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Group Managing Director of FirstBank of Nigeria Limited, the premier bank in Africa, Dr. Sola Adeduntan, speaks on how Nigerian banking operators could respond to the dynamics of regulations, increased digital innovations, and a focused approach toward sustainable growth and financial inclusion. He shares insights with Thisday (Festus Akanbi) on how to insulate the Nigerian economy from the fallouts of the current hostilities at the international scene, the prevailing operating environment in Nigeria and the First Bank’s blueprint for optimum performance in 2024. Adeduntan, asserts that with over 4.6 trillion-naira loans to customers in Q3 2023, FirstBank remains committed to economic growth and transformation.
What are your plans to sustain the bank’s robust customer service network and digital banking architecture in 2024?
At FirstBank, our “You First” brand promise to our customers is not just a cliché. It encapsulates our firm commitment to making banking seamless, more accessible, and rewarding for our teeming customers. As an institution, we will continue to leverage both physical and digital channels to serve our customers effectively.
RELATED: FirstBank launches Digital Xperience Centre in Abuja
With almost 700 operational business locations, no other bank comes close in the branch network. This has enabled FirstBank to deliver banking services within proximity to our customers’ homes and offices. We have also supported our extensive branch network with a best-in-class agent banking network with over 220,000 FirstMonie Agents strategically located across the length and breadth of the country. These agents, in no small measure, have been critical to extending financial inclusion levels in their immediate localities.
With over 3,000 Automated Teller Machines (ATMs), FirstBank has one of the highest ATM spreads in the Nigerian financial services space which enables us to serve our customers round-the-clock. Also, the Bank’s digital and mobile channels (*894#, FirstMobile, FirstOnline & Lit App) have been very successful with our clients, enabling them to conclude both banking and non-banking transactions from the comfort of their homes and offices.
To cater to the needs of our wholesale clients, the Bank has positioned a robust transaction banking platform (FirstDirect) that enables us to service the transaction banking needs of our customers.
In a bid to improve overall customer experience, the Bank has also ensured that its service delivery channels have in-built complaint-handling and issue resolution mechanisms to give customers extra confidence to transact on any of these channels. This is in addition to our always-on, 24/7 interactive, and intelligent contact center, known as FirstContact.
At FirstBank, we remain committed to seeking innovative ways to serve our clients and we will leave no stone unturned to continue to deliver a wholesome customer experience.
As the first Nigerian bank to surpass 200,000 agent banking locations as an exceptional financial inclusion pioneer, what are the plans being put in place to maintain your dominance of agent banking in the coming year?
FirstBank’s feat in the Nation’s agent banking landscape is in tandem with our established pioneering status in Nigeria and the sense of partnership with which the bank operates towards achieving critical national developmental objectives. With over 220,000 agents on our FirstMonie Agent Network, FirstBank is a major partner in pushing the Central Bank of Nigeria’s (CBN) financial inclusion agenda.
The Bank’s FirstMonie Agent Network has processed over 1.4 billion unique transactions worth well over NGN32 trillion and has empowered numerous localities around the Nation’s 774 Local Government Areas (LGAs) with basic financial services that facilitate economic activities in these communities. This is in addition to the millions of direct and indirect employment opportunities that our agent banking network has created for local communities.
The Bank is constantly strengthening its value propositions to the FirstMonie agents in several ways. For example, through our Agent Credit product, the Bank supports agents to bridge intra-day liquidity shortfalls, thus enabling them to better serve their clients. Also, beyond basic offerings (such as cash-in-cash-out, transfers, and bill payments), the bank has empowered its agents to render more financial services such as account opening for customers. We are also continuously fine-tuning our agents’ support structure to ensure our agents obtain prompt resolution for any service hitch experienced.
As a Bank, we view our FirstMonie Agents as partners and we remain committed to making the necessary investments to make the partnership a win-win for all parties involved.
The bank recently pioneered the deployment of humanoid robots in three of its branches as a demonstration of its commitment to fully adopt technology-led banking services. What is the initial feedback from customers and what are the implications of the adoption of technology on the employees’ job security?
FirstBank’s Digital Xperience Centre (DXC)is Nigeria’s first ever fully digitized bank branch employing the latest technologies such as humanoid robots and artificial intelligence to enable customers to perform self-service banking transactions. The DXCs reflect the Bank’s views on the near-future possibilities in financial services delivery, given recent technological advancements. It also underscores the central role modern technology now plays in the Bank’s operations and overall service delivery strategy.
The DXC is a fully automated interactive digital branch that was first launched in Lagos in 2021 and has since then, redefined customers’ banking experience through a world of digitised self-service. We have thereafter rolled out the DXC at the University of Ibadan, Oyo State, and more recently, at our branch in Wuse Abuja. Since these rollouts, the Bank has received commendable feedback from customers (especially customers in the retail segments) which has validated our investments in these modern technologies. There are already plans in place for more rollouts of the DXCs across all our operating jurisdictions.
I would like to note that the DXC is not a trade-off for our employees, but an enabler to free up our staff’s productive time to take on more complex and rewarding tasks within the Bank. Also, given our several laudable employee initiatives (some of which I had earlier mentioned), we are well-equipped to empower our employees to take on any other role they may desire within the larger FirstBank Group.
Another game-changer in the story of the transformation of FirstBank was the conscious attempt of the board and management to make the bank a transaction-led institution. How does the bank intend to continue from this threshold as a way of drawing from the gains of its investment in Technology Academy in Nigeria?
One of the Bank’s strategic priorities in the current strategic cycle is to build a world-class (customer-first) service organization. As such, as an institution, we no longer view Technology as a business enabler but as a business.
Also, when you consider that over 90% of the Bank’s customer-induced transactions now happen on digital platforms, it becomes clearer why we have made (and will continue to make) sizeable investments to overhaul our Information Technology (IT) architecture and infrastructures to guarantee IT platform availability and security to support the overall business aspirations.
The FirstBank Technology Academy is one of the Bank’s creative solutions to addressing the emerging shortage of skilled IT talents in the country in the wake of the increasing migration rate (commonly known as Japa). It is a one-of-a-kind intervention where the Bank engages available graduates with a STEM background and offers them bespoke IT training in line with our business needs. This is FirstBank’s way of growing its IT talents and boosting the national supply of critical IT talents as we cannot afford to use a shortage of talents as an excuse for not meeting up to the high standards to which our customers hold us. The program has also proven to be highly successful, and we will intensify our efforts in this regard.
As a foremost financial institution in Nigeria and on the continent, we are keenly aware of the role technology will continue to play in our ability to serve our clients, and we are poised to make necessary investments at the right scale and on an ongoing basis to guarantee the security, availability, and relevance of our digital assets.
Is acquisition one of the plans being put in place by FirstBank in preparation for the new threshold of capital base to be announced soon by the Central Bank of Nigeria? We note that the bank already has a capital base of N1.287 trillion.
As you also noted, FirstBank has been very intentional in ensuring that it maintains a strong capital base given the scope of the Bank’s operations and in line with regulatory requirements. This has informed the deliberate measures the Bank has taken to shore up its capital base over the past few years.
Depending on where the pendulum finally settles when the CBN unveils the new minimum capital requirements for banks, as a compliant and socially responsible institution, we will explore all options available to us to ensure full compliance and maintain our competitive advantage over other players in our industry.
At FirstBank, we leverage both organic and inorganic growth strategies to achieve scale and deliver improved shareholder value.
FirstBank’s plan to rejuvenate its workforce was recently underscored by the employment of more than 700 fresh graduates. Can you start to count the gains of this decision?
The Bank’s Graduate Trainees programme is a highly competitive process through which the Bank identifies and selects young and dynamic individuals for proper grooming to occupy future leadership roles within the organization. Aside from this, FirstBank has several other talent development initiatives such as the FirstBank Management Associate Programme (FMAP), Leadership Acceleration Programme (LAP), and Senior Management Development Programme (SMDP) which are targeted at employees at different strata within the workforce to build a sustainable pipeline of dependable leaders for the institution.
I am glad to note that as an equal-opportunity employer, we offer very compelling employee value propositions that set us apart in the industry. This is in line with our belief that our employees are not just our greatest asset, but they represent the greatest source of strategic advantage for the Bank’s long-term success.
The global community is yet to recover from the hostilities in Eastern Europe and the Middle East and the wars do not look as if they will end soon. How can Nigeria, a leading producer of oil, take advantage of the attendant disruptions to world order to reposition its economy instead of continuing to count the losses of the wars?
Since the emergence of the COVID-19 pandemic, global uncertainties have been on the rise; manifesting either as geo-political trade tensions or full-blown wars such as the ongoing Russia-Ukraine war and more recently, the Israeli-Hamas hostilities in Gaza. Despite concerted global efforts to resolve the conflict, the Russia-Ukraine war seems on track to mark its second anniversary in a few weeks from now. This has also led to significant disruptions to the global supply chain, especially in the commodities and energy space.
As a leading oil producer, one way Nigeria can take advantage of the disruptions caused by the wars is by positioning herself to fill the vacuums created by the breakdown in relationships among established trading partners and regions, e.g. the Russia – Europe gas supply deals. However, to do this, the right infrastructural enablers must be in place as well as a significant rise in volumes of daily crude oil outputs beyond current levels. Nigeria must position itself as a more reliable source of gas supply to Europe in the short to medium term.
On the flip side, Nigeria can take additional steps to further insulate her economy from external shocks by strengthening local manufacturing capabilities and improving agricultural production to reduce the Nation’s import dependency.
However, due to growing global interconnectedness, it is becoming more difficult for any nation to fully protect its economy from volatility on the global scene. Nonetheless, this period calls for a heightened sense of awareness among Nigerian policymakers to ensure minimal distortions to the Nation’s economic conditions.
Nigeria’s crude oil production benchmark in the 2024 budget has been pegged at 1.78 million bpd, whereas OPEC is proposing a cut that will leave Nigeria with 1.5 million bpd. How can Nigeria remedy this in a way that will not significantly jeopardise the implementation of the 2024 budget?
Traditionally, Nigeria has struggled to meet its OPEC output quota over the last couple of years. Although the Nation is currently recording some improvements in daily output volumes (largely due to the improving security situations), the country’s production volumes as of November 2023 stood at 1.25mbpd (excluding condensates), according to available official figures. This represents about 3 million barrels cumulative monthly reduction when compared with the average daily production output of 1.35mbpd recorded in October 2023.
In preparing the 2024 budget, the government has made some key assumptions around crude oil production outputs and price, that is, 1.78mbpd and $77.96/barrel respectively. Given the expectation that security around crude exploration will keep improving and crude oil theft will progressively reduce, these assumptions do not seem overly aggressive. Also, the Minister of State for Petroleum Resources recently expressed strong optimism about the country’s ability to achieve its crude oil production budget benchmark.
However, recent moves by OPEC to cut crude oil export to buoy global crude oil prices should not immediately be a challenge for the Nation seeing that our national daily crude production levels are still a bit far off from OPEC’s quota. Rather, we should focus on entrenching the improvements in crude oil production levels to make them sustainable. Where OPEC’s production cuts become inimical to economic growth, it is also possible to engage OPEC for exemptions from the production cuts given our current difficult economic situation. Nevertheless, the Nation also stands to benefit from the upsides of a higher crude oil price if OPEC’s production cuts are effective. This should offset the envisaged reduction in production volumes.
I would also like to note that the Nigerian authorities should enhance the ability of the non-oil sector of the economy to generate sizeable revenues to support the government’s expenditure. This will help to reduce the perennial over-reliance on crude oil revenues.
The Federal Government borrowing in the 2024 budget is to increase from N6.3 trillion in 2023 to N7.8 trillion in 2024, with much of it coming from Nigerian banks. How will you allay the fear of a possible crowding out of the private sector from banks in the coming year?
Given the government’s current preference for local borrowings, I can understand where the fear of a possible crowding out of the private sector is emanating from. However, this does not necessarily have to be the case.
Over the years, Nigerian banks have sufficiently demonstrated their commitment to supporting the real sector of the economy. For example, as of H1 2023, the value of loans disbursed to customers by just seven Nigerian banks stood at almost NGN23 trillion. As of September 2023, FirstBank alone has grown its loan book to customers by over N1 trillion over the December 2022 closing position. This is a clear testament to FirstBank’s ongoing commitment to the growth of the Nigerian economy.
As bankers, we fully understand and have embraced our catalytic role as agents of economic transformation. In addition, banks deliberately pursue a diversified earning asset portfolio strategy. As such, lending to the real sector will continue to offer much-needed diversification for banks’ overall portfolio health.
In summary, I do not think the private sector has any need to worry as we will continue to support all sectors of the economy (including government) to realize their objectives.
With the inflation rate trending at 26.72%, and its attendant strain on the economy, how realistic is the dream of the private sector for an affordable lending rate in 2024?
Interest rate remains inextricably linked to the inflation rate. To narrow the margin of negative returns (which usually happens when the inflation rate far exceeds the interest rate in an economy), monetary authorities like the Central Bank of Nigeria (CBN) move to restore the attractiveness of investments by raising interest rates to tame inflationary pressures.
The rise in interest rate also affects customers differently depending on which side of the divide they fall. For depositors, a rise in interest rate means they will earn more returns on their savings or investments, while borrowing customers may have to take on a higher lending rate as banks also try to adjust for the higher funding costs.
Nevertheless, it has also been proven that an unusually high-interest rate burden exerts considerable pressure on borrowers’ ability to repay their loans. Therefore, it is in the best interest of both the banks and their customers to collaborate in arriving at a lending rate that works for both parties. I do not believe that any bank will unreasonably raise its lending rate above its justifiable cost profile, given the elevated competition that exists in Nigeria’s financial services industry.
The current administration plans to grow the GDP to $1 trillion in 2026. Although the Central Bank Governor has directed banks to gear up for recapitalisation to enable them to adequately lend to the economy, do you believe the nation’s capital market, largely dominated by local investors, is liquid enough to generate the needed capital for banks?
The Government’s aspiration for a $1 trillion economy in the next 8 years from 2023 seems well-anchored given the significant fiscal changes that have been implemented since the new administration came on board. If successfully implemented, these actions hold immense potential to unlock new growth opportunities within the economy.
As of 18th December 2023, the Nigerian Exchange All Share Index (NGX ASI) has grown by almost 45% from its closing position in December 2022. This suggests significant activity in the capital market within that period. Also, as the inflation rate tapers in advanced economies, we will begin to see normalization of interest rates in these jurisdictions. Given this trend, we expect to see a growing volume of Foreign Portfolio Investments (FPIs) into the Nation’s capital market as investors seek high-return jurisdictions and portfolios.
Therefore, given these tailwinds and other factors, I remain confident that the Nation’s capital market will be sufficiently liquid to support the potential recapitalisation of banks.
In 2015, FirstBank initiated a development plan that allows most vacancies in the bank to be filled internally. What is the update on this employee-friendly policy of the bank?
At FirstBank, we maintain an end-to-end view of the employee lifecycle which ensures that we focus on offering every employee a fair chance of having meaningful work experience with us. This approach ensures continuous improvements across every stage of the employee experience from recruitment to development and deployment on an ongoing basis.
Since implementing the policy on internal recruitment for vacant roles, the Bank has witnessed a significant uptick in the employees’ mobility index as most vacancies now get filled from existing employee pools. To achieve this, several initiatives such as the FirstBank Job Shadow Programme and the FirstBank Mentoring Programme enable current employees to acquire new skills even while still in their current roles. This makes them ready to take on future opportunities within the Bank.
Secondly, the Bank has acquired a world-class people management system that supports seamless management of job vacancies, competency assessments, and the entire employee lifecycle management process. This provides the necessary visibility into various aspects of our employee management process.
While the Bank still conducts some external recruitments to infuse external perspectives into some functions, the proportion of external recruitments in the overall recruitments has reduced over the last few years.
Can you give further explanation on the recently announced phased corporate name change for FirstBank’s subsidiaries in the United Kingdom and Sub-Saharan Africa?
The Bank’s decision to adopt a monolithic brand name across all operating jurisdictions is borne out of the need to ensure we leverage the rich heritage behind the FirstBank name, and the goodwill garnered in almost 130 years of operations across all the markets where we operate.
Also, as we follow our clients across geographies, it becomes increasingly important to maintain consistency in the brand name to improve overall client affinity and guarantee similar standards in service delivery across all operating jurisdictions. In addition, the name change across all our subsidiaries will enable us to take advantage of available synergistic opportunities in both our marketing efforts and budgets.
Finally, a uniform brand name (across our market) helps the Bank to avoid needless identity crises and is best aligned with our vision of becoming “Africa’s Bank of First Choice”
What is FirstBank doing in the ESG and the broader sustainable development space to achieve these recognitions and how do you intend to ensure this is strengthened to enhance your market leadership considering that ESG/sustainability space is very dynamic, fluid, and always evolving?
At FirstBank, we value our relationships with all our stakeholders, especially the communities where our businesses operate. Therefore, we are very deliberate in how we engage our host communities to guarantee shared prosperity and the long-term sustainability of the environment. The Bank also ensures its Corporate Responsibility and Sustainability (CR&S) approach is well aligned with both local and international best practices as advised by the Nigeria Sustainable Banking Principles (NSBPs), International Finance Corporation Performance Standards (IFC PS), and the Equator Principles (EPs).
To this end, FirstBank’s CR&S Framework is hinged on three strategic pillars, namely: Education, Health & Welfare; Diversity & Inclusion; and Responsible Lending, Procurement & Climate Initiatives.
Each pillar is operationalized through the implementation of well-coordinated programmes and initiatives that enable the Bank to fulfill its sustainability agenda and priorities. For example, some of the initiatives include:
SPARK: SPARK (an acronym for Start Performing Acts of Random Kindness) is a values-based initiative designed to continuously reignite the Bank’s cherished moral values of compassion, civility, and charity. Since its inception, the SPARK initiative has impacted over 150,000 people and 100 charities / NGOs across 8 countries where FirstBank currently operates.
FutureFirst Programme: In partnership with Junior Achievement Nigeria (JAN), this programme is FirstBank’s vehicle for promoting the triple benefits of financial literacy, career counseling, and entrepreneurship among the younger generation. Over 1 million people across Nigeria have benefitted from this financial advocacy effort.
Partnership with Nigeria Conservation Foundation (NCF): Through the Green Recovery Nigeria (GRN) Initiative, the Bank aims to plant 50,000 trees in 2024 towards the reduction of carbon dioxide gas emissions.
In addition, the Bank has fully embedded an Environmental, Social, and Governance Risk Management System (ESGMS) into its credit decision processes as well as adopted sustainability reporting to measure progress on its sustainability journey. The Bank is also committed to decarbonizing its operations, including those of its value chain, in a bid to accelerate its transition to a net-zero carbon emission status. This is being done in line with the standards of the Partnership for Carbon Accounting Financials (PCAF) and other international agencies such as the British International Investment (BII) and Proparco.
Finally, to ensure issues about sustainability are continuously given the highest visibility and consideration in all our business pursuits, FirstBank has constituted a Corporate Responsibility & Sustainability Committee that is chaired by our Executive Director / Chief Risk Officer, thereby guaranteeing the right “tone at the top” in the execution of our broad ESG agenda.
Culled from ThisDay
