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One Year of Heritage Bank’s Journey: Sweet Music in a Topsy-Turvy Industry?

By Eric Eghaghe
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The youngest player in Nigeria's financial landscape turned one year old on March 4 this year. As the bells chime for Heritage Bank and all those connected with its accomplishments in the past year clink glasses in a well deserved toast, it is pertinent to salute the spirit behind the evolution of unarguably the sweetest music to emanate in recent times from the nation's topsy-turvy financial sector.

The story of Heritage Bank's liquidated predecessor, Societe Generale Bank of Nigeria (SGBN), has been told severally. Suffice to say, Heritage Bank came out of the shell of a rubbished brand. Therefore, the expectation at its inception was, at best, tentative. Especially coming at a time the financial sector was undergoing serious belt tightening, Heritage Bank appeared to be a bad experiment; akin to a small fish opting to jump headlong into a shark-infested ocean!

However, going by the depth and industry-wide impact of some of the accomplishments it has recorded, it is hard to tell that Heritage Bank commenced operations only about twelve months ago. The first noticeable step the bank took to announce its serious commitment to making a mark was the Account Validation Exercise it conducted for depositors of the old SGBN. For the first time in the banking history of Nigeria, a bank that had gone under for ten years, with depositors having lost hope of recovering their deposits, came back under a new ownership and management structure to return the lost deposits to their owners. The development became all the more commendable as the Central Bank of Nigeria had earlier on two successive occasions before the coming of Heritage Bank, raised and dashed the hopes of SGBN depositors, with its inability to see through its own account validation exercise it had organised for SGBN depositors.

This hope-restoring platform on which Heritage Bank commenced operations quickly established its brand credentials of empathy, trust-worthiness, integrity, reliability and focus. Beyond these demonstrable positive brand attributes, however, the Bank opted to add innovation as yet another measure of its business philosophy.

In the last twelve months, Heritage Bank has championed a few innovations and trends that have changed the course of banking business in the country. One such innovation is its leading exploration of alternate channels of financial services distribution. The Bank has continued to move the frontiers of e-banking platform with its first-of-its-kind deployment of Finnacle 10 software. Other older and bigger banks have had to copy this approach and, today, the e-banking platform has become a veritable marketing and competitive arena.

Moving on, Heritage Bank equally raised the bar by launching, ahead of any other financial services provider in the country, its Automated Banking Centres (ABCs), MSME Clinic, Financial Literacy Plan and Agency Banking platform, among other innovations that never previously gained wide embrace in the financial sector before its coming on board.

Also, the launch of its Zero COT offering signaled yet another revolution. For most banks before Heritage Bank, the COT represents a huge cash cow; producing 20 to 25 percent of their revenue base. Heritage Bank became the first to operate zero COT on all its account categories and today, a few other banks are towing the line while it is just a matter of time before this instrument of customer exploitation is consigned to the waste bin of history.

In the last one year, Heritage Bank has definitely, reaped the benefits of goodwill and public acceptance. Among other evident show of corporate and institutional demonstration of confidence in its values and business philosophy, the Bank has received mandates from several MDAs, Governments and Corporate organisations as their revenue-collecting agent. Among these are the Lagos Government, Nigerian customs service, the Oyo state Government, the Power Holding Company of Nigeria (PHCN), Eko Distribution, PHCN Ikeja Distribution and DSTV/Multi-choice, among others.

Industry analysts see the bank's securing of these mandate as noteworthy because apart from being the newest commercial bank in the county, it also does not yet have the kind of branch network and presence that usually recommend financial institutions for such services. The obvious consideration, analysts observe, is the Bank's robust credentials built up via its unrelenting commitment to innovation, integrity and focus.

The Heritage Bank story is further made more exciting by the fact that the Bank is designated a regional bank. According to skeptics, given their lower capitalization and being restricted to operating in a minimum of five and a maximum of 10 contiguous states within the country , regional banks will find it difficult competing with lenders having national and international licences.

This is because, apart from having more capital than regional banks, National banks are also allowed to operate in every state of the federation as well as outside the country (international banks).

From its activities and achievements so far, the bank has definitely confounded doubters who had initially questioned its founders' decision to choose to operate as a regional bank in the highly competitive Nigerian banking environment and especially at a time when no other regional commercial bank in the country seems to be in the limelight for any major landmark business breakthrough.

If as a regional bank, Heritage Bank has given older, bigger and national players in the sector a run for their image, it is better left to imagination what new possibilities would follow its much envisaged growth and status transformation into a national bank.

In a press interview in May 2013, Heritage bank's managing director/Chief Executive Officer, Mr. Ifie Sekibo, had disclosed that the lender planned to increase its branches in the country from three to 16 by the end of June and to about 30 by the end of the year. He, however, went on to add, 'We can't compete on branches but we will have what is more than a branch. We will have points of reference rather than branches where customers will transact their businesses seamlessly. I foresee a situation where more banking would be done from homes and offices. If you need a loan, you can do it from your house. Banking is moving somewhere. Technology will be able to help us give that confidence to the clients to assess minimum loan to start a small business. We will be at a cutting edge in giving deliverables to customers.'

Also, the chairman of the Bank, Mr. Akinshola Akinfenwa, noted during the Bank's maiden press briefing a year ago, that despite the number of banks in Nigeria, the country is still under banked, thus presenting opportunities for fresh operators.

'That is why we at Heritage Bank see opportunity for service. With the caliber of people assembled to run this bank, given their firm knowledge of Nigeria's financial terrain, our Bank will provide firm support to small and medium scale industries and we are going to deploy first-class technology solutions as well as knowledge to achieve this goal', Akinfenwa, who was a former group managing director of Skye Bank Plc, further stated.

Today, barely one year into its journey, Heritage has delivered on all the things Sekibo and Akinfenwa promised at the onset of the journey. This could only mean the Bank, including its continued evolution, is a product of consistent strategy, clear vision and focus.

It obviously may be too early at the moment for analysts to begin to make predictions about the Bank's prospects; but judging by its activities and achievements so far, few would doubt that Heritage Bank has come to stay as one of the positive results of the on-going efforts to transform and strengthen the nation's financial sector as a strong catalyst for overall national economic rejuvenation.