<p><em>Mr Nnamdi
Okonkwo,  ;Managing Director/Chief Executive
Officer, Fidelity Bank Plc, recently spoke on the bank’s commitment  ;to grow businesses through improved customers’
service and  ;retail banking digitization  ;in  ;an
interactive forum with journalists.  ;</em><strong>OpenLife</strong><em> presents excerpts</em><em></em></p>



<p><strong>How has Fidelity fared in its
quest to break into Tier 1 bank?</strong></p>



<p>Two years ago, we set out at Fidelity Bank, to drive a
five-year strategic plan, beginning from last year, that would see us migrating
to a Tier 1 bank in the country by 2022. We want to break into the league of
Tier 1 banks and grow organically, keeping in mind that the other banks are
also growing.</p>



<p>This is my sixth year as Chief Executive of the bank
and by God’s grace we are driving the plan and the numbers show that we are
making steady progress, year-on-year, in terms of balance sheet size, deposit and
profitability.</p>



<p>As we are doing this, we are keeping our eyes on the
safety of the bank. We have thus kept our eyes on the bank&#8217;s capital adequacy,
liquidity ratios, risk management framework, governance and compliance
practices e.t.c. For instance, as a result of our prudence in building up
capital, we were able to cushion the impact of the implementation of IFRS 9 so
we took the charge out rightly.</p>



<p>On deposits, we grew by 26 percent last year. In fact,
in one year, we grew deposits by about N200 billion, which means that our
market share is increasing. Two years ago, our desire was to make sure that
low-cost deposit constitutes a larger percentage of the total deposit. Today,
we have largely achieved that as low-cost deposits now constitute about 82% of
total deposits.</p>



<p>On governance, you would have noticed how our Board
has been strengthened. We brought on board some seasoned professionals. For
instance, the Chairman of the Board is a former Chief Executive of a bank and a
former Deputy Governor of the CBN for 10 years. We also have with us the former
Managing Director of Guinness Nigeria and another former MD of a bank. As a
deliberate strategy, each time a Director retires, we replace with yet another
very experienced one. We also ensure diversity.</p>



<p>We are also very serious about succession. Therefore,
we plan ahead. As you may aware, we recently appointed three Executive
Directors at a go, subject to CBN’s approval. That is an outcome of planned
succession.</p>



<p>We are driving our retail banking with digitization.
About 81.5 per cent of our transactions are now done through digital channels.
That is why you will see us building just one or two new branches in a year. In
the past, we used to do like 15 to 20 branches. I can’t remember the last time
I went to commission a new branch or even wrote a cheque. Digitization has made
things more efficient. Still on digitization, we have also taken into
cognizance, customers who may not have data to do their transactions, so we
introduced our USSD *770#, which does not require you to have smartphone or
data to carry out some banking transactions. This category of customers do not
need android phones to operate their accounts, just basic phones. This has made
our cost-to-income ratio to improve significantly. Ultimately, our
cost-to-income ratio is likely to drop by about 50 percent by 2022.
Digitization will play a key role in achieving this. Having said this, IT comes
with a lot of risks. Any bank that does not pay attention to cyber risks is
living dangerously and I doubt if any bank will even try that.</p>



<p>Statistics have also shown us that even in some of the
areas of the north with security challenges, we have very high adoption of
electronic banking, because people are sending and receiving money using their
phones. What is a challenge actually leads to innovation and opportunity.</p>



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



<p> ;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.</p>



<p> ;<strong>What is your take on cyber security in the
industry and what is your bank doing to tackle it?</strong></p>



<p>The entire industry is as strong as a bank with the
weakest security measures. Therefore, no bank should toy with cyber security
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 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.</p>



<p><strong>What plans do you have to grow
the bank organically and inorganically?</strong></p>



<p>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 happens,
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.</p>



<p><strong>Fidelity Bank recorded about 28
per cent growth in deposit base in 2018, what was responsible for this?</strong></p>



<p>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.</p>



<p><strong> ;What are you doing to
sustain loans and advances above 10 percent?</strong></p>



<p>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% to 9%. Still
talking about last year, a lot of those were to the real sector of the economy
which encourages growth and creates employment.</p>



<p><strong>What is your take on payment
service banks</strong></p>



<p>You know it has been a prolonged push by the Telcos to
come into the banking space. We don&#8217;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.</p>



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



<p>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.</p>



<p> ;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
percent, everybody rushed in. So, that is the constant dynamics of inflows and
outflows.</p>



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



<p>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 implementation of IFRS9.</p>



<p><strong>Do you plan to raise Eurobond to
support capital?</strong></p>



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

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