Raising profitability, customer service with digital banking

Digital banking is where many commercial banks and financial technology (finch) firms are making substantial investments because it is seen as the future of financial services.

Many banks that embraced and digitised their operations are beginning to have positive feedback from their customers, including substantial leap on their profitability.

Wema Bank Plc has for years been ranked as a leader in the payments, transactions scorecard for digital banking. The bank, which has redefined the digital banking space with ALAT, a fully-digital bank, leads in mobile and internet banking space with innovative products showed strength with improved performance across major indicators.

This bank’s huge investment in technology is paying off and with positive results.

Wema Bank’s unaudited half-year for the period ended June 2021 financial results showed growth in key areas of its performance indicators.

Analysis of the results showed that total assets grew to N1.02 trillion at half-year 2021 from N979.52 billion at end of the 2020 financial year.

Profit before tax soared to N4 billion at the end of June 2021 compared to N1.72 billion at half year of 2020.

Equally, gross earnings jumped from N37.95 billion at full year 2020 to N39.82 billion at half year 2021. Its capital adequacy ratio also went up by 13.2 per cent at half year 2021 as against 11 per cent at half year 2020.

Managing Director, Wema Bank Plc, Ademola Adebise, said, the bank’s performance speaks to the spirit of resilience that runs through the organisation.

He said the bank has bounced back from the COVID-impacted performance of the same period in 2020.

“As the economy opens back up fully, we expect to see a stronger performance for full year 2021. Over the course of the second half of 2021, the bank will continue its strong focus on the digital business, pushing for further gains in customer acquisition, consumer lending and transaction volumes while on the commercial side of the bank, we will continue to aggressively grow our commercial lending business alongside trade and other revenue lines.”

He said the appointment of Emeka Obiagwu as an Executive Director and Prince Olusegun Adesegun & Adeyemi Adefarakan as Non-Executive Directors also speaks to the bank’s preparedness to for a greater future with well equipped workforce.

The bank’s Chief Finance & Strategy Officer, Tunde Mabawonku said the bank’s first half 2021 results performance shows growth in key financial metrics despite the challenging macro-economic environment arising from the pandemic.

Wema Bank recorded year-on-year (y-o-y) growth of 149 per cent in profit before tax (PBT) to close the quarter at N4.3 billion; its gross earnings grew by 4.94 per cent y-o-y to N39.82 billion in half-year 2021 as against N37.95 billion in first half 2020

Similarly, Net fee and commission income increased by 71.7 per cent y-o-y to N5.40 billion in half-year 2021 compared with N3.1 billion in same period of last year, due to 112.6 per cent increase in credit related fees, 151.5 per cent increase in management fees, 147.7 per cent growth in fees on financial guarantees.

According to Mabawonku, “The key measure of success for us is growth in customers and customer activity – and we are glad that we are reporting strong growth here.”

Total liabilities grew by 4.9 per cent to N953.9 billion as against N909.2 billion in the first half of 2020, driven by deposits from customers which grew by 0.5 per cent to N808.8 billion N804.8 billion in 2020.

The bank’s cost of funds declined to 5.3 per cent from 6.4 per cent in 2020. The bank’s non-performing loans numbers stood at 3.55 per cent while Capital Adequacy of 13.24 per cent is above the regulatory minimum of 10 per cent.

Fitch, GCR and Agusto re-affirm Wema’s National Long-term rating at BBB-.

“The bank’s flagship digital banking platform, ALAT, has in the last four years, grown .We are building agency, and we have refreshed ALAT to four and a number of new products in the offing,” the bank said.

Digital banking space

For years, ALAT has made it possible for Nigerians to complete the most complex banking transactions right from the comfort of their homes. And from inception till date, ALAT hasn’t just provided the latest banking technology, but fit perfectly into the lifestyle of Nigerians; making life easier for everyone.

To stay ahead of competition and serve its customers better, ALAT by Wema Bank recently upgraded its mobile app – ALAT 4.0 to enable customers remain connected to do much more. A unique app that provides seamless access to an array of exciting features serves as a platform where customers can personalise offerings to meet their frequent financial and lifestyle needs.

Being a customer-centric financial institution, the upgraded app serves as a one-stop platform that gives customers the option to create unique experiences for themselves; this includes dashboard personalisation where customers can decide to hide and unhide their account balance as well as to display most frequently used feature on their dashboard.

The card control option, a new feature in the app enables customers to put a limit on their spending habit and the reintroduction of the virtual dollar card which gives customers the ability to make international payments irrespective of the currency.

ALAT has also expanded loan offerings to goal based loans, salary-based lending and device loan. Customers can also top up existing loan amount, make part payment during the loan cycle at anytime and liquidate the loan before the end of the loan cycle at any given time.

For instance, the KPMG Nigeria digital channels report for the banking industry has ranked Wema Bank Plc as a leader in internet and mobile banking space. For instance, ALAT, a fully digital bank by Wema Bank, has simplified banking by creating a perfect blend of speed and functionality.

A report posted on its website, KPMG Nigeria signed by Partner & Lead Digital Transformation KPMG in Africa, Boye Ademola, explained that as a leader, Wema Bank has capacity to onboard customers digitally end-to-end without the need to visit branches or agents and is delivering innovative products to enrich payment and transfer offerings.

He said Wema Bank has also embarked on an aggressive play to accelerate the self-service agenda for customers and is able to engage and resolve customer complaints on the channels.

The KPMG explained that based on its user journey-centred assessment of retail banks’digital channels, it categorised banks into four categories: Leaders, Challengers, Followers or Late Starters.

According to the report, challengers performed well on the user journeys, but lack some of the key ingredients that should place them in the leaders’ tier.

“While they are able to offer effective user journeys on their channels, they fall behind the leaders on the array of capabilities and quality of user experience. These banks can become leaders in the near future if they are able to leverage design thinking principles to resolve user experience issues and deploy innovative capabilities that will deliver an engaging digital experience on their channels,” it said.

It said followers are unable to onboard customers digitally without requiring them to visit the branch, have several disjointed user journeys, limited self-service offerings and struggle with responding to and resolving customer complaints in a timely manner while late starters either do not have several important user journeys or offer several broken journeys. Late starters are unable to onboard customers digitally, have unwieldy user journeys, lack Self-Service offerings and struggle with respect to customer care.

It said the recent pandemic lockdown further reinforces the need for banks to ensure that customers can access all services digitally as the restriction of movement meant that branches were unavailable to serve customers.

However, banks that had developed strong digital capabilities provided their customers with sufficient digital alternatives during the lockdown period.

KPMG said ensuring their ability to sustain service delivery, attract new customers and grow revenue despite the pandemic situation.

“Although restrictions are beginning to ease, the effects of the pandemic continue to be felt locally and globally, the changes we are seeing are likely not short-term as customer adoption of technology has been heightened. This presents a new reality for businesses to grapple with, thus, surmounting the challenges of this new reality will require banks to anticipate and prepare for the changes in their consumers’ needs, behaviours and preferences.

“As we shift from short-term responses to the COVID-19 challenge to a new way of life, Financial Services providers must continue to provide essential services to customers digitally while protecting the well-being of their employees. Banks can leverage this pandemic as an opportunity to benchmark and identify gaps in their digital channels capabilities”.