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The Group Managing Director and Chief Executive Officer (CEO) of First City Monument Bank (FCMB) Plc, Mr. Ladi Balogun has said that innovation in mobile payments, financial inclusion and regulatory intervention are amongst the key drivers of sustainable and profitable growth in the Sub-Saharan African banking industry – with growth rates, capital adequacy and profitability ratio's that are leaving Western counterparts behind. In a presentation titled “The Future of Finance In Africa: Thoughts from the Next Generation” he made at The Economist Africa Summit in London on Tuesday, Mr Balogun stated that in a region that is often a slow follower, Africa's banks are increasingly becoming first movers. He cited the example of M-PESA, the Kenyan banking system in general, and the role its regulator has played in promoting mobile payments and financial inclusion which has resulted in the highest mobile payment penetration numbers in the world. He also cited the example of a leading South African bank recently conferred a global award for innovation, with solutions such as social (network) banking, cardless ATM withdrawals, unique branch formats - all aimed at increasing accessibility and convenience. Bringing it back home, he cited the example of regulatory innovation in Nigeria, which led to one of the boldest and most efficient crisis resolution efforts to be recorded by any bank regulator in recent times, where within 3 years the Nigerian banking industry has gone from non-performing loan ratio's of over 25% to less than 5%, and aggregate industry operating profit likely to cross $3 billion in 2013 in the estimation of analysts. This has been done by the industry deciding to collaborate and self finance its own bail-out, set its own sustainability principles with goals around the environment, workplace diversity, financial inclusion and other key social metrics that promote good business and operating practices. The regulator has also been proactive in de-risking the agricultural sector and promoting the fixing of the sector's value chains, which has seen more than 300% growth in bank lending to sector within 2 years. These innovations has led to leading regulatory figures in the country being nominated by The Banker Magazine as Central Bank Governor of the Year, and by Forbes Magazine as African person of the year. More importantly, it has led to what could be a sustainable transformation of the banking sector and a gradual restoration of the reputation of an industry that had lost its shine not just in Nigeria but globally. What is driving these innovations? Mr Balogun believes it is driven by needs of the customer and society rather than the needs of the shareholder. Hence you will not find African banks innovating in derivatives or complex financial instruments a great deal. Rather we are likely to continue to innovate with unique retail credit offerings for the underbanked, payment solutions, financial inclusion, and impactful banking. Ultimately however, as is being seen by investors in some of these markets, this form of needs driven innovation ultimately results in strong and sustainable shareholder returns. Return on Equity above 25% is not uncommon inspire of the fact that most leading African banks operate at capital adequacy ratio's in excess of 20% (more than triple their Western counterparts). The FCMB Group Managing Director, in conclusion called for an expansion and improved efficiency of the capital markets, believing that Africa's risk was being mispriced both in the debt and equity markets. This has led to many of the corporate and instutitional users of capital shying away from the capital markets and relying excessively on bank credit or their own working capital, thereby limiting growth and competitiveness. He pointed out that, “banks have nothing to fear from the disintermediation by capital markets because as capital markets evolve and support institutional users of capital, banks will focus more on the retail space and provide credit to the underserved where risks are diversified”. The FCMB helmsman also said that despite the challenges, largely due to the high GDP growth rates and innovation, “the future is positive for the financial sector and banking in particular”. He cited the case of FCMB which has been able to transform its business from a corporate and investment bank to a full service banking group within 6 years that has one of the highest volumes in loan origination in the consumer space in Nigeria. He informed that the bank now disburses over300,000 personal loans every year – a figure that is likely to grow by 40 per cent this year, while the bank is also expecting to grow its customer base by 500,000 per annum from next year onwards as it seeks to better support the communities it serves. About Ladi Balogun Ladi Balogun holds a bachelor’s degree in Economics from the University of East Anglia, United Kingdom and an MBA from Harvard Business School, United States of America. He has 20 years’ experience in commercial and investment banking in Europe, the United States of America and Africa. He began his banking career in 1993 at Morgan Grenfell and Co Limited, where he worked in the areas of risk management and corporate finance (debt origination). He was responsible for managing the bank’s trading and investment positions in debt instruments in Latin America and Eastern Europe, and also part of a team that structured numerous complex debt deals in Latin America, Eastern Europe and the Asian sub-continent. Subsequently he worked at Citibank in New York before returning to Nigeria as an Executive Assistant to the Chairman and Chief Executive in 1996. He has worked in various areas of the bank, including Treasury, Corporate Banking and Investment Banking. He was appointed an Executive Director in charge of the Institutional Banking Group (IBG) in 1997. In 2000, he was made Executive Director in charge of Strategy and Business Development and in 2001 Deputy Managing Director. He was appointed the Managing Director in 2005, where he has led the successful acquisition and integration of 4 banks, and the transformation of FCMB from a modest wholesale bank to a prominent banking group with almost 300 branches, 2 million customers and a presence in UK, Nigeria and South Africa. Contact Media Information Business name:Intelligent interactive limited Contact Person Name: Ikpehare sobowale Street Address: No 21 wale adenekan,Magodo Gra lagos Company Email: temi@intelligentinteractiveltd.com Company URL: www.intelligentinteractiveltd.com
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