Mr. Tim Hinton is the Global Head, Small and Medium Enterprises Banking at Standard Chartered Bank. He came to Nigeria as part of his oversight functions and had a chat with CHIJIOKE NELSON on the bank’s strategy to boost Nigeria’s economy through its SME-driven operations. Excerpts.

WHAT is the place of Africa in your business model and are we expecting more investments?

Africa is a core part of the bank’s Group Strategic Intent, with more than 180 branches in 16 African countries (15 sub-Saharan) and over 7, 000 staff.  The bank’s economic contribution to Africa has been the culmination of 150 years of sustained and increasing investment in the region. We are in a position of strength. The investments we have made in our distribution channels, in our products, our services, our people and our system are realising immediate value. We continue to differentiate our brand and have confidence in our strategy for long-term, sustainable growth.

Standard Chartered in Africa remains well capitalised and in every country in the continent our capital position is above the regulatory minimum.

With our well-intended products, services, distribution channels and system, the bank provides customers with increasingly sophisticated banking services that are unrivalled in Africa.

We recently committed more $100 million to add another 100 outlets to our existing branch network by 2015, which will bring our total number of outlets to more than 250, with the majority of the branches to be opened in Nigeria, Ghana and Kenya. With this investment, Nigeria, in particular will more than double its branch footprint between 2011 and 2015.

What is Nigeria’s profile in the group’s performance?

Our recent investment of $76 million on the ongoing ultra modern head office complex is also a definite sign of the group’s commitment and the position of Nigerian market. The first occupants are expected to move in from Early December 2013.The Nigeria franchise is building a strong track record of performance and has the capability to deliver on its potential and aspiration. Nigeria was a star performing country in the group in 2012. Injecting $147 million capital into Nigeria in 2005 was a significant investment and a demonstration of the bank’s commitment to one of Africa’s major growth markets.

Standard Chartered is excited by the long-term potential of Nigeria and the re-capitalisation is closely aligned to our bank’s growth strategy for Africa. A successful Nigeria will enable us to be well positioned to support the business opportunities in Africa’s fastest growing economy with our international expertise and global network.

How about the bank’s agenda for SMEs?

For Standard Chartered, the SMES segment is a vital part of our future strategy and indeed, it is a big business already today. SMEs typically drive most economies and they are usually accountable for a large part of GDP of many countries and a major provider of employment. Not only that, what we see typically is that SMEs grow faster than the countries’ GDP growth. Most companies grow faster than the average seven per cent or six per cent of local GDP of any country. So it’s an important part of every economy today, but also a fast growing part of the economy.

For us, we focus on the segment very carefully. I think with the advances in technology, what’s possible now is using system, cell phones and softwares and the digital agenda as a tool in helping SMEs is critical and absolutely fundamental if we are going to be the main bank. If we are going to be a core provider of services to our SMEs, we have to have a good electronic platform and Straight2Bank is our latest strategy for our corporate offering and most SMEs are ready corporate that want to have information at their finger tips.

Nigeria is now the highest in the region in mobile and Internet usage. So, people are becoming tech-savvy here. The bank’s new proposition- Straight2Bank is revitalising the usage of the technology and make it more familiar to the people and helpful for them. So, this strategy is across Africa, not Nigeria alone. The slogan is now “use fingers and not feet in banking” and that’s what we have brought.

At the convenience of your office, you do payments, and payrolls and your office becomes your banking hall. It is secure, convenient, and user-friendly and can be done in lesser time. It is the same across the globe in Standard Chartered. What you see in Lagos is the same as in Nairobi, Singapore and this is where we defer from others. Businessmen in Africa are interested in absolute and immediate response to any payment that they make. This is another contribution to the country’s cashless initiative and a project that has worked well for many years in other places; so, we know what we are doing now and what customers want.

To which extent has the bank been supporting SMES in Nigeria?

Our loans to SMEs grew year-on-year by 117 per cent. This was on the back of our revamped value proposition and increased focus on sectors such as manufacturing and oil and gas. In 2012, we launched the first purpose-built SME centre at Opebi, Lagos, which is essentially a hub for relationship managers specifically dedicated to serving our SME clients. We also continued to support local SMEs through trainings and workshops. The consumer banking has grown at a cumulative average growth rate of 22 per cent, against the general industry average of 15 per cent. We currently serve over 64,000 customers across the retail and SME segments. Over the past year, our customer centric approach and best in class product offering have further enabled us deliver revenue growth of 16 per cent, while customer deposits and loans to customers grew by 21 per cent and 48 per cent respectively.

Expanding our physical footprint remains top on our priority. We currently have 36 branches spread across the major commercial cities in Nigeria and also focused on enhancing our digital banking capabilities- ATMs, Internet access for i-banking and phone boxes for direct call centre access, which have been introduced at many branches. Collections have been a problem. This is because we don’t have many branches and what a typical SME customer will say is that his suppliers or contractors cannot see a branch to pay in cash. Now, these people do not even need to pay cash anymore, given the cashless initiative. So, we are saying don’t pay the cash, just transfer the money and that is what Straight2Bank is here to do.

You introduced a new product known as Straight2Bank. What is it all about?

Straight2Bank is a fully integrated global online banking solution that helps to add value to your businesses, especially the Small and Medium Enterprises. It is a tool to efficiently execute and monitor cash management, transaction and trade finance. The product also offers a wide range of payment solution on a single platform, including domestic transfer, international transfer, and payroll, among others. The Straight2Bank platform revolves around the customer. With enhanced security features, it offers both flexibility and peace-of-mind for our esteemed customers. Indeed, digitisation has become the benchmark for success globally and we want to lead the way in this regard. As a business owner or SME, the product helps in cash reporting (account statement access); transactions initiation; account to account transfers- local bank transfers to other banks through RTGS; direct credit transfers to other banks via NEFT; international bank transfers / telegraphic transfers; payroll payments; draft request; e-mail notifications on account activity; e-mail delivery of cash related telex copies; e-mail delivery of trade related telex copies and advises. With Standard Chartered Straight2Bank, effective management of multiple currencies, accounts and geographical locations is very possible.

Why do you think the launch of this product timely?

We have witnessed a huge increase in demand for remote banking services, just as customers want to do all banking activities on the go and at their own convenience. Huge increase in usage of smartphones will enable us to deliver a richer banking experience on the go. At Standard Chartered, our aspiration is to be the ‘main digital bank’ and having a superior digital offering is a key component to achieving the success, as it provides customers with a superior, convenient, personalized and seamless banking experience.

Like I said earlier, our focus is to provide banking services that are characterized by convenience for our customers. Today’s consumers are tech-savvy and mobile. They want banking that not only meets their financial needs, but also anticipates them. We believe that technology has to be useful, intuitive and most importantly, seamless and we continue to transform our business and invest for long-term growth, with a focus on digital technologies that we believe will shape the future of banking. The Straight2Bank platform is at the very core of our agenda of being the digital main bank in all of the markets we operate in. The world as we know it is now a global village and with it comes an increase in the speed at which business is done. Straight2Bank provides our customers with one-stop banking portal without the restrictions of doing business across time zones.

Why do you believe it will work here?

In the last 10 years, this has become accepted in most countries in the world that banking can be done online. I think the younger generations are always online. Initially, we were worried about security, precisely, the hacking saga- where people make money from other people’s account. But those concerns are gone because they have been addressed substantially now. The proportion of transactions that is done online in many countries is now massive. Cash and cheques are dying. Bullion vans are getting off the road. We are training our customers and there are dedicated staffers for this purpose to deal with every question concerning the proposition. For us, the knowledge of how to use the new platform should not bother anyone. We are sure it will work.

What’s your strategy to increase lending and prevent defaults?

It is a two-way affair between our client and us. If a client actually wants to borrow from the bank, the client needs to prepare by giving a lot of information, which will in turn help the bank to assist. A lot of times where the bank asks for information to help make a credit decision, many clients don’t have any or some. For instance, we may ask for cash flow report, structure of the business, the projections and plans to structure the facility and repayments, we usually find out that the clients do not have the discipline to create a proper structure for their businesses. Now that they want to deal with banks, it becomes difficult. For the ones that are structured, they do not have problems.

In recognition of this impediment, last year, we had a gathering with our clients. In an effort to improve lending too, we took them on accounting and structuring of their business. This was really helpful. We have concluded plans to have another one this month and July just to educate them. SMEs anywhere in the world would always be like that until they are helped. For us, we can always help them at least for the purpose of value addition. Standard Chartered over the last 10 years has had consecutive years of growing its business in many segments, including SMEs and consumer banking. Even in the face of financial crisis, we kept growing our balance sheet. We lent $20 billion to our SMEs in our footprint globally. So, as part of our strategy, $300 million loans to SMEs are reasonable share of our balance sheet.

But we must say that we have to do it with companies we know, understand and like their business model, because we are not in business to lose customers’ money. We want to lend sensibly, sustainability and help businesses grow. Africa, with Nigeria in particular, is a major growth engine for our growth in SMEs and we need to sustain it.

Banks are known for insignificant interest rate on savings account. What is your bank’s position on this, especially with the Central Bank of Nigeria’s recent guideline on the issue?

Interest on savings account does not work the way it is seen outside the bank. If you have a savings product, there is a treasury department that actually manages the accounts. What is bank in the business of lending, except that it takes depositors money and lend to its customers. But in savings account, you can come back any day and at will, to demand for the money and for that, we cannot lend out the money to a customer for a longer period and take high interest from the customer. So, what can be done with savings deposit is extremely limited and we are not really getting much from it, hence interest attached to it is always lower than that on fixed deposit. But having said that, the new Central Bank guide on charges and fees stipulated a minimum rate to pay on savings account deposits, which is linked to the subsisting Monetary Policy Rate. All banks have adopted that and we are obliged to it.