To say the least, 2016 has been a challenging year for Nigeria’s economy. With 70 percent of the nation’s revenue derived from oil, the commodity’s steep fall in price has led to a significant devaluation of the naira. Add to this a fall in foreign reserves and instability caused by the Boko Haram insurgency, and it is plain Nigeria has become a hard environment in which to do business.
Amid this economic uncertainty, Access Bank has been adopting innovative strategies to maintain its strong financial position and continue its growth. Access Bank was founded in 1988 and is now one of the five largest banks in Nigeria in terms of assets, loans deposits and branch network. Its position was significantly boosted in 2012 when it acquired International Commercial Bank, one of a number of banks that were failing government stress tests. This acquisition gave Access Bank the branch network and asset base to quickly become a major force in Nigerian banking.
To support the national economy, the bank has been partnering with the federal government on various programmes designed to uplift Nigeria’s non-oil industries. Another focus is on sustainability programmes, which the bank remains committed to despite the difficult economic climate.
With 70 percent of Nigeria’s revenue derived from oil, the commodity’s steep fall in price has led to a significant devaluation of the naira
World Finance had the opportunity to speak to Herbert Wigwe, Group Managing Director and Chief Executive Officer of Access Bank, about how these sustainability programmes are ensuring the future strength of the Nigerian banking sector.
How does Access Bank define sustainability?
At Access Bank, we appreciate the impact that environmental degradation has on the world we live in. Even though we are in business to make profit, we refuse to do so at the expense of our people and our planet.
We understand the projects and deals we finance could have a significant negative impact on our local communities. Our activities impact people’s livelihoods, the rivers, the soil, farmlands and even air quality. Sustainability to us is responsible business practices and community investment. Our work in sustainable development primarily focuses on health, arts, sports, education, gender empowerment and the environment.
How prevalent are sustainable approaches within your markets?
With the creation of the UN Sustainable Development Goals in September 2015, businesses and industries are challenged to drive agreed global objectives in their various communities. However, on a larger scale, the Nigerian banking industry’s attitude towards the adoption of sustainability is progressive and evolving. Many institutions are now showing commitment to sustainability as a strategy, practice or set of activities, offering opportunities to manage risks, explore opportunities and adapt to changing business.
For a successful and genuine commitment to sustainability, society at large has to provide an enabling environment in which it can thrive. Unfortunately, the Nigerian business environment – like most developing markets – is still characterised by an evolving structure. This in turn has implications for the success or failure of sustainability in banking operations.
Despite this, the launch of the Nigerian Sustainable Business Principles was a major step in the right direction. Even though there is room for improvement in creating an environment in which sustainability can thrive, the truly committed banks are seeking to create the change they desire.
Sustainability is often overlooked within challenging markets. Why is that?
Many companies have the misconception that the more sustainable they become, the more their efforts will work against their competitiveness. This pushes management executives to approach sustainability with reluctance, viewing it as an avoidable corporate social responsibility separated from business objectives. However, due to their intermediary role in the economy, banks hold a unique position and are therefore expected to approach sustainable development with a more proactive approach.
Sustainable businesses are ones that are able to ensure their future. They are able to cut down on energy and waste costs, which will in turn have a positive impact on their bottom lines. Ignoring the relevance and importance of sustainability is foolhardy.
Clients and investors are also drawn to sustainable businesses. If taken seriously and diligently enforced, the positive and profitable reputation for sustainable practices will grow.
What are the biggest challenges to maintaining a sustainable approach in a challenging market?
Sustainability should be firmly anchored in the business strategy and leadership structures of all organisations. However, embedding sustainability in a brand is usually ridden with various shortcomings and choked by several other pressing issues. This creates setbacks to advocating sustainability in business operations.
The challenges of embedding sustainability into business operations are diverse, ranging from the creation and definition of a business case for sustainability to the lack of standards and metrics for the measurement of sustainability. Furthermore, the motivation of management and employee engagement on sustainability issues remains low. With the lack of government policies supporting sustainability and the lack of understanding and support among consumers, advocating sustainability becomes an uphill battle. The lack of expertise for the credible implementation of sustainability initiatives and the need for better guidelines for engaging key stakeholders are also challenges.
At Access Bank, we recognise the sustainability journey is filled with challenges, and we believe that sustainability must be embedded into the fabric of any business that intends to contribute to economic development while achieving long-term success. Sustainability therefore remains at the core of our operations.
We have set up a sustainability committee at the executive management and board level, tasked with the responsibility of steering Access Bank’s sustainability strategy. The committee is responsible for the supervision of the bank’s sustainability activities. This includes monitoring performance and producing public reports of the bank’s sustainability projects.
Fulfilling a broader social, environmental and economic purpose does not mean looking away from profits. The significant impact of unsound banking practices on the economic health of many countries around the world is a salutary reminder of the responsibilities banks hold. Therefore, we at Access Bank have pledged to stand and advocate for sustainable business practices in our industry.
Access Bank’s number of shareholders
Branches in Nigeria
How have your various platforms helped to increase access to banking in Nigeria?
PayWithCapture was launched by Access Bank to solve issues of connectivity, intuition and diversity. It is a first in the sub-Saharan African payment space. It provides financial services anywhere and anytime, even without an internet connection.
The innovative app provides convenience and ease in accessing banking services for all individuals, whether they are customers of Access Bank or not. It also provides a solution that allows all types of devices, from smartphones to the simplest mobile devices, to access financial services utilising the USSD system. It is the ultimate mobile wallet that enables all types of diverse users to save, spend and invest their finances quickly and conveniently.
How important are innovative digital banking platforms in the Nigerian market?
In the Nigerian landscape, marketers and their clients are becoming aware of the fundamental effect and importance of digital banking. The leaders in digital banking are more client-centric, tech-savvy, inclusive and open to fundamental change to deliver the best results. In the past decade, digital banking has taken hold; most leading Nigerian banks have incorporated strong digital strategies into their system. These leaders understand the importance of mobility in a digital strategy. They are developing more agile operating models and, most notably, they have tackled the need for internal culture shifts.
First, as more customers use their mobile phones and tablets to do their banking, the mobile experience is becoming a crucial aspect of digital strategy that banks must address. Second, to keep up with the fast-changing technological market, Nigerian banks will have to adapt to newer, more innovative and more technologically advanced operating models. Top management-led innovation towards technological advancement and progression will lead the way to addressing market changes, becoming more agile, and improving openness to digitilisation in day-to-day business.
However, the digitilisation of retail banking is not a new development. Online solutions and services have existed since the turn of the century and have progressively led banking beyond mere multichannel strategies. In coming years, mobile use will become the epicentre of digital banking. Across Nigeria, transaction volumes from mobile devices are starting to take over all the other channels. It is therefore imperative that financial institutions strategise and embrace digital banking opportunities to advance with the world and changing trends in banking.
What changes can we expect to see in the Nigerian banking sector in the coming years?
As a result of the current economic crisis, raising the capital base of the banks has become a necessity. The need for this has become more imperative as capital ratios are under pressure from write-downs on credit products, downgrades of securities, as well as pressures to expand credit to the private sector, which requires banks to hold even more capital against potential losses.
Another trend that will result from the recent crisis will be the need to review the existing rules and laws relevant to the financial industry in Nigeria. In addition to all of this, it is also expected that the Nigerian banking sector will undergo a major shift towards more sophisticated, digitalised and modernised financial practices that will be customer-centric and efficiently sustainable, creating a more admirable banking industry and Nigerian economy.