Q: In your own assessment, how is the banking sector in Botswana?
A: Botswana’s banking sector has grown significantly over the past decade. Sector loans and deposits have doubled while electronic access to funds through payments and ATMs has increased by more than five-fold. This shows a rapid uptake and increased depth of the banking sector in Botswana. In this period, Botswana has established a well-earned reputation for its quality sovereign credit rating and stability. Botswana is one of the countries that has really adopted technology in banking and payment services, and the prevailing lockdown due to the pandemic has further increased digital penetration.
Despite the challenges of 2020, the 2021 outlook for Botswana is considerably more positive for the banking sector. Experts envisage an accelerated growth in borrowing in line with recovery of economic growth, which will in turn cause an upturn in profits for banks which were hit by the pandemic of 2020.
The competitive landscape allows for consumers to have access to quality financial solutions, which can only further strengthen the industry. It is a market that has significant room for a bank that intends to offer convenience and value for its customers, which Access Bank Botswana will do.
Q: With Access Bank in the process of acquiring a majority stake in BancABC, what do you think you can offer that is different from what is already in the market?
A: One of Access Bank’s core values is Innovation. We have continued to disrupt the banking space through innovative solutions that have accelerated our business model while increasing operational efficiency and revenue. This positions Access Bank to effectively compete in this new market.
On our way to being the world’s most respected African bank and Africa’s gateway to the world, we intend to leverage our flagship products to break into the Botswana market and other part of Africa. One such product is Access Africa, which is a fund transfer product designed to simplify Person-to-Person (P2P), Business-to-Business (B2B) and Person-to-Business (P2B) global payments, as well as Government-to-Person (G2P) and any other payment functions such as account activities and flows.
We also plan to focus on products and services critical and relevant to the Botswana market from Trade Finance, Women in Business, the Public Sector, Business Banking to Retail Digital Banking products and services. Access Bank has best in class digital solutions that we have compared them to what is available in the Botswana market. We are excited about the added ease and convenience that our platforms will offer to the people of Botswana.
Q: The banking sector in Botswana faces challenges of slow credit growth. Disposable incomes are narrowing and interest rates have been declining over time. How will Access Bank navigate under these circumstances?
A: Whilst we understand the situation of thinning margins in the Botswana banking sector due to the lower rate environment, we intend to explore sophisticated ways of creating credit, leveraging digital and advanced data analytics. Our data analytics will help understand the needs and behaviour of our customers while making access to credit seamless through our digital loan products.
Women are an integral part of our customer focus. We intend to provide support to the women in Botswana leveraging our W-initiative programme. Aside of providing access to loans and credit facilities, Batswana women will also get to participate in capacity building programmes tailored to their businesses, mentoring programmes and maternal health services, all aimed at helping to build a bigger, stronger and more sustainable society.
BancABC Botswana provides a strong foundation for Access Bank to build on, including strengthening the bank’s Corporate and Business Banking capabilities that will allow us to offer more to SMEs and other business clients.
Q: Do you still see opportunities in the core-banking sector, i.e. credit?
A: Despite the evolving nature of the banking sector, the core business of banking will continue to remain relevant because banks are continually looking for ways to simplify their services and product offerings. Credit remains one of the key opportunities for customers because it allows them to grow their businesses and own a home or a car. These are important milestones in the lives of our customers that Access Bank will continue to support. We intend to simply every aspect of our customers’ journey to make banking more convenient and enjoyable.
Q: With interest rates declining in Botswana, where do you see growth coming from for the banking sector, BancABC in particular?
A: Access Bank has a robust digital and transactional banking product suite for all of its customer segments. Our focus is on providing more solutions and better access to those solutions that will allow us to play a pivotal role in the lifestyles of our customers. Botswana still has a significant underbanked market that can be served with better technology and strategic partnerships to bring even more customers into mainstream banking.
We intend to focus on driving transaction banking income through increased migration of our customers to our alternative channels like mobile and internet banking, ATMs and other self-service solutions.
Q: Given that banking rates have been coming down and putting pressure on profit margins, how can you prepare the bank to caution the downside risk of monetary policy, i.e. in the event that interest rates remain this low?
A: Despite the low-rate environment, BancABC Botswana has remained profitable over the last 10 years. The bank has done exceptionally well to grow into a top four banks by profitability in Botswana in those 10 years.
Access Bank will build on the BancABC Botswana journey by accelerating the strategy to offer more to customers through introduction of best-in-class digital solutions and payment capabilities that will allow the bank to do more with more customers. In addition, the expanded product scope and strengthening the Corporate and Business customer will provide significant growth opportunities for Access Bank Botswana.
Q: Some banks have been aggressively growing their non-interest income sector to caution against falling interest rates. Is this what your bank will be looking to do?
A: The rich Access Bank product portfolio across sub-Saharan Africa affords the Botswana franchise the platform to aggressively grow its non-interest income base. These unique selling points afford Batswana the opportunity to transact with the rest of Africa and accelerate the bank’s value proposition.
Q: What income lines is the bank looking to expand on or introduce to caution the impact of monetary policies?
A: The diversified product bouquet across multiple regions presents a mitigant for prevalent monetary risk. Leveraging these attributes, will drive the bank’s non-interest income lines, enmesh Botswana with the rest of Africa and expand the boundaries of transactions.
Q: What role do you think non-interest income will play going forward vs interest income which is under pressure?
A: The bank will continue to drive all income lines as a reflection of our premium services to our customers. Acknowledging the contracting interest rate market, the bank will continue to innovate and improve its offerings. Non-interest income lines remain a key revenue generating machinery that will be improved upon as the bank pushes for growth with our customers at the core.
Q: Do you see Access Bank’s digitalisation drive playing an important role in growing non-interest income going forward?
A: Technology presents a platform to scale market penetration, product development and product offerings. Leveraging technology and riding the emerging digitisation wave presents the bank with the opportunity to deliver value across the country and into the region. The adoption of digital transaction channels will be accelerated due to its merits, pushing our customers to do more, taking advantage of Access Bank’s huge technology stack. All these increased activities will drive our non-income earnings capacity.
Q: With digitalisation, charges for banking services tend to be lower than traditionally walking into the branch. How will you ensure that this does not offset the non-funded income?
A: Digital banking channels have rapid scalability due to ease of access and flexibility structures while traditional banking channels possess low scalability due to their rigid structure, which informs the higher transaction charges in comparison to digital banking channels. These differences present a trade-off, but the digitalisation offerings have no ceiling in revenue generation.
Q: Please share with us any extra information that may help this publication.
A: The focal point of Access Bank’s strategy is to become the world’s most respected bank both in financial and non-financial metrics as well as shareholder value creation. Given this strategic positioning, we are focused on forging greater co-operation and collaboration among African countries, ensure greater economic development and provide financial access to millions of Africans.
In 2018, Access Bank set an aspiration to become Nigeria’s #1 bank by 2022, which implies an increase in net revenues to over N1 trillion. The merger with Diamond Bank combined the retail and wholesale competences of two of Nigeria’s leading institutions to create the largest bank in Nigeria in terms of total assets, as well as the largest in Africa by customer base. This led to the attainment of Access Bank’s strategic focus of being the No1. Bank in Nigeria and in part Africa, with a total customer base of 32 million customers at the time of the merger and over 40 million customers at the end of 2020.
With the emergence of the new enlarged entity, we are well-positioned to cater to the retail business through a broader reach alongside product offerings, benefit from a diversified business mix, reduce earnings volatility and deliver improved shareholder value. This is still with great attention to the wholesale segment in which the bank has built strong presence in order to consolidate its market share.
Access Bank is featured as part of the world’s 500 most valuable banks, showing the financial strength that we have as a pan-African bank with Nigerian roots. We are present in 14 African countries and have the best global presence spanning five continents, which is the best of any African bank. Our services and compliance standards are world-class. They include being the only African Bank with a clearing licence in the UK, as well as a presence in China, Dubai, and the US.
All these demonstrate the expertise and track record that we bring into Botswana as one of our newest markets, coupled with numerous international and national awards received as recognition of our continued strong business performance. Some awards won in 2020 are Africa’s Best Bank for SMEs, Euromoney Awards for Excellence winner; Best Digital Bank in Africa, Asian Banker Awards winner; Most Innovative Bank in Africa, winner of the EMEA; and Outstanding Business Sustainability, Karlsruhe Sustainable Finance Awards.