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AfricaAugust 31 2018

Ecobank puts Africa on the digital map

Ecobank is present in 33 African markets, giving it an enviable reach across a widely underbanked continent. Its CEO, Ade Ayeyemi, tells Joy Macknight how the bank's appetite for digital and fintech-related solutions is bringing widespread benefits to this population.
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Ecobank

When Ade Ayeyemi was appointed group chief executive officer of Ecobank in September 2015, the executive team agreed a five-year plan to address the African bank’s structures, processes and people, entitled ‘Roadmap to Leadership’. “We decided to fix our foundations in the first two years of the strategy and then drive the business into a leadership position over the next three years,” says Mr Ayeyemi.

Part of the strategy entailed improving Ecobank’s loan book, which had high provisions in 2015/16. These measures led to a loss in 2016, but in 2017 Ecobank returned to profitability, with a pre-tax profit of $288m. Profitability has continued to increase in 2018, with the bank’s half-year results posting profits of $213m, a 41% improvement over the first half of 2017. “As we go through 2018, we expect to grow our profit before tax by 50% compared with 2017 and we are well on our way to achieving this target,” says Mr Ayeyemi.

Ecobank also restructured its branch network, reducing numbers from 1400 to 927. At the same time, it has added 7000 Xpress Point agency locations where customers can do small-scale banking. “This allows us to add value points within our network, where our customers can interact with us,” says Mr Ayeyemi.

Going digital

The bank’s reconfiguration has been enabled by its digital transformation strategy, the first step of which has been to digitalise the way it interacts with customers. “We want to serve the customer wherever they are, and as people use their mobile phone multiple times in a day, our mobile app also enables them to conduct their banking transactions whenever they want, 24/7. Enabling financial services on the mobile phone is one of the ways we have digitalised customer interaction,” says Mr Ayeyemi.

Not only does going digital reduce account opening costs but it also gives the bank greater reach across Africa, boosting financial inclusion in the 33 markets in which Ecobank operates. “The best way to serve our customers is to bring financial services to where they are and at a price point they can afford,” adds Mr Ayeyemi. “Using technology as the enabler to do that is critical.” 

Today, Ecobank has about 19 million customer accounts – an increase of almost 5 million since the beginning of 2018 – with a large proportion of new accounts coming through digital channels, according to Mr Ayeyemi. Correspondingly, customer deposits have grown by 12% in dollar terms year on year. “This is important because it gives us the foundation to increase lending to governments, corporates and individuals,” he adds.

The group has centralised its processing and product manufacturing to ensure a lower cost of distribution across its pan-African operations. “We made a choice not to address each country separately but to produce all our digital products centrally and then distribute to local markets with minimal configuration, to make the price point affordable,” says Mr Ayeyemi.

The bank has also centralised its data into two centres, with a private cloud connecting all its country locations, so that data and information is seamlessly distributed across the organisation. As Mr Ayeyemi explains: “We need to be able to convert data into information from which we can draw actionable insights and act on them with the power of one, irrespective of where we are looking at the data.”

Leveraging partnerships

While technology has enabled Ecobank to improve the service it offers to its existing customers and attract new customers, Mr Ayeyemi emphasises the role that partners are playing in the bank’s business strategy. “We can’t do everything for our customers alone, so we must make ourselves into a platform and partner with other companies to expand our reach and deliver best-in-class services to our customers,” he says.

The bank has created 'service as a platform' based on its 33 banking licences and is actively engaging with the African fintech community. “The banking licences give us certain privileges and advantages, whereas fintechs also have strengths and the advantage of agility. It is about bringing both parties together to solve a customer problem in a way that is profitable for both of us,” says Mr Ayeyemi.

Ecobank launched its second annual Fintech Challenge in April, and 11 finalists were chosen to pitch their solutions at its innovation fair at the end of August. The best three won cash prizes and the opportunity to partner the bank.

Ecobank is also working with mobile network operators (MNOs), such as MTN, Orange and Airtel. “Such partnerships leverage the best that each can bring to the conversation,” says Mr Ayeyemi. “For example, MNOs have millions of customers that use their network multiple times every day, as well as their mobile wallets. Using the mobile channel for financial services means that we can deliver profitably and at scale.”

Liquidity injection

Remittances are a problem that Mr Ayeyemi is also keen to solve. “Africans in the diaspora need to transfer money to relatives back home, but the cost of transfer from the developed world to the African continent has been an issue that the World Bank and others have highlighted,” he says.

Ecobank has been able to leverage the MTN partnership in this capacity and has teamed up with the likes of Transfast and Ria Money Transfer, as well as developing its own remittance platform, Rapidtransfer. “Customers can remit now money instantly from their accounts in the UK to their family in Malawi, for example. They don’t have to wait until they have £500 but can remit £50 or less,” says Mr Ayeyemi. “Using a digital channel means that a person working a shift job doesn’t need to leave their office to go to a corner shop to remit money. They can do it from the comfort of their home, at any time of the day and at significantly lower cost.”

This will help solve trade and foreign exchange requirements for corporate customers as well as solving the liquidity requirements of the recipients, says Mr Ayeyemi, who adds: “This is financial inclusion – allowing people’s dreams to become reality. And, ultimately, we will begin to elevate the standard of living and ensure money is reaching the base of the economy, which is a standard mark of progress.”

Ecobank is also expanding services and products for small and medium-sized enterprises (SMEs), and is enabling merchants to accept digital collections for goods sold. Previously, only point-of-sale terminals could be used, but in May 2018 the bank launched Ecobank Pay, which, together with Visa and MasterCard, provides consumers with the ability to make payments with a QR code. Mr Ayeyemi reports that almost 70,000 merchants are already using Ecobank Pay.

The bank is focused on financially supporting SMEs by allowing them to digitally track transactions and then borrow money on the back of the transaction data. “Part of the reason why banks are not able to lend to SMEs is the latter’s inability to keep accurate records. However, when the collection happens digitally we can track their performance, which makes it easier for us to lend money to them,” says Mr Ayeyemi.

Catalyst for growth

Ecobank’s geographical footprint allows the bank to connect Africans with each other, as well as connecting Africa with the rest of the world in terms of trade. “By allowing people to trade among themselves and make payments we are fuelling the growth of the continent, in addition to aggregating the savings and providing the liquidity that can support SMEs, medium and large corporates and, of course, governments,” says Mr Ayeyemi. “We are connecting the donor flow from the north to African countries at a lower price because we can deliver to the last mile. Those are things that we are continuing to do across the continent and it enables us to serve people at a profit.”

He feels energised by the many people in the fintech community who are using their intellect and resources to solve problems that have never been solved before. 

“The challenge of our time – to deliver financial services at a price point that people can afford – is massive," says Mr Ayeyemi. "If we can incorporate the intellect and the aspiration of so many in solving this problem, we believe that it will be a win-win-win result – a win for ourselves, a win for fintech players and a win for the communities in which we operate.”

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Read more about:  Africa , Digital journeys , Fintech
Joy Macknight is the editor of The Banker. She joined the publication in 2015 as transaction banking and technology editor. Previously, she was features editor at Profit & Loss, editorial director at Treasury Today and editor at gtnews. She also worked as a staff writer on Banking Technology and IBM Computer Today, as well as a freelancer on Computer Weekly. She has a BSc from the University of Victoria, Canada.
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