Coming from virtually nothing to being the fourth most profitable bank in Botswana with a strong presence and resilient income lines, BancABC has done well over the last 10 years,
The bank is so strong that it attracted the attention of international players interested in Botswana. Coincidentally, BancABC was looking at its next phase of growth, which involved significant investment, complimentary to its new owner, Access Bank, a Nigerian banking outfit with excellent technology capabilities that BancABC dreamt of. BancABC has been trying to build technological capabilities from the beginning, which is something that Access has a proven record of accomplishing.
Access is everything that BancABC has tried to be in the last three years, only on a smaller scale. The Nigerian bank accomplished tremendous growth, built digital capabilities that BancABC has been aspiring to do.
Access bank has existed since 1988. The real story, however, started in 2002 when its CEO Herbet Wigwe and his partner put together a strong plan to transform it into a world-class financial services provider. Wigwe says at that time, there was proliferation of banking licences in Nigeria. “We wanted to be one of the top 10 banks in the country,” he says.
At that time, it seemed impossible, given that top banks were those that had been established for years. “We started with a transformational agenda. We said we are going to walk with institutions that share similar values with us.” Wigwe recalls, adding that they attracted investors like the International Finance Corporation (IFC). “We said we are going to play to our strengths to be a wholesale commercial bank. We had most of the large corporates that we had built over time. They truly did go with us.”
They recruited the best people, of some who were from Citibank. Its five-year strategy (2002-2007) of becoming one of the top 10 in the country succeeded. It was difficult because the bank had capital of only $10 million then. “We had hardly settled down with the borrowed money when we had a new central bank governor who said minimum capital was going to be increased from $10 million to $250 million,” Wigwe says.
Access had already started working on a growth plan because it was clear that the market was always gravitating towards the biggest players. The global financial services sector was consolidated. Wigwe says they approached HSBC Bank. HSBC had gone through a tremendously successful inorganic strategy in Hong Kong. “They told us what to do. So even before the central bank governor came, we had already identified whom were we going to merge with and how much capital we needed. Nobody had any inkling that there was going to be an increase in capital requirement,” Wigwe says, adding that they merged with two banks and raised capital.
In 2007, Access Bank wanted to become one of the top five in Nigeria. While this was happening, the country’s central bank came up with the ‘discriminatory’ stance that if a local bank had a strong presence in the UK, the bank would give it a billion dollars to manage. They spoke of Nigerian banks going outside because they thought it would strengthen things internally.
“We issued euro bonds and raised a billion dollars in capital. That marked another big change for us. Having raised the capital, we were now very profitable and continued to grow,” Wigwe says.
Then something just happened in that year. Subprime prices hit and took a lot of banks in the US. A couple of Nigerian banks were impacted too. A new governor took over in Nigeria and emphasised that something had to be done to save the financial sector. “We believed as a Nigerian bank and would not just sit and watch. When they opened the banks for sale, a lot of international banks came in and as they looked at their balance sheets, given the problems they were under, they left those banks,” Wigwe recalls.
Wigwe says they approached the banks for prospects that would enable them to grow, add value to shareholders and promote a safe hub for deposits. Having a plan alongside Citibank, Wigwe says they took it to the central bank which quickly endorsed it. “That became the template for the resolution for the financial crisis in Nigeria,” he says.
Through a similar approach, Access grew because of a huge bank which was intercontinental and expanded its retail network. Wigwe says in line with their strategy, they became one of the top five banks in Nigeria in 2012.
During the bank’s third five-year corporate strategic plan, the aim was to be one of the top three banks in Nigeria. This was between 2012 and 2017. “Begin to imagine that we have Absa here and say I want to knock them out. That was exactly the task ahead of us. We went to work, and by 2017 we had become one of the top three,” Wigwe says. A signification portion came from the wholesale part of business. There were some things that stood out, among them issues around diversity and supporting female entrepreneurs.
In its fourth corporate strategic plan (2017-2022), Access wants to be Africa’s gateway to the world but there are a couple of things that need to happen for this to succeed. As Wigwe says, they need to be the major trade centre of Africa. The idea is to make that one out of every three transactions in Africa is completed on an Access bank platform. “We had to make sure that the number of customers who bank with us is increased,” Wigwe says. Today Access is at 45 million customers and wants 100 million African customers by 2022.
“We said we have to use technology to drive it. We have to strengthen our compliance to be able to achieve it, we have to partner with fintechs. We need to make sure we collaborate in places where we don’t have physical presence,” Wigwe says. The banker says they have a broad framework, cluster strategy.