Fom my position as a participatory observer, I have come to the conclusion that there is a sector-wide confusion in the banking industry. The buy-side is agreed on loss of essence. It leaves observers with same negative emotion with the pensions’ sub-sector; another confused group. The commonality of work instruments, essence and character, pushes a whole world of similarity of purpose for these two; one that is evidently betrayed.
True, one may be guilty of harried judgement or rush to conclusion in manner of prejudice, but be sure we are only reportorial, with a small flavour of commentary that at best, betrays our involvement as either ombudsmen or advocates. The concern is strong, in the face of blatant disregard to public reaction, mentioning the least.
Let’s put forward the following questions, to help self-appraisal and opportunity of response from among Bankers:
Could it be the banking sector is not self-appraising?
Can the industry players really say nothing is wrong with the trade and practice, as it is today?
Would the players say there is no difference (in the negative) between what used to be between years 1960 – 1974/80 and now (1997 to present day)
Are there still institutional regulations and regulators in place?
If the answer to the immediate above is Yes, have they not charted a downward trend in the critical rating indicators of character, discipline, professionalism, service relevance, essence, sense of purpose and service delivery over time?
We can go on and on, but let’s shorten the scope of conversation for now. However, there is clearly a whole world of difference between what obtains now and the traditional institution of commercial banking, in the negative. Somehow, there is a disconnect in tradition, which reminds me of professional training schools established by banks in the olden days, to help generational knowledge transfer and sustenance of established professional standards. We shall stop-short of mentioning names, but the old generation banks stood as brands, in the real sense, and to so-play they had own-training schools in the real sense, which helped them sustain distinguishing brand characters, corporate philosophy, brand personality, and brand promises.
Banking, as a system, was service-focused and collaboratively competitive; each bank brand had something to offer, and that one thing to be known for. Which Of The Commercial Banks Of Today Has A Training School (not in-house training programs that are either outsourced or organised as interventions)? Consequent upon declining professional corporate management structure, commercial banks have grown into confusion.
Commercial banks are an integral part of Nigerian society, and their essence is dependent upon prevalent societal needs. Evolution challenges its integral parts in the direction of change, as growth partners, and as a duty. Commercial banking in immediately post-independence Nigeria, served the purpose of monetary storage, payments and institutional dispensation, a need-range in line with prevalent economic activities at that time. Economic activities were largely government-driven, with about 28 per cent private sector involvement (mainly agricultural produce sales and merchandising). European trading companies were driving what was Direct Foreign Investment, using our locals as middlemen.
So, it was that the Barclays Bank of this world was Everywhere. Commercial banking needs and service delivery were rudimentary and traditional, facilitating commodity trading and commerce. Salaries were in small volume and handed out to civil servants and staffers of corporations such as Electricity Corporation of Nigeria (ECN), Inland Waterways Department, Nigerian Ports Authority, and the likes, on pay-days. No bank transfers. Consumer service needs was near-zero.
Immediately after the Nigerian civil war, reconstruction and reintegration stepped up economic activities, private sector activities stepped up, with the entrance of talented individuals hitherto constrained by the civil war. Then, commercial banks assumed greater level of importance in their traditional roles. Yet, they were more clerical than tactical. Nothing challenged them in the direction of creativity as it is now.
There was a gap in skill-set and knowledge base expansion that left the system unprepared for the disruptive changes that happened around 1980s. Not sure if the central bank system was also prepared, but we know certain banking wiz-kids that came up with the innovative banking practice in the 1980s till when the bubble burst at about 2007/7, left everybody guessing the essence of commercial banks, in view of its new direction. At some point, some industry players so confused the system, universal banking system licenses that permitted combo commercial & merchant banking together showed up.
So, when the new generation banks came into play, and changing the dynamics, the entire banking industry was left in confusion. Old generation banks were rushing to tag along, not certain if the new market was leaving them behind. The likes of Union, First and UBA managed to fund the learning process and competition by drawing on diversified investment and international market presence. Emergent new generation banks redefined the core of banking business for hawkish profit optimisation.
In spite of their traditional service orientation, none of the old generation banks prepared for the size of profit earning the new generation introduced to the market within five years of entrance. The new orientation was simply callous. But then, the business dynamics changed. Focus changed from customer service to profit optimisation.
Commercial banks are designed basically to attract deposit, lend to investors at regulated interest rate, and provide other interest-earning financial services. It is within this ambit of function that those who called themselves banking wiz-kids, perpetuated so much ill that turned commercial banks against the public it should serve, as it is today. We call on the Consumer Protection Council (CPC) to join us at MC&A DIGEST to question commercial banks as follows:
Do savings account holders still earn interests on their deposit (if Yes, at what rate)?
Do savings account holders pay to operate their account in any way or form (are they charged for the use of Automatic Teller Machines – ATM)?
Can they differentiate between cost-attractive and cost-free services to their customers?
Which aspects of their services are complementary, such that supports their brand person, for competitive engagement?
What portion of their loans portfolio is targeted at small real growth sector? And how much of this is invested in small/medium scale investors in the private sector?
How much have they supported skill acquisition/appreciation and investment?
What are the cost components of tech-injection in commercial banking operations, and how much of this is passed to customers?
Our (hypothetical) position at MC&A DIGEST is that commercial banks are now predatory in nature and character. We are presently conducting a survey on the structure of banking services, towards answering the questions raised above. But until we publish our report, we like to leave our readers and the commercial banks with the fact that over 70 per cent of commercial bank customers are unhappy with the present system as it is entirely self-serving, unfriendly and antithetical to economic growth in the real sense.
By the way, let me put Guaranty Trust Bank on notice, because I am preparing a report to the CPC on a personal sad experience. It happened that a little over a month ago, I mistakenly sent some money to an unintended recipient at UBA, from my GTB Account. I reported to GTB branch at Anthony Village, Lagos, and was made to call and send an email to GTConnect after a long delay. In about two days, GTConnect sent a reply to say the case is closed, and that they have contacted UBA, and that whatever happens then on, is at the discretion of UBA and the unintended recipient. Till date, I am still waiting. Surely, GTB is shaming itself, as I will do all I can within the law to make them responsible.
We shall continue this ‘conversation.’