“I think Diamond Bank is just a platform. But we are trying to provide beyond banking services to our customers. This means we are not just all about banking”
Uzoma Dozie, the amiable Chief Executive of Diamond Bank Plc, is a banker and economist that is very passionate about the development of Nigeria’s small businesses. His love for MSMEs stems from his deep conviction that the sector holds huge prospects for the economic emancipation of Nigerians.
It is perhaps in the light of this that he has committed to leveraging technology to improve banking service delivery to micro, small and medium scale enterprises (MSMEs) over the last two decades.
The Imperial College London and University of Reading trained banker in this interview with Daily Sun, spoke on a wide range of issues, including his bank’s decision to focus more on small businesses development as well as partnership with global service providers.
Drop in half year financials
For any organisation, especially financial institution, there are three key parameters, namely liquidity, capital and profitability.
For us as a financial institution, what we key in first is liquidity, next is capital and of course profitability, if you are sustainable over a long period to be able to run the business for the investors.
So I think for us what we have been doing in the last one year is trying first of all to generate enough liquidity by creating great products and services for our customers across all the sectors in which we play.
On the capital side, you can see that in line with our national strategic direction, we have been focusing on key area which is Nigerian businesses.
And to further strengthen our Nigerian footprints, we have sold off our UK business. We have also sold off our West African business. to pursue a national growth agenda to ensure we have enough capital shock absorbers to grow our areas of competencies.
Another area where we have equally been consolidating our footprint is probably in the press because we think that is one area we are going to generate a lot of benefits.
Over these years, we have been investing in technology and the whole idea is to free people (customers) from the physical assets and see how we can modify their business in our 270 locations across the country to meet their expectations.
We are looking at consolidating the head office operations which is very key to our business by moving into a new head office complex since we have been operating from three rented locations that were not purpose-built for a head office.
The key thing we are targeting is that over the next five year period, we want to reduce our cost and that is why we are moving into a head office that is purpose-built. The idea is that over the the long term we are actually going to reduce the cost of providing these services by leverage on technology to drive our business.
Again, maintenance cost is going to be much lower when we bring all head office operations to one place. For instance, in terms of security at a consolidated head office operation, you are like the owner of your own destiny.
That is very paramount to us and we are really excited about it because that will encourage us to continue to invest in projects that will help us reduce the cost of doing business. That also shows that even from cyberspace perspective, when you have three silos and you are consolidating your key resources, you are bringing your key activities in one location, a lot of cost will be saved.
Our new focus
On the top line also, we are focusing on three key areas, which are the small businesses, key multinationals and business banking sectors and the high end businesses.
This shows that we are becoming very selective of the sectors we lend, meaning also that the growth you saw when we were lending to big infrastructures and oil and gas would not be there anymore.
We are now beginning to bank on sustainable growth. Perhaps what you are not seeing from the numbers is that the retail book where we have about N800 billion is now generating a lot of income in the loan book at very low cost. There are also huge transaction incomes being generated from the services we provide through our alternative delivery channels.
So you can see that our operating income is growing, the liquidity is growing, the customer base is growing, but what people often look at is the bottomline.
But it is important to tell also that we have a hold on our capital. We have a plan which is one thing the stakeholders are excited about.
Why embark on new head office project
You need to know that the project started about four years ago. So, we did not just wake up and you saw a building.
Secondly, I think where the impact is are in two areas, namely capital and cost.
On the cost side, we are hedging against inflation cost. Today what do we have ? We have three locations and only one of them is owned by us while the other two are rented. This means that we are not in control of the cost of rent in the two others.
It means that anything can happen, because the landlord can wake up one morning and decide to raise the rent or sell them at a time we are not prepared to buy. There is also the cost of logistics, moving our systems from one location to the other.
But with our new head office, the long term cost is low.
From a capital perspective, we are consolidating. For instance, the premises we are operating from we will no longer use. The market value now will be higher than when we got it. We got it a long time ago, and if you look at it on face value, it may sound crazy, what are these guys doing. But if you look at it from operating cost, the book value and expense and capital costs and what you are going to do with it, you will begin to see the benefits.
Don’t forget we just came out of West Africa. We sold our business there, and UK as well. ‘For us, physical assets are no longer key, but what is needed most for our current and future businesses are the technology assets to drive our business. So, we are investing in one building, and selling off others to ensure we have the right resources to deliver services to our customers over a sustainable period.
Strategic alliances with foreign service providers
I think Diamond Bank is just a platform. But we are trying to provide beyond banking services to our customers. This means we are not just all about banking which is just one aspect of our business. Over the last two decades people have been spending quite a lot of time daily doing banking. But I think that if we can collaborate well with other service providers with requisite expertise to serve our customers better, it will be a win, win situation for us all and our customers . That is what we have done with our partnerships.
Even in the women space, we are bankers, and we do not know much about women. But there are people who know women much better than we do. So we have to partner with them to be able to bank women. You cannot financially include people by just saying come and open a bank account. You must find a way to meet their needs.
On the retail technology space for instance, we are collaborating with MTN to drive Diamond Yello’, Account, because we do not have the retail mass that MTN has and that is why these strategic alliances are very important to our business. We realised that everybody has a mobile phone with which they want to transact and so collaborating with people like Microsoft, Techpartners and a whole lot of others working with us will create much value for us, our partners and the customers too.
Again our collaboration with ‘Women World Banking’ and emerging businesses have been assisting us grow our lending to SMEs. For instance, they have helped us design a cash flow plan that allows us to lend more to the MSME space.
The major challenge in lending to this category is that of collateral. And it is not that we are not taking collateral from them but we are talking in terms of how flexible we are right now.
One more point to note here is that our collaborations are always with organisations with expertise that have been used in several African countries and that they are actually working.
Today we sit on their board, which also enables us leverage that relationship to do more lending to this group.
Our relationship with Women World Banking is very strong and we are prepared to do more for the group.
Goodwill and relationship with MTN
I can say that our relationship with MTN is one that is being envied.
For instance, our partnership with the company in the Diamond Yello Account is one that has helped us go very far on financial inclusion without which we probably would not have been able to achieve the mileage we are enjoying now.
And if you’re talking in terms of recent issues regarding MTN’s capital importation, I can tell you we have been cooperating with the Central Bank of Nigeria to ensure that all the issues are resolved..
So in summary those issues did not impact our goodwill negatively because the CBN has been asking questions and exchanging correspondences with us and we’ve been cooperating. They have also been working with MTN to resolve all the issues so we do not see issues of negative perception there.
More importantly, our customers and stakeholders understand all these issues and are happy they are being resolved
On the Diamond Yello Account, for instance, for us it not just about opening account, but about people’s lives.
Today, we have over 9 million customers on the Diamond Yello Account and that is helping us transform the lives of people on the streets.
What we are excited about is that we are transforming the lives of market women for instance who are making money but don’t know how to bring same into a formal banking system to further enhance their business. With such banking relationship they can now save for their children’s education and save for the rainy day and so it’s no longer a question of keeping money at home and not knowing what to do with it.
Again if you go into the markets or streets of Nigeria to see how owning a telephone handset is transforming people’s lives, you will appreciate what MTN is doing. As for the challenges they are facing, I think it is a global trend that the bigger you grow, the more you are confronted with issues of this nature.
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Now we have about 9 million customers on the Diamond Yello Account and over 50 million subscribers on the MTN network, and just imagine what will happen to such people if that network closes down suddenly.
I think there will be so much disgruntlement all over the place.