Bank innovations drive growth

Standard Chartered Bank launched its Borderless Banking service last week, highlighting the important role innovations in financial services are playing in East Africa’s economic integration. The initiative was an important milestone for the bank, which opened its doors to Ugandan customers in August 1912, and has since been at the forefront of product innovation and customer service. In 2009 and 2010 Stanchart won the Euromoney Magazine and emeaFinance Magazine awards as Best Bank in Uganda. It has shown consistent growth in deposits, assets, profits, loans and advances and capital reserves. Managing Director Lamin Manjang spoke to The Independent:

What is driving the significant and steady growth of the banking sector over the past 15 years?

Uganda has a stable macro-economic environment and economic growth averaged about 7% over the last couple of decades. This has fostered growth and development in banking, telecoms, hospitality, services, manufacturing, among others.  Bank of Uganda has done a very good job supervising the banking sector, especially after the spate of bank closures. That is why the sector did not suffer even when the western world was hit by the financial crisis in 2009.

Does the growth of commercial banks in profits and assets mean that more people can access banking services?

The industry has seen growth in the number of banks, branches, ATMs and other services, profits, assets over the years. Banks have invested in new products and services that have revolutionized the industry.

Is the recent increase of the minimum capital base for banks to Shs 25 billion a prelude to big changes in the sector – mergers and acquisition of smaller banks that can’t raise that level of reserves?

It will strengthen the industry. The financial crisis of a couple of years ago taught us that there is need to create solid financial institutions to safeguard customer deposits and interests. This has already happened in neighboring countries and is good for the banking industry.

What’s your main area of focus for future growth? How are you prepared to compete in a rapidly “regionalizing” financial sector?

Standard Chartered will maintain its current focus on Africa, Asia and the Middle East, and we will continue to lead in terms of product innovation. We are a major regional player with operations in Kenya and Tanzania. Very soon, our customers in Kenya and Uganda will enjoy the benefits of borderless banking.

In the telecoms sector, stiff competition has caused set-backs for the sector’s growth. Do you see similar problems for the banking sector?

Even though we have seen five new banks joining the industry in the last three years, the sector has continued to grow. Competition has its benefits for both banks and customers. It leads banks to rethink their strategies so as to remain competitive in business while retaining customers.  It leads to innovation and generates efficiencies for customers, it leads to a wider choice in terms of products, prices and services. This is a win- win situation.

There is concern that high bank charges, especially on services such as school fees and government payments, exploit customers…

We have to levy charges to continue to provide services, to cover their day-today- costs. We also have to invest in product innovation, technology, train and pay employees, so as to deliver superior services.  As business entities, banks also need to make a profit to stay in business and continue to safeguard the deposits of customers. It is a fine balance that always needs to be maintained.

Doesn’t mobile money take away potential customers from banks? How are you dealing with this new platform in financial services?

Mobile money complements the services of banks.  Because many more people hold mobile phones (over 10 million) compared to the banked population (about 3 million). These services have now reached areas where banks have never banked before. Banks in turn offer services and platforms to mobile phone companies. It is no longer necessary to have bank branches in every locality.

Internet banking is seen as crucial in modern business, yet it is also an avenue for fraud. How are you dealing with this?

Our internet banking platform, Straight2Bank, uses the highest level of security available in the market today. This is coupled with rigorous risk management systems and operations.  That said, there is an increased risk of cyber fraud and both banks and customers should always be on the look out to ensure we are ahead of the fraudsters.

Stanchart is widely seen as an elitist bank, targeting the high-end corporate market. Can you continue to compete with this focus?

Standard Chartered Bank is the oldest bank in Uganda, and has been at the forefront of innovations. We were the first bank to introduce ATMs, the first to operate 7-days banking, and mobile banking as well as service guarantees across a range of products.  We offer services to corporate clients, SME clients as well as personal customers.

We have over 50,000 customers across a range of market segments. In addition to 7 branches in Kampala, we have branches in Mbale, Jinja, Gulu and Mbarara.