Fidelity Bank on the path of becoming a tier 1 bank

Fidelity Bank Plc may soon be classified as a tier 1 Nigerian bank, as management of the bank is working towards achieving this goal. In a recent interactive session with Business Editors of leading newspapers in Nigeria, the Managing Director/CEO of the bank, Mr Nnamdi Okonkwo explained how the bank will realise this through its four-year strategic growth plan. MOTOLANI OSENI was there for The Daily Times Newspaper. Except.

You were a leading investment bank before the consolidation in the banking industry, but are you de-emphasising corporate banking for retail banking?

We have just appointed a new Executive Director, Corporate Banking and that should tell you how seriously we take Corporate Banking.

Fidelity Bank used to be Fidelity Union Merchant Bank and that was why most multinational companies in the country have continued to bank with us.

Supporting business in this niche segment comes at is at huge costs.

Therefore, building up low-cost deposits from the lower end of the market helps support lending to the corporate segment at rates lower that higher-risk segments.

We have grown our savings deposit account base from N75 billion when I became CEO on January 1, 2014, to N226 billion at present.

What is your take on cybersecurity in the industry and what is your bank doing to tackle it?

The entire industry is as strong as a bank with the weakest security measures. Therefore, no bank should toy with cybersecurity measures because there is a contagion effect if fraudsters can penetrate one bank.

What it means is that they can also affect other banks. At the Bankers Committee, we have discussed this several times.

Therefore, even at a regulatory level, there are certain measures you are compelled to take.

For instance, building a Security Operations Centre and appointing people with certain qualifications and executive level personnel as Heads of IT Security.

What plans do you have to grow the bank organically and inorganically?

A company’s strategic initiative for growth might be driven by either organic growth or inorganic growth. Our five-year plan was crafted to be based on organic growth, based on the projections we made.

We also purposefully decided that we will not expand outside Nigeria until after 2022. So, our plans are based on organic growth.

We also left a window that allows us to take advantage of emergent opportunities though.

When these happen, we will sit down and look at them and go back to our Board to see if we need to alter anything to take advantage of such opportunities or to continue with on the organic growth path.

Fidelity Bank recorded about 28 per cent growth in deposit base in 2018, what was responsible for this?

The deposits came from a combination of growth in savings, growth in current and domiciliary accounts.

We have a new product where you can transfer foreign exchange with your mobile phone up to the regulatory limit.

It means that we have also seen growth in our domiciliary accounts because people built up funds so that when they want to transfer they can easily use it.

We also have corporates that are in foreign currencies earning businesses. The increase in oil prices also impacted on our deposit growth as it favoured our oil and gas upstream customers.

What are you doing to sustain loans and advances above 10 per cent?

The environment is so challenging that growing loans double-digit as we have done have prompted some people to ask us: How come we grew double-digit.

In 2018, we took advantage of opportunities in some sectors to grow loans.

For this year we are guiding for between 7.5 per cent to 9 per cent. Still talking about last year, a lot of those were to the real sector of the economy which encourages growth and creates employment.

What is your take on payment service banks?

You know it has been a prolonged push by the Telcos to come into the banking space.

We don’t have a problem with that. Let them be subjected to the same regulatory conditions that we have because you are talking about depositors’ money.

So, once all of us are subject to regulatory control, we will all do banking together.

I think the sky is big enough and as banks, we are not sleeping, that is why you see some of us deepening our digital platforms.

Nigerian stock market is still experiencing heavy foreign capital outflows post-election, what is your opinion on this?

We just got back from London on a no-deal roadshow and the outlook on Nigeria is quite positive.

Indeed, based on some of the sentiments, we were being advised to raise Eurobonds because they want to increase their emerging markets investments especially the fixed income managers.

On the flows, you know European Central Bank raised rates. With the increase in rates, capital will always follow where margins have just popped up.

People generally move money to those areas just the same way when we had our treasury bills going for about 20 per cent, everybody rushed in. So, that is the constant dynamics of inflows and outflows.

What measures have you put in place to ensure that your bank is not threatened as you grow to become a Tier 1 Bank?

We are keeping our eyes on our capital, on risk management, on governance and sustained profitability.

This explains why, for instance, we had enough buffers to absorb the impact of the implementation of IFRS9.

Do you plan to raise Eurobond to support capital?

We do not plan an immediate increase in Eurobond. We are not doing any Eurobond this year but we may consider the local bond issue if necessary as part of Tier 11 capital but no size yet.

How is Fidelity Bank leveraging Fintech to grow its franchise?

Under our five-year plan which was crafted in 2017 and commenced on January 1, 2018, we got one of the big four consulting firms to do a full global analysis of Fintechs and how we can collaborate with them.

Part of our engagement strategy is a partnership. This partnership has been on several fronts including the deployment of a solution for a major customer of ours; an airline.

We are bankers to an airline that controls about 40 per cent of the industry. Initially, they had challenges with ticketing on the electronic system they were using, and they came to us.

Through collaborating with a Fintech, we migrated their entire transactions to the cloud. This has worked so efficiently well in the last one and half years without fail.

Aside from partnering with Fintechs, we then decided that there was a need for us to develop our internal capacities as well. We decided to build a digital lab as part of the outcomes of the strategic studies we had done with the consulting firm in the last six years.

Today we have several millennial that are IT savvy, working at solving problems with innovative solutions, under flexible hours and work environment, at our digital lab.