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GTBank wins double awards… Best Customer Service

By Ishmael Kindama Dumbuya

The Guaranty Trust Bank has not just been proving that it is one of the best financial institutions in Sierra Leone and Nigeria over the past years but has continued to prove successful and thus receiving laurels across the African continent. In a survey titled “Africa Banking Industry Customer Satisfaction Survey” conducted by KPMG, the Guaranty Trust Bank has emerged the most successful in term of its Customer Service followed by the UBA and Zenith Bank. It stated the influence and contribution of regional banks in the top 10 list of rankings. Eight out of the top 10 banks ranked over the industry’s average CSI score for Sierra Leone of 66.2%.

According to the April 2013 KPMG report, GTBank emerged in the first place with 73.8%, followed by Zenith Bank and UTBank respectively. In contrast to the top two banks, UTBank is an indigenous bank, which was previously a non-bank financial services provider until 2008 when it acquired a majority stake in another local player–BPI Bank. The top three banks are all relatively new to the market in the Country, which notwithstanding these financial institutions have been working hard to win over customers from the traditional banks and also targeting the unbanked population.

GTBANK

In Nigeria, GTBank has emerged as the most customer-focused bank with 77.9% followed by Zenith and Stanbic IBTC in the second and third positions.

The KPMG Team Leader of Africa Banking Project, Bisi Lamikanra said in a statement said “I am very pleased to introduce the inaugural edition of the KPMG Africa-wide Banking Industry Customer Satisfaction Survey in which we provided insights and results from our survey of over 25,000 retail banking customers from 14 countries across Africa including Angola, Botswana, Cameroon, Chad, Côte d’Ivoire, Ghana, Kenya, Nigeria, Senegal, Sierra Leone, Tanzania, Uganda, Zambia and Zimbabwe”. She said “more than one in two institutional investors see Africa as the most attractive region to invest in the next decade, and went on to inform the audience that with one in three expecting is to put at least 5% of their portfolios into the continent by 2016”.

The survey was conducted from June to December 2012 with the exception of Nigeria and Zambia where it was conducted earlier in 2012. Over 25,000 respondents were surveyed across 14 countries in Africa. A key consideration in selecting the sample size was the banking population of each country. The survey location in each country was selected based on the level of commercial activity and density of bank branches.

Rating the Customer Care, the researchers said African banking customers overwhelmingly about 94 percent voted ‘staff friendliness’ as the most important factor influencing satisfaction with the banks. Yet, while eight in ten expressed satisfaction with this element, results for other customer care elements were rather weak across the continent: just three in ten customers said they were very satisfied with their bank staff’s knowledge of banking products and only 10% indicated that they were extremely satisfied that their complaints were being promptly addressed.

A quick glance at the results reveals the dominance of banks with multi-country presence across the continent. Some of these banks have succeeded in replicating the high service delivery performance established in their home countries in other markets they play. The researchers revealed that their success (the Banks) can be partly attributed to strong knowledge of the local market and leverage on technology and GTBank, Zenith and United Bank for Africa (UBA) appeared in top positions and seemed to dominate the West African coast while Stanbic, Diamond Trust, Kenya Commercial and Equity Bank showed a strong presence in East Africa.

In Sierra Leone, the KPMG report highlighted vast changes experienced in the banking sector with the influx of sub-regional financial institutions due to liberalization of the economy in the post-war era. Survey respondents chose GTBank as the most customer-focused bank with 68.8% while UBA and Zenith Bank occupy the second and third positions.

The survey report further showed that the Sierra Leone banking sector has evolved quickly within the last decade, marked by a post-war influx of sub-regional financial institutions. Prior to the start of the civil war in the early 1990s, Sierra Leone depended heavily on three major commercial banks: the state-owned Sierra Leone Commercial Bank; Barclays Bank (which was replaced by Rokel Commercial Bank after it ceased operations); and  the Standard Chartered Bank. However, the end of civil war witnessed the liberalization of the national economy that is characterized by ‘friendly’ investment policies, which attracted very credible sub-regional banking and financial institutions into the country’s financial market.

The presence of these banks in the industry has increased capitalization and created stiff competition for market share. As a result, banking products have become very accessible and affordable while access to personal loan products has increased dramatically. Indeed, consumers in Sierra Leone are being bombarded on a daily basis with commercial advertisements encouraging them to save and tap into the various loan products in the market.

That being said, the Sierra Leone banking sector continues to face a number of challenges. The payment system is still in its infancy stage and largely under-developed; transactions within the country are mainly cash-based with limited use of alternate channels; and the country lacks an electronic payment system for large-value transactions. Despite these challenges, the capital-asset ratio of the banks is 17%, further reinforcing the potential for growth in the financial sector.

The report indicates that despite the challenges faced in terms of service delivery and alternate channel usage, customers’ loyalty in Sierra Leone is quite high. Sixty-five percent of customers said that they would absolutely repeat business with their banks, while 64% indicated that they would recommend their banks to others. Ten percent of customers indicate that they might change or have recently changed their bank, citing ‘service quality’ as one of the principal reasons for the change.

To gain a clear picture of customer satisfaction with Africa’s banks, the researchers said they asked respondents to judge their banks across five key areas that – in our experience – holds the greatest influence over customer satisfaction and when asked what part of transaction method and system are important to customers, interestingly turn-around time for transactions, processing and accuracy of information provided by banks were of equal importance. However, the results revealed higher satisfaction with transaction turn-around time 81% compared to 71% were satisfied with the accuracy of information provided by their banks on account statements, advice slips and basis of bank charges.

It should come as no surprise that 99% of the respondents said that they still use branches. However, it is clear that ATMs are becoming a vital part of Africa’s banking system; 85% of the respondents said that they are use ATMs; with half of that saying they are using ATMs on a weekly basis.  Other alternate channels have clearly demonstrated value in Africa, such as POS in Botswana that is enjoying 69% usage, while mobile banking in Kenya has topped 50%

According to the survey, mobile penetration in Africa today is higher than the Internet Service, which is expected to continue to rise for the foreseeable future. The cost to serve is unquestionably lower via mobile than any other channel. Africa has a young and vibrant population that tends to be the early embracers of new products and services and financial inclusion is a top agenda for Africa’s policymakers.

Given that all the right market variables exist, banks need to consider how they would optimize the opportunities that the mobile channel presents. A recent study of banking channels in the US reveals that the cost to serve customers via mobile channel is cheaper than the dominant channels in Africa (branch and ATM) by wide margins.

It is 45 times more expensive to serve customers via branch than mobile and 10 times more expensive to serve customers via the ATM. Given these facts, banks need to rethink their strategy, surge forward by taking a bold step, not waiting for critical mass to establish leading positions in the mobile banking and mobile payment space. Although high risks/ uncertainties exist for services that could be offered through mobile channel especially with technology, the reward surpasses such risks. Mobile banking is essential for banks that want to be identified as innovators and customer focused.

Mobile payment, on the other hand, is a sure way of entering untapped areas to gain market share and establish new revenue streams.

The report also highlighted that while Nigeria may be Africa’s most populous country, only about 20% of the population is banked and two-thirds have never banked at all before.

The banking industry is made up of 20 banks with nearly 6,000 branches, most of which are concentrated in the urban areas, a fact that contributes to the low levels of banking penetration. Nigeria’s banking sector is expected to grow from about US$117 billion in 2011 to more than US$168 billion in 2015. The sector has recently experienced a number of regulatory changes including a repeal of the universal banking licenses and the promulgation of more stringent regulations by the country’s Central Bank, among which aims to reduce soaring books of non-performing loans and stamp out severe breaches of corporate governance. However, with the establishment of the Asset Management Company of Nigeria (AMCON) to purchase toxic assets of banks and recapitalize troubled banks, some stability has returned to the sector leading rating agency Standard that upgraded the sector in 2012 to a positive outlook due to the country’s improved asset quality, capitalization and corporate governance.

Branches according to the report remain the most used channel in Africa at 99%, followed by ATMs at 85% while all other channels lag behind with rates below 30%.

 

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