Barclays Bank of Botswana, the largest retail bank in the country raised competition stakes in the local market by announcing its intention to launch the retail direct sales initiative coupled with portable banking plans in an attempt to increase its foot-print across the country.
The bank’s Chief Executive Officer, Thule Johnson stated at the breakfast briefing on Tuesday that his organization has taken a decision to enter the direct competition market which will represent a mob exercise.
The move by Barclays with huge assets totaling P 8.8 billion is likely to trigger the down fall of a number of micro-lending companies and loan sharks in the country.
“We are reviewing out foot-print across the country and we will be starting to introduce portable banks,” he said.
The former brokerage firm to Barclays Bank of Botswana, Stockbrokers Botswana said: “the direct sales strategy complimented by other initiatives such as establishing portable banking network, reflect a strategy to grow the group on a more cost effective platform without the legacy costs issues associated with traditional brick-and-mortar delivery channels.
“This move is positive one for the group as the wider deliver channels indicate a more aggressive growth strategy in the face intensifying competition between the big banks for retail lending.
The introduction of portable banks is likely to lead the introduction of direct sales which has been under discussion for some time.
The direct sales move is being champion from Barclays Africa based in South Africa and it is expected to match its peers in the market such as First National Bank ÔÇô through First Funding ÔÇô and Standard Chartered Bank’s No Mathata loan product which is currently marketed on door-to-door basis.
It also comes at a time when government and parastatal companies have removed caps on employees direct debits in an effort to liberalise the retail loan market. The move is expected to bolster the bank’s retail sector which has been the main engine of the loan book growth over the first six months of the year. Out of the total net interest income of P 212 million realized during the period P 118 million was attributed to the vibrant retail banking sector.
The growth was achieved through a combination of a raft of factors including strong appetite for cash and improved customer relationsÔÇöthe latter being aided by the performance of Prestige Banking and Premier Banking divisions. Premier Banking divisionÔÇötargeted towards the rising number of millionaires — was introduced last year to give them world class banking service.
However, the new move will be aided by some of the most innovative products such as the introduction of most affordable credit card rather than cashing around some already over committed clients.
That wills more closely representative of the cash-loan system which is currently milking clients of their most valued money.
“We have embarked on a customer service revolution programme aimed at ensuring we deliver world class customer service. We are delighted with the feed back our customers are giving us in this respect and we are confident of our success to get it right,” Johnson said.
The bank which its results were largely supported by the treasury department said that the move by the central bank to restrict the purchasing and holding of BoBCs to commercial banks has been a blessing in disguise for the banking sector as the domestic retail lending climate has been rather soft.
“However, with macro indicators pointing to a recovery for household credit demand underpinned by moderating inflationary pressures and the likelihood of a rate cut in the near term, the direct sales strategy places the group in a stronger position to compete with other banks that’ve been more aggressive on the retail front. As long as the direct sales model is effectively integrated in the group’s existing branch network delivery channels, the move should drive earnings as investment solutions for group liabilities will be more geared towards higher yielding advances, Stockbrokers Botswana said.