Ecobank’s group CEO, Ade Ayeyemi, talks to John Everington about his priorities, which include climate change initiatives, digital developments and cyber protection, and the significance of signing up to the African Continental Free Trade Area.
Ade Ayeyemi
Q: What are the big priorities for the Ecobank group in 2020?
A: For Ecobank, one of the keys is to develop our products centrally and then roll them out across the countries in which we are active. We’ve almost finished the modernisation of our technology, and the next step is to use that technology to roll out products and services to our customers.
The pace at which we’re able to roll them out is going to be a key challenge for us in 2020, to be able to aggressively grow the customer base for such products, as well as the revenue and value that comes from that.
A big part of banking’s future is the substitution of technology for the physical; this requires us to have the right investment in technology, and then try to direct customer traffic towards those technology channels. It is going to become more and more expensive to have redundant physical channels. But this, of course, has consequences on society as those channels, such as branch networks, are manned, and so we need to figure out [the best way to proceed].
Q: As banks across Africa lean more heavily on digital banking, the risks from cybersecurity become greater. What are you doing to protect customers?
A: There are always going to be cybersecurity challenges, so it is an area we’re giving a lot of attention to because it is crucial to our operations. Ultimately, you have to be careful in your use of technology; you can’t just put a policeman in all of your agents’ locations. So it is a question of committing enough investment to our endpoint computing, and having multi-factor authentication, which reduces the potential for unlawful penetration.
As we go forward, with the data and predictability, we are increasingly able to automatically pick up transactions that look out of the ordinary; with all the computing power at our disposal, we’re able to make such predictions pretty quickly. Because our agents are also coming through traceable channels, we can see where the problems are coming from, we can see which agent is actually handling said transactions.
Of course, we have to make sure that in terms of administrative controls that the impact on customers is minimised. It is always a balance between convenience and security.
Q: Climate change was identified as an increasingly pressing issue for governments and central banks at this year’s International Monetary Fund meetings in October. What can banks do in this area?
A: When you live close to the equator, you really know the true meaning of global warming. Climate change is something that we pay attention to firstly in our conduct as an organisation. We’ve installed solar panels in a lot of our branches and in our head office in Togo, where we use solar power as a source of energy during the day and transfer what we don’t use to the national grid – particularly at the weekends when we’re not working. We’re also paying attention in terms of our lending practices. For people that have projects that are supportive of the climate, we're able to give them better loan conditions.
Q: One of the biggest stories of 2019 was Nigeria signing up to the African Continental Free Trade Area. What is your view of the opportunities the agreement will create?
A: It is definitely a good thing for Africa to be [open to trade as] one market, but it is going to take a lot more than just signatures and high-fives to make it work.
Now that the agreement has been signed, we in the private sector need to start to think about how we can help people trade with each other [across borders], and we need to start creating the pipes that link us together. Of course, this is what Ecobank has been doing: enabling payments across the continent to happen almost instantly, therefore giving people the ability to trade with one another.
We’re still having conversations with other [participants], including governments, stressing that this is the right thing to do because it expands the scope of opportunity and can create more value for the continent. The agreement [when properly implemented] will stop unnecessary [economic] migration, and allow people to create work and achieve contentment in their own countries. Of course, it is always important to have migration, but it shouldn’t be forced.
Ecobank believes and supports all these things, and we will work with others to ensure that we are a force for good in guiding the path for the various stakeholders involved.
Q: Now that all but one country [Eritrea] has signed up to the pact, what are the next steps that governments should be taking to make it a success?
A: Governments need to be very specific and communicate that the agreement is [to the benefit] of their people, to articulate the vision behind it and explain how it will make things better for everyone. Communication is the best antidote to the spread of fear.
There also needs to be a dialogue to identify the winners and losers [from the new processes created] and figure out how we support those who might lose out. It is those people who will pay the price of prosperity in the future, and we therefore need to work out how to limit the negative consequences.
Q: What steps need to be taken by the financial sector to facilitate the increased cross-border trade that the agreement promises?
A: If you look at the payment [infrastructure], it is actually not that difficult to connect all of us today, as we’re all talking to each other one way or the other. But the issue we have is that we’re talking to each other via the West: if I want to send money to South Africa, I send it to New York and then from New York to South Africa.
To be able to come to a common understanding and extend the clearing services and the connectivity that exists in all our countries today, and creating a point of aggregation and distribution to those countries, it is not a technological or economic challenge. We just need some key people to move, and to realise that this is a better way to support the continent.
Q: Mobile technology has had a transformative impact on Africa for nearly 20 years now. What do you see as the next major leap forward for mobile banking in the continent?
A: I think it is the idea of [electronic] payments becoming persistent and ubiquitous, driving out cash as a means of exchange; but also being able to save, and then being able to aggregate those savings and create an investment opportunity to be leveraged. It also means you can build up a credit history. You let people know the value of being a trader in a formal society and the economic opportunity it creates.
[One obvious benefit from such engagement] is the ability for previously unbanked customers to be offered quick loans at the point where they need them. As Oscar Wilde said: “Anyone who lives within their means suffers from a lack of imagination.” Credit is an instrument of growth, as it allows you to consume what you don’t have today with the benefit of paying for it in the future.
The economic growth and opportunity that it will create is profound; [traders using cash] that cannot give you an estimate of their sales and therefore can’t make future predictions aren’t bankable because they don’t have that data. All of sudden [when payments become electronic] it becomes something that you can lend against.
Q: How important is the link between electronic payments and ID schemes, such as India’s Aadhaar scheme and the Kiva Protocol in Sierra Leone?
A: The best examples of ID card systems in Africa are in South Africa and Kenya. In Kenya, every person over 18 has an ID card. If you want to know why M-Pesa was so successful in Kenya, [the link with the national ID] is a big part of it.
The ID card as a social infrastructure is critical, and to make sure it is trusted requires an issuing authority [so as] to make sure it is not duplicatable. The ID system can be provided by the private sector, but it needs to be underpinned by the regulations of the state that protects its integrity.
