of the market on an average basis. So, it has been a solid performance, outstripping average market growth rate. Our ratios are not different. The return on equity grew from 13.7 per cent to about 18 per cent. Non-performing loans improved from 4.8 per cent to 3.7 per cent and capital adequacy ratio remains above 20 per cent, closing at about 22.5 per cent”.

Roosevelt maintained, “The benefit of the combination with Diamond Bank clearly shows in our retail business. The technology and the scale that was built since 2019 has seen an accelerated growth of almost 32 per cent over the last five years.

“In terms of market share, in 2017, we projected that we would get about 18 per cent market share, but we ended up with 22 per cent market share. In certain indices, we control a quarter of the market share.  We are still in an investing mood. We are investing in infrastructure, we are investing in people and that investment is coming through as we see the numbers.

“A lot of that investment has been around our digital platform and we have seen the impact on our commission and fees growth rate compounded over the period. Just to put it in perspective, in Nigeria alone, we earn 20 billion more in commission and fees than the bank that is next to us.”

It is expected that at the end of the five years, the institution would have transformed to an organisation with a strong bench of talents who are among the best African leaders with capabilities to deliver the corporation’s future aspirations.