| Impact of ATMson banking industry
By SEUN ADESIDA
Monday,
April 10, 2006
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• Fadahunsi
Photo: Sun News Publishing |
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The Intercontinental Bank Plc made history last October when
it became Nigeria’s first banking group to successfully
and fully integrate its systems for online, real-time transactions
in all its locations, nationwide, same day. This led to the
emergence of a mega
Mr Femi Fadahunsi exudes confidence. Suave, articulate and
bold, he tells you that the present craze by banks to install
Automatic Teller Machines (ATMs) is not misplaced. Rather,
it is in line with advancement in technology and the quest
to transact business in a quick and flawless manner. He is
quick to remind you that his company, National Cash Registers
(NCR) introduced the first ATM machine in Nigeria, which was
as far back as 1989.
Fadahunsi, who is the first indigenous managing director and
chief executive officer (CEO) of NCR spoke with Daily Sun
on the implications of IT revolution in Nigeria and its benefits,
offering advice on how to move forward.
Background
My name is Femi Fadahunsi, a Nigerian, and a 1982 graduate
of Economics from University of Ife, a 1986 Law graduate of
University of Ibadan. Called to the Nigerian Bar after attending
the Nigerian Law School, Victoria Island, and I am also an
alumni of Lagos Business School, where I took the Advance
Management Programme Course Eight. I work for NCR Nigeria
and this is the only company I have ever worked for since
my graduation from the university and by the grace of God,
I am the first indigenous manager of NCR Nigeria.
NCR
NCR Nigeria is a subsidiary of NCR Corporation, that owns
60 per cent shares, while Nigerian citizens own the balance
of 40 per cent. The company has been operating in Nigeria
since 1949 about 57 years. The company is the world leader
in ATM manufactures, shipment and deployment.
The company is also the world leader in implementation of
Enterprise Data Warehouses (EDW) and retail solutions. The
company is also involved in consultancy and training.
NCR Nigeria is very much a Nigerian company in that we are
the only multinational I.T. company, quoted on the Nigerian
Stock Exchange and the only multinational I.T. company that
did not exit the Nigerian market after the Indigenization
Decree.
The company has positively been involved in many facets of
Nigerian society, in helping Nigeria convert to the decimal
system being the dominant supplier of cash registers then,
which were the precursors of the calculators and computers.
We were also involved in the introduction of the MICR cheque
standards in Nigeria and, for many years, we were member of
the CBN-MICR implementation sub-committee.
Success of business
The success of any business comes down to its ability to create
a relevant, timely conversation with each individual customer.
Think of your conversations as variations on a theme: Your
value proposition for your business, products, and services.
Your company's ability to establish attractive value propositions
- and turn them into compelling conversations - drive your
customer relationships, revenue and success.
You can optimize your power to create and personalize compelling
value propositions across the right channel for the right
customer at the most opportune moment. We refer to this process
as dynamic Customer Relationship Optimization (CRO). Dynamic
CRO is the single most important reason to adopt customer
management solutions. Senior analysts at Gartner have consistently
ranked us as a leader among CRM providers at executing this.
Each company can integrates process-friendly analytical tools
that show you what your customer’s value - with automated,
rules-driven, event-based communication across all channels.
Our Teradata customer management solutions are industry-specific
and implemented in days, not months. Customer management solutions
will drive the profitable revenue growth and tangible return
on investment (ROI) that your marketers can be proud of and
the high returns business executives and shareholders demand.
Doing business in Nigeria
Doing business in Nigeria can be very challenging, as services
that are abundant in most economies are scarce in our country;
I am referring to water and power issues.
The business climate has improved drastically with the advent
of democracy and some issues like telecoms, fuel scarcity,
now belong to the past.
Economic stability
We have also seen some macroeconomic stability in terms of
the exchange rate regime and policy stability. We appreciate
government’s efforts in addressing corporate governance
issues and the anti-corruption. If the trend and policies
are sustained, I am very confident that Nigeria will certainly
become a major emerging market in the not too distant future.
The Nigerian economy overall is on the right path.
Nigerian payment system
We witnessed a tremendous growth in the evolution of the Nigerian
Payment System infrastructure in the last six years. We have
NACs, Three or four switching companies i.e. Interswitch,
Card Technologies, E-Transact, Valucard Nigeria Limited (
Visa representatives) and many industry- wide initiatives
like ATM Consortium – which is a company formed by banks
to deploy ATMs in off premises location.
Also during the period, we have seen the introduction of higher
value denominations, which seems to make ATM transactions
worthwhile. The major international card issuers like MasterCard
and Visa have surfaced in Nigeria and the battle for the Nigerian
market is about to begin and this is a good thing to happen
to an economy because prior to this period they were all shying
away from the Nigerian market.
Also, we should not forget what is happening in the telecoms
sector, which is also impacting positively on the Nigerian
Payment System. As a matter of fact, if we do not want to
deceive ourselves, without telecoms most of the initiatives
I mentioned above will still be in infant stages.
Banking consolidation
With regard to banking consolidation, it is good for the Nigeria
economy, as well as its people. There is a benefit to be derived
in being big. All that is required is to ensure that banks
are efficiently managed. It presents a lot of opportunities
to our company because in the long run, to ensure efficiency,
there will be a lot of re-engineering and automation taking
place.
End of branch banking
Make no mistakes that bank branches will disappear because
people bank with people. What you will see is a migration
of routine transactions like Cash withdrawal, Balance enquiry,
Transfers, Bills payment etc to the automated channel, while
more value added transaction will be handled by in-branch
personnel. It has happened in other places that have gone
through similar evolution and Nigeria will not be an exception.
Challenges
Normal challenges facing other businesses in Nigeria –
like power outages, telecoms breakdown and others we are all
aware of. There are also people issues that are to be sorted
out, like re-training of staff displaced by automation and
customer/consumer education to use new technology.
For power, most organizations have generators, UPSes and inverters
to back up PHCN, in some extreme cases, depending on how mission
critical is the application. Some businesses use PHCN as a
back up. And on displaced staff, I already mentioned that
they would need to be retrained to acquire new skills. Also,
customer education is essential in order to enable them understand,
adapt and use new technology
Automated Teller Machines
We introduced Automated Teller Machines into the Nigerian
market in 1989 and I sold the very first ATM in Nigeria to
the defunct Societe Generale Bank Nigeria (SGBN) in 1989.
The national infrastructure for clearing cheques (the National
Automated Clearing Systems – NACS) that reduced drastically
the time it takes to clear local and upcountry cheques was
also introduced and implemented by us.
Banks and ATMs
Banks are adopting Self Service (ATMs) technology because
it is cost effective in the long run. ATMs will continue to
service us for as long as there is telecoms and power. There
is no going on strike or asking for increment.
They offer convenience to customers and provide banking services
well beyond the traditional brick and mortar service period.
They also ensure that a lot of cash is still within the banking
system where it can be managed and channelled into productive
use, instead of bulk withdrawals that we use to witness in
the past.
It is good for customers to withdraw cash that they need by
eliminating the risk of loss through theft and fire. All in
all it is a win-win scenario for all the parties concerned.
ATMs success rate
ATMs are just taking off and transactions through them are
building up. The success rate is directly proportional to
the number of ATMs installed. In my opinion, we have less
than 1,500 ATMs installed in Nigeria, which is a ratio of
1 ATM to about 100,000 Nigerians.
This means we still have a long way to go to ensure that every
Nigerian who has a bank account has access to his account
anywhere, anytime. Only the ATM can make this possibility
a reality.
ATM’s challenges
We are, indeed, witnessing long queues at various cash points
because the ratio of ATM per 100,000 of Nigerians is much
more. In our experience, we had to deploy more than two ATMs
in some bank branches because of such problems.
The only remedy is faster deployment of ATMs and helping banks
to build a cost effective model through the introduction of
cost effective models that will make the business case easier
and achieve the breakeven point faster very well as it makes
it easier for us to differentiate our offering in the market.
We are known for efficient and reliable after sales support
services, when you buy our product, you cannot be fired because
you have bought the best. You can enjoy a good night sleep!
We do not compete on price but on the value we are bringing
into your operations.
Automation induced job losses
No, ATMs will give you financial advice and, people inside
the bank/branch still need to do analysis and provide inputs
into the output of ATMs and other automated channels.
Epileptic nature of power supply has definitely an impact
on deployment, as it unnecessarily increases the cost of implementation
i.e. cost of ATM + cost UPS and Generator. However, because,
we, as nation, must move forward, while financial institutions
are bearing this cost until such a time that power becomes
more stable.
Leadership style
I have a very open leadership style, NCR is a flat organization,
with responsible staff, who respect our common bond values,
which are dedication to helping our customers, highest standard
of integrity, respect for each other, commitment to excellence
and accountability for success.
When you are managing such an organization, all you need to
ensure is adherence to corporate policies and guidelines.
I empower people to take initiatives. I have been fortunate
enough to work with great managers, who recognized my talents
and helped me develop these further. It is now my duty to
pass this knowledge to my colleagues, who are working with
me.
Outsourcing
I expect that outsourcing in Nigeria is bound to happen very
soon. Every business needs to focus on its core competence
and once you realize that what you are currently engaged in,
is not your core competence the next thing is for you to outsource
it to those who can do it better than you. I cannot say whether
or not outsourcing is good for the Nigerian economy but I
know that specialization is good for any economy.
Business intelligence
Business Intelligence is about better understanding your customers
and your business in order to take effective business decisions.
This is based on analyzing the behaviours and trends of the
customer’s transactions and business data from previous
months and years. The objective is to provide prompt and accurate
answers to business questions.
It will help the large organizations that have a large customer
base and large volume of transactions–namely; telephone
companies and banks, better serve their customers and optimize
their performance.
We can see the utilization of voice and data network significantly
increasing in Nigeria as well as the use of the banking products.
Business Intelligence will help better serve customers in
Nigeria and provide more competitive offerings to the Nigerian
market.
Organizations who use Business Intelligence will be able to
conduct effective marketing campaigns, provide better customer
service and at the same time have a more cost effective operation.
Return On Investment
The Return On Investment from Business Intelligence is measured
in months and is proven to be high. Challenges are basically
around creating awareness and conviction within different
management levels in organizations and the top executive sponsorship
for the adoption of the Business Intelligence technology.
Each company needs far more than strategic insight from the
vast amount of information they collect about on their customers.
They should be able to use that data to serve each customer
as an individual, intimately, knowledgeably, cost-effectively
and securely. In short, they should be able to treat each
customer as their only customer.
Customer relationships
With an unprecedented level of customer reach and powerful
data warehousing solutions that help each company use an information
to better understand and serve each customer in a clearly
defined market.
The company boasts of a complete portfolio of transaction
and data warehousing solutions and in many ways it can help
companies turn customer transactions into mutually beneficial
customer relationships.
Self service solutions
For more than a decade, we have been the worldwide leader
in Self service solutions. Predominantly, in manufacture and
deployment of ATMs. ATMs are now permeating every corner of
the globe, including "off-premise" locations such
as grocery stores, transportation terminals, banks, dispensing
not just money, but tickets and other non-cash offerings.
Increasingly, relationship management tools are being integrated
into such self-service channels. So that ATMs can recognize
and respond to the unique requirements of the user.
Technology and solution
Our technology and solution is helping thousands of companies
across the globe. Our company enables companies the world
over to touch millions of customers, millions of times each
day. Whether these transactions and interactions take place
across the counter, by telephone, at a kiosk or ATM machine,
or over the Internet.
We are into hardware, software and solutions that make the
interactions easier, more convenient and more relevant to
users, while giving any company the tools needed to gather
critical data about their individual preferences, needs and
requirements.
Store Automation solutions
Likewise, there are Store Automation solutions, which is helping
retailers, including e-tailers, to respond to individual customer
and to encourage and reward their patronage. The innovative
solutions that companies continue to bring to market--such
as self-service checkout, electronic shelf labeling and interactive
Web kiosks are advancing their market leadership in Store
Automation. Businesses can turn collected data into information
that can help build relationships not only with customers
but also with suppliers, partners and others.
Warehouse solution
The warehouse solution is designed to help businesses manage
the huge volume of information that is available to them,
more so than ever in today's e-business environment. In addition,
we have designed software applications that harness the power
of our Teradata engine, including customer relationship management
(CRM) and decision support applications. |
