Usoro:  UBA Investing Heavily in AI, Predictive Analytics to Enhance Service Delivery

The Executive Director, Nigerian North Bank, United Bank for Africa Plc, Emem Usoro, boasts of over 20 years’ banking experience spanning customer service, retail, commercial, corporate banking and public sector, covering all the regions in the country. Before now, she was the Directorate Head, Abuja and North Central Bank and was also the Regional Director, Lagos Island region in charge of 32 branches in the Apapa and Lagos Island region, where she was responsible for developing, planning and implementing strategies to grow and turn around ailing branches, amongst other activities. She has a strong track record of winning and executing high-powered transactions. In this interview she speaks about the intervention of the bank in strategic sectors. Excerpts:

Given the global economic impact of the Russia-Ukraine war on Nigerian and African economies which has greatly impacted global and business activities; how has UBA navigated these challenges to ensure continued growth and profit in the UBA Northern operations?

Before the advent of the Russia-Ukraine war in February 2022, UBA  had put in place  a robust risk management framework to adapt to any emerging risk in all its countries of operations. Hence, the challenges of food security, supply chain disruptions, increase in fertiliser costs, increase in the cost of diesel and aviation fuel, etc, occasioned by the Russia-Ukraine war did not come to us as a surprise. All we did was to review the sectors and customer segments that would be severely affected by the war and to activate the proactive measures we had in place, including but not limited to: Re-evaluation of the capacity of borrowing customers in affected sectors to repay as at when due, including the variation of repayment terms as necessary; reduction in banking costs for some affected customer segments; and aggressive financial inclusion drive to increase the number of the banked population, especially in rural communities in the north. Others are active participation in special intervention schemes of the Central Bank of Nigeria (e.g. Anchor Borrowers Scheme, Commercial Agriculture Credit Scheme (CACS) aimed at increasing local food production, boosting the nation’s self-sufficiency and decreasing hunger in the land; greater partnerships with donor and multilateral agencies for the execution of various intervention programmes like the World Food Programmes in states like Borno, Yobe, Gombe, Bauchi, Adamawa, Zamfara, Sokoto, Katsina, Kano and Abuja, where cash disbursements and fund transfers were made to hundreds of beneficiaries in excess of N12 billion. In line with United Nations’ 17 Sustainable Development Goals (SDGs), these partnerships helped to reduce poverty and hunger, while improving the good health and well-being of the people of Northern Nigeria. Consequently, our customers had more disposable income to save and invest with us. In conclusion, I will say that the Russia-Ukraine war provided a greater opportunity for UBA to positively impact the communities where we have business operations in Northern Nigeria; rather than the focus on continued growth and profit, which happened as a natural consequence of impacting of our business community positively.

How has UBA helped in curbing high inflation rates and food insecurity, amid the ensuing economic crisis especially in Northern Nigeria?

You will agree with me that it takes the interplay of fiscal and monetary policies to curb high inflation rates (a current global phenomenon) and food insecurity. Despite the tight monetary policy stance adopted by the CBN since its May 2022 meeting, inflation had not decelerated towards the CBN’s long run objective (currently at 22.79% as of June 2023). The continued rise in headline inflation, remained the biggest challenge confronting macroeconomic stability in Nigeria. Headline inflation has remained high due largely to a host of monetary and non-monetary issues  such as  unification of the foreign exchange rates , removal of fuel subsidy and hikes in the pump price of PMS from N195 to N617; high and rising price of various energy sources;  and a host of headwinds confronting the food supply chain. In the circumstance, the fiscal authority needs to explore other avenues to expand the fiscal safety net in an urgent bid to improve its ability to respond to legacy and emerging shocks. Economic diversification and non-oil revenue sources, such as the expansion of the tax bracket, will enable the reduction of fiscal deficit and public debt to improve fiscal space. With the bold steps on economic reforms taken by President Bola Ahmed Tinubu, in his  first few months  in office, I believe we are on the path towards  sustainable economic recovery and growth. Only recently, the president  approved the setting up a new infrastructure fund which will enable states to intervene and invest in critical areas such as transportation (including farm to market roads improvements; agriculture (encompassing livestock and ranching solutions); health with a focus on basic health care, education especially basic education, power and water resources, all of these will improve economic competitiveness, create  jobs and deliver economic prosperity  for Nigerians, these savings will complement the efforts of the infrastructure support funds (ISF) and other existing planned fiscal measures, all aimed at ensuring that the subsidy removal translates into tangible improvements in the lives and living of Nigerians. These support to the states would help to cushion the effects of the subsidy removal, though these policies may be for short-term adjustment, but I am confident that these reforms would lead to positive outcomes as our economy would witness competitiveness, increase in foreign direct investment and a boost in exports. While these policies hold immense potential, it is important to acknowledge potential short-run challenges. The removal of petrol subsidies has led to temporary fuel price increases and the transition to renewable energy requires significant investment in infrastructure and technology. However, as a responsible corporate citizen, UBA is prepared to collaborate with the government, private sector entities, and other stakeholders to overcome these challenges. We can leverage our financial expertise to support infrastructure development and facilitate the transition to clean energy.

You’ve been setting out ambitious expansion into unbanked northern markets; what is the one goal above all others that you hope UBA northern operations under your leadership will have achieved by the end of 2023? And why is it so important?

For UBA Nigeria, our strategic goal remains to lead in Nigeria by having more than 15 per cent of the total deposit market share and being among the top three most profitable banks. In line with this, to make UBA a bank of choice in northern Nigeria and to have a UBA account holder in every nuclear family in Nigeria. That is why leveraging on digital technology to drive financial inclusion remains paramount in our hearts, given the low level of financial literacy in Northern Nigeria.

Now, you mentioned your network and where that kind of reach is. Thinking of accessing the unbanked or the underbanked, do you consider current bank branch networks across Nigeria and Northern Nigeria to be sufficient?

Currently, our branch network is very optimal, and we would do more to leverage on our existing branch network, digital technology and partnerships with fintechs to reach the unbanked and underbanked for the purpose of financial inclusion and access to credit. UBA has deployed 610 agency banking partners in the north, who have reached over 1.5 million underbanked individuals, using e-channels such as agency banking, PoS and mobile money in rural areas. Furthermore, we have strategically deployed over 200 offline BVN devices, which currently process over 400 BVN numbers monthly. This in turn is used to open Tier 3 bank accounts to carry out transactions. However, we will not shy away from opening more branches in strategic areas whenever the opportunity presents itself and given favourable market forecasts.

And do you expect further branch expansion, like in physical bricks and mortar, as a future way of boosting financial inclusion and access to credit? Or is it all going to be down to technology?

Currently, our branch network is very optimal, and we would do more to leverage on our existing branch network, digital technology and partnerships with fintechs to reach the unbanked and underbanked for the purpose of financial inclusion and access to credit. UBA has deployed 610 agency banking partners in the north, who have reached over 1.5 million underbanked individuals, using e-channels such as agency Banking, PoS & Mobile Money in rural areas. Furthermore, we have strategically deployed over 200 offline BVN devices, which currently process over 400 BVN numbers monthly. This in turn is used to open Tier 3 bank accounts to carry out transactions. However, we will not shy away from opening more branches in strategic areas whenever the opportunity presents itself and given favourable market forecasts.

In your efforts to boost financial inclusion in northern Nigeria, what is your thought on forming strategic partnerships with various state governments and other organisations such as NGOs? Have those partnerships proved to be fruitful?

To be modest in my estimation, in terms of strategic partnerships with various state governments and other organisations such as NGOs, donor and multilateral agencies to boost financial inclusion, UBA is clearly the leading bank. The statistics speak for themselves. We have profitably supported government at all levels (federal, state, LGs, National Assembly) and with intense focus on the value chain to finance short term loans and temporary overdraft facilities to meet urgent obligations; contract finance facilities and term loans to support infrastructural development, including but not limited to roads, bridges, hospitals, etc; special intervention loans such as Anchor Borrowers Scheme, CACS, and issuance of bonds for capital projects via SUKUK, FGN Bond, among several others.

 What do you think is the most single effective solution for boosting financial-inclusion levels in northern Nigeria? Is the solution something that UBA can adopt, or is it currently adopting?

In my opinion, financial literacy remains the most single effective solution for boosting financial inclusion levels in Northern Nigeria. As of 2019, the literacy level in the north was 34 per cent, compared to 67 per cent in the South, according to the NBS. Furthermore, northern Nigeria is reported to have 16.34 million unbanked population, which represents 43 per cent of its population. I will like to enjoin the government at all levels (federal, state and local) to declare a state of emergency on the general low level of literacy in Northern Nigeria due to its ripple effects on the endemic insecurity, banditry, gross poverty and other vices in Northern Nigeria. As a responsible corporate citizen, UBA has contributed significantly to the improvement of financial literacy in northern Nigeria as a way of boosting financial inclusion through deployment of 200 offline BVN devices and 610 agents across strategic locations in the rural areas of Northern Nigeria; periodic training of agents in the region on financial literacy who will in turn educate people around their vicinity, and strategic focus on our presence and visibility in market locations to spread financial literacy to the grassroots, among several others.

And thinking of innovation, new ideas, Nigerian banks have adopted Artificial Intelligence (AI)/Chatbots. Can you briefly explain some of the benefits of AI to the banking sector and growth of the Nigerian economy?

AI had had a significant impact on the banking industry, A1 is rapidly changing the quality of products and services the banking industry offers. Not only has it provided better methods to handle data and improve customer experience, but it has also simplified, sped up, and redefined traditional processes to make them more efficient. With the availability of technologies such as AI, data has become the most valuable asset in a financial services organisation. Now more than ever, banks are aware of the innovative and cost-efficient solutions AI provides and understand that asset size, although important, will no longer be sufficient on its own to build a successful business. Consequently, banks are investing heavily in AI and predictive analytics to make better decisions and provide customised services to its customers. We are already seeing several areas in banking services that have been taking advantage of this disruptive technology.  A1 is playing a significant role in customer services, support , fraud detection and prevention , risk assessment and credit scoring , data analytics and process automation within the banking industry . Our journey in A1 started six years ago, on January 11, 2018 with the launch of our conversational chatbot – Leo with a firm resolve to prioritise our customers as well as put the bank at the heart of disruptive technologies that will transform the experience of our esteemed customers.

AI has had a significant impact on the banking industry, revolutionising various aspects of banking operations and customer experiences. Some key areas where AI is playing significant roles include customer service and support and A1 powered chatbot and virtual assistant  (the leading example being UBA’s Leo). UBA  took the lead in the conventional banking space with its chatbot Leo across various social media platforms, facebook, messengers, apple business chat, whatapp, Instagram and goggle biz chat across its 20 african subsidiaries and grew to more than three million customers in four languages ( English , French , Portuguese and Swahili).  We have used A1 to evolve from a virtual assistant chat box to offering personalised banking services to our customers. A1 achievements include employee attrition prediction, customer churn prediction and account reactivation. AI-powered chatbots interacts with customers 24/7 and enhance online conversations. In addition to typical responses to customers’ questions to help them work through their account details, chatbots can now help in opening new accounts and directing complaints to appropriate customer service units amongst others.

As an Executive Director of UBA, what are the biggest challenges ahead of the banking space in Nigeria especially northern Nigeria and what solutions are you proffering?

In my opinion, the biggest challenges ahead of the banking sector in Nigeria in the short to medium term include slow GDP growth. Available data and forecasts for key macroeconomic indicators in the Nigerian economy, suggest that the economy will continue on a moderate recovery path through 2023 as legacy headwinds linger. These include insecurity in food producing areas; high cost of energy and rising cost of debt servicing. Accordingly, the economy is forecast to grow in 2023 by 3.03% (CBN), 3.75% (FGN) and 3.29% (IMF). According to the National Bureau of Statistics (NBS), Real Gross Domestic Product (GDP) grew by 2.31 per cent (year-on-year) in the first quarter of 2023, compared with 3.11 per cent in the corresponding quarter of 2022 and 3.52 per cent in the preceding quarter. The economy moderated on its current recovery trajectory, posting positive, albeit lower growth, for the tenth consecutive quarter, in spite of a multitude of headwinds to its full recovery. The growth performance was driven largely by the sustained growth in the services and agricultural sectors; progressive uptrend in economic activities across several sub-sectors; and sustenance of broad-based support by the CBN in growth enhancing sectors; increasing wave of cybercrimes and cyberattacks. Disturbing trends in financial fraud and cybercrimes have put at risk electronic payment or e-payment transactions, now estimated to be worth an average of N30.2 trillion monthly. Findings shows that as more Nigerians are embracing e-transactions daily so is the surge in cybercrimes, as cybercriminals are getting adept in the clean sweep of bank accounts of unsuspecting users. While banks are facing a dearth of IT staff (JAPA ) to promptly respond to cyber threats, bank account compromises are expected to get worse as the festive season approaches. Already, the Nigerian Communications Commission (NCC) has issued 10 cyber alerts to warn Nigerians about the possible danger associated with or targeted at some platforms, including Cisco and lately telegram, which these cyber criminals exploit to cause havoc. A January report by Financial Institutions Training Centre revealed that Nigerian bank customers lost a total of N2.72 billion to fraud in the first and second quarters of 2022. Between July and September 2020, banks, according to the Nigeria Inter-Bank Settlement System Plc, lost N3.5 billion to fraud-related incidents, representing a 534 per cent increase from the same period in 2019, when it was N552 million. In 2018, commercial banks in Nigeria lost a cumulative N15 billion ($32.36 million) to electronic fraud and cybercrime. This was a 537 per cent increase on the N2.37 billion loss recorded in 2017. Nigeria’s Consumer Awareness and Financial Enlightenment Initiative had projected a $6 trillion loss by 2030 to cybercrime within and outside Nigeria. These crimes are committed mostly through phishing and identity theft. In September 2022, suspected fraudsters, during a three-day cyber-attack, hacked a customer’s account domiciled in an old-generation bank and transferred N523.337 million from the account to 18 different accounts in the same bank. Some analysts have argued that the 2004 banking industry recapitalisation, which increased banks’ capital base from N2 billion to the current N25 billion, had weakened. Analysis shows that N25 billion in 2004 exchange rate, saw the banks’ capital base in dollar terms average $250 million. Today, if we relate N25 billion at N800, it is substantially lower to just $31 million. Since valuation is done at FX rates, the perception of the strength of most organisations will decline marginally. Should the current FX rate float at the current rate for long, we should expect recapitalisation of banks, insurance companies and other financial organisations. Recall that minimum capital requirement for commercial banks is N25 billion; the naira has depreciated five times since then, the apex bank- CBN may need to recapitalise banks to strengthen the banking industry and financial industry at large.

These challenges require a synergy between fiscal and monetary authorities, while I will encourage all banks to enhance their risk management frameworks and risk scenario plays to enable them  successfully mitigate any emerging risk or challenge.