Thursday, July 7, 2022

How Bank ABC forced its way into Botswana’s competitive banking landscape

The Managing Director of Bank ABC, Jitto Kurian, has said for his company, the year 2012 has been a year of tremendous growth which will be difficult to repeat.

The growth was mainly a result of initiatives that the bank had put into place in 2011, which included products such as home loans, group schemes and car loans.

It was only in 2012 that such products began to show signs of takeoff which resulted in phenomenal growth that even surprised the bank itself.

Early signs thus far are that 2013 will bring with it subdued growth.

Speaking to Sunday Standard, Kurian said Bank ABC is making inroads into the country’s competitive banking market because from early on the bank was quick to appreciate the fact that from “a technology perspective, Botswana is much more advanced”.

This analysis informed the bank’s strategy of harnessing the country’s superior technology infrastructure to come up with products that are tailor made to appeal directly to a population that is technologically savvy.

Many Bank ABC products, including their cards, have piggy-backed on this assumption, and it has paid off.

“From early on, we wanted to provide a customer with a clear reason why they had to do business with us. Other than providing value, it was our task to put together a footprint that would connect with the customer.”

The upshot of it was that in the few years that Bank ABC has gone retail, they now have six branches countrywide.

And given that there is consensus among the entire industry that opening a branch is a huge expenditure, this clearly has been a big feat for Bank ABC. Four branches are in Gaborone, with Maun and Francistown boasting one each.

“Our Airport Junction mall branch is open seven days a week and two more branches are on the way; one in Selibe Phikwe and another in Palapye,” says Kurian.

After a decision to go retail, Bank ABC was confronted with the question of how to make themselves more relevant to the already more established players they were finding on the field.

Because existing competition was charging between 10 and 15 percent deposit for home loans, Bank ABC decided to come up with 100 percent home loan product.

Not only did the home loan become a hot sell, it also allowed Bank ABC to enter the market, which was the beginning of a dramatic transformation of the country’s entire banking landscape.

A little less than ten years ago, Botswana’s top four banks controlled 92 percent of the market, leaving the remaining 8 percent to smaller players that had no hope of breaking through the stranglehold created by household names.

But over time, the landscape has changed dramatically; Barclays Bank of Botswana, for a long time the supreme king, in both market share and capitalization, has now been overtaken by First National Bank of Botswana.

Standard Chartered Bank, which arrived in Botswana long before it was fashionable to set shop here has found itself squeezed down the ranking ladder, in some areas even surpassed by Stanbic, the offshoot of Standard Bank of South Africa, which for reasons best known to its South African principals is still to list on the Botswana Stock Exchange.

With reports that the Central Bank is on the throes of licensing two more new entrants, it may now be an end of an era for the conservative instincts that have been used to hide innovation among the country’s leading banks.

“When we came into the picture we were surprised to see that there was a large untapped market of people who were staying in rented houses. These people wanted to buy houses but they could not because of the deposits demanded of them. All we did was to say we were going to share the burden with our customers as a way of allowing every Motswana to own a piece of their country. Now other banks are replicating our initiative and for that we are very proud,” says Kurian.

For Kurian, the story of Bank ABC has just begun. Ranked fifth in Botswana, Bank ABC currently controls 9 percent of the market share and the figure is growing very fast.

“In every country where it has a presence, Bank ABC has strived to be a top tear bank and that is where we are headed.”

Five years ago Bank ABC had 50 employees, today there are 230.
To put the cherry on top, the number of expatriates has not increased with growth of business, says Kurian.

“Skills have certainly been a challenge, but we have gone out to get and retain the best,” he adds.
He speaks of the card suite products introduced by Bank ABC as a revolution.

“We are the first and still only visa Pin and Chip card providers.”

In addition to that, the bank has introduced pre-paid cards that have proved very popular, especially among travelers because they can be loaded in at least five currencies; Rand, Dollar, Euro, Pula and Pound.

Better still, one does not necessarily need to be an account holder at Bank ABC for them to have such a card.

“For our debit card holders we are saying you can use any ATM at no cost to yourself. Bank ABC will absorb the costs. The good thing for our customer is that they do not have to go to Bank ABC to cash their money,” said Kurian.

Not surprisingly, the growth of Bank ABC in Botswana is now fully reflected in the Bank’s regional results. The Botswana based operation has been growing and even surpassing other operations from such traditional operations, including in Zimbabwe from whence the bank was first established.

In 2012, the Botswana operation contributed 27 percent to the entire group, second only to Zimbabwe which contributed 38 percent, well ahead of Mozambique (14 percent), Tanzania (4 percent) and Zambia 17 percent.

The 27 percent contribution was a marked growth over the previous year where Bank ABC Botswana had only contributed only 19 percent.

During the same time, attributable profit for the Botswana operation grew from P28 million to P75 million, with assets springing from P2, 5 billion to P5 billion.


Read this week's paper