WE HAVE CLEANED UP OUR BOOKS- OTTI, GMD, DIAMOND BANK

Otti
Dr. Alex Otti, the Group Managing Director of Diamond Bank, can easily be described as someone who eats, breathes and lives banking, although it was not his first choice of career. He distinctly said: 'Banking is what I do, but I did not set out to be a banker even though I read Economics.' According to him, his first job was teaching. The job excited his dad but he wanted to try other things and, eventually, came to banking.

Barely one year after he took over the leadership of the Diamond Bank, Dr. Otti said the institution has gone through its internal reforms of cleaning up it's books and had started 2012 on a very good note.

In this interview with Daily Sun, he described the bank as leader in innovation in technology, saying Diamond Bank has acquired the necessary technology to drive business in the area of small, medium enterprise, an effort which, he said, is to complement President Goodluck Jonathan's vision of growing the economy and empowering the people.

The chief executive, who was recently honoured with a Doctor of Science (D.Sc) degree for his outstanding performance in the academic and financial sector, affirmed that Diamond Bank is very healthy, founded on ethics of financial integrity and professionalism. He said: 'We want to do a whole lot of that to be a very efficient electronic driven bank, more efficient and stable than we are today.'

Excerpts:
I am currently the CEO of Diamond Bank Group. Before now, I worked in different institutions in the banking industry; First Bank, UBA and a few others, including Citibank, where I started. I read Economies and graduated in 1988 from the University of Port Harcourt, as the best graduating student; had an MBA from the University of Lagos in 1994 and other prestigious institutions. In addition to receiving an honorary doctorate degree in Business Administration, I am alumnus of Harvard Business School. I also trained at Stanford Business School, California; Wharton Business School (University of Pennsylvania) and Columbia Business School, New York, just to name a few.

This recent recognition from the University of Port Harcourt, which is important to me, though this is not the first time I am getting an honorary degree, but this time it is my alma mater recognizing me and, if you know how it works, it's not all the time your parents feel that you are grown up. So, I am excited about that opportunity because it is a recognition, and I thank the university for the honour accorded me. I have served on the board of several companies, and presently sits on the Governing Council of two Nigerian universities - University of Port Harcourt and Babcock University.

I have been very much interested in the progress of the university from the private sector perspective, but I am not too sure that I have done enough. Perhaps, this is a calling now for me to do more. I have done a lot of things in the academic world, and I am still interested in them. By the time I am done with banking job, I will pick up the chalk to teach in the university. I believe that is the best thing to do and I believe the university will benefit a whole lot more, when people who have practiced in different industry bring the practical perspective, together with the theoretical, then the students will benefit a lot more. I've been married to Prescilia for 18 years and we have three wonderful children. I like to listen to music, play my squash and travel.

How did you come into banking, any regrets?
When I graduated from the university, I went for my National Youth Service Corps (NYSC) in the banking industry. The banking sector was exploding at that time, it was the era of Structural Adjustment Programme (SAP) and that was when a lot of new banks were springing up. I was also interested in banking, having read Economics, just like I was interested in other things during my service. I found that Citibank, in those days, was arranging and organizing interview for people who had 2:1 and above.

I sat for the test and passed, went through the interview process and I was hired to do my Youth Service in the bank and, after the service, I was retained in 1989. Banking is what I do. Though I read Economics, I did not set out to be a banker. It was a difficult decision then because, at that same time, the same university I graduated from had indicated that I could come and do my NYSC and begin my Masters programme and, of course, teach as a graduate assistant. That was the job my father was excited about, and I was to disappoint him for the first time. He was very unhappy about that decision.

There were other issues then. I had a scholarship to do my Masters at the University of Leeds, and a University in Canada. Then I had a job from the then Arthur Andersen, of which a part is now KPMG; and the other, Accenture, but I chose to remain in Citibank for a whole a lot of reasons. I liked the environment; an American bank, and I also liked the money, which was like two times what Arthur Andersen was offering me. With the banking profession, I have no regrets. There would have been challenges left, right and center, which usually comes with anything you are doing in life. It is not that challenges will not come, but the most important thing is been able to surmount them…and move on. And so far, so good, I've been able to weather the storms.

You came into Diamond Bank at a time of severe reforms of the Nigeria financial sector. How has this impacted on your management over the past one year?

Well, if you read the just published annual report, you will know that we have gone through our own internal reforms in this one year. It is still early days, but a whole lot of things have happened and these reforms have a lot to do with global economic crisis and the resolution of the crisis. Maybe we didn't start or do the things we should have done early, but I can tell you that as I speak, we have done a lot in terms of the cleaning up our books.

We have finished with that at the end of the financial year 2011 and we have started 2012 on a very good note. These challenges are not specific to Diamond Bank alone, it comes to virtually every other bank in the industry, and not just in Nigeria alone but globally. You are also aware of banks that failed; very big ones that were 'too big to fail'. I think we have confronted the challenges and we are coming out stronger.

How would you assess the impact of Diamond Bank's investment in the Nigerian SME's, vis-à-vis President Jonathan's economic transformation agenda?

We pride ourselves as the leaders in the SME space, when you look at what is happening elsewhere in the Nigerian banking industry. That is not to underestimate the challenges existing in that space but what we have done, taken the lesson we have to learnt, and also bringing in the skills we needed, and the proposition that this space requires. We have been able to do a whole a lot in terms of lending; a very large chunk of our lending in that space. We have taken the lessons at some point; had some challenges, and we have cleaned them up.

We learnt of them and brought out proposition that helped in strengthening the small scale and medium enterprises. Today, we have a chunk of our lending in that area; we have acquired the necessary technology to drive business in that area and that has helped a whole lot, and also very consistent with the President Goodluck Jonathan's vision of growing the economy and empowering people because if you lend to multinationals…yes, they can create some jobs, but if you lend to indigenous entrepreneurs - the small and medium enterprises - they are not only creating jobs, they are also empowering people, the economy and making it self-reliant and independent and those are the driving forces. It's not so much about making profit, even though we cannot do business without making profit. It is about the impact we are able to make by doing business in this sector.

How prepared is Diamond Bank for the full implementation of cash-lite Lagos. How many PoS have you deployed?

If you know the Diamond Bank story very well, you will know that Diamond Bank is a leader in innovation in technology and, wherever the nation is going, we have been leading. We are not just prepared; we are already working. The policies are rolled out and we are ensuring that our customers comply. There maybe hiccups, infrastructure challenges, scarcity of point of sale terminals (PoS), the network challenges from the telecoms companies, power issues but, irrespective of their existence, we have rolled out and believe that as time goes on, we are improving and doing better.

There is no choice for the economy than to go in that direction, if you begin to compute the cost of carrying cash around. You want to buy a car and assume it is N10 million; you come to the bank where you have your money and write a cheque and the bank gives you N10 million; you sit down, count and reconfirm it, and you later go through the security risk of moving the money to the car shop. Getting there, the car shop wants to count too to be sure that the cash is complete and, after recounting, they give you the car and probably take the cash to the same bank. The bankers will now recount it again. Look at the manpower spent, the risks involved and the shear waste of time. If you put all these into consideration, you will see that it is a very good policy. We don't have a choice but to implement it. At the moment, we have over 3000 PoS, and we are still counting.

What percentage reduction in cost of cash management do you think the cash-lite initiative will bring to the bank?

It will be over a period of time because there are still the challenges we want to deal with; there are problems we may still encounter. It maybe early to begin to proffer numbers around. Anyhow, you look at it. I don't need to start hiring armored vehicles, battalion of mobile policemen, who are armed to the teeth, taking my staff on cash movement just because somebody insists that he has to sale by cash.

So, when you reduce that, think of the one you cannot quantify in monetary terms; social risk and challenges that goes with moving cash from one location to another, exposing you to such much risk. Armed robbers can waylay you…this has been a common trend; open fire on you, dispossess you of your entire money, that is, you lose 100 per cent of that which belongs to you, or you lose your staff or the policemen, or everyone in the convoy, knowing that life is more valuable and they are people's fathers and relatives. If we are able to eliminate all these, we can't continue to think about cost.

How does the bank intend to leverage on the e-payment services to boost its support to small business?

We are leaders in innovation and technology; we are already leveraging on e-Payment services to boost support to small businesses, because most of our propositions are electronically driven today and we have been able to reach a lot of places that ordinarily we will not reach with our technology. We are talking of financial inclusion today; extending our banking to the unbanked and under-banked. You can only do that by leveraging on technology. We are one of the first banks that signed unto M-banking platform with our partners Pega, and we are at pilot stage, probably its rolling out anytime from now. So that the people in the villages and far places; once you have a mobile phone you will be able to do some banking, that is the direction we are going.

What is the bank's strategy for the public adoption of the cash-lite policy?

Our Strategy is for all customers of the bank to have their bank with them, anywhere and anytime. This can be achieved by ensuring that each of our customers has at least a minimum of two e-channel solutions, which will reduce their cash transaction at a minimal cost while providing convenience and online real time value. The e-Channels are tailored to meet the numerous needs of all our customers irrespective of their social status.

These e-channels options include Diamond Online, Diamond Dial, Diamond Pay, Diamond Mobile, Point Of Sales and Debit and Credit Cards. Customers will be notified of any transactions that take place in their accounts through SMS alerts and e-mail messages.

How would you assess the current state of Nigerian financial system?

A lot of progress have been made, we are probably not there yet but a lot of changes have been recorded under Governor Sanusi Lamido Sanusi led Central Bank of Nigeria. And, those changes are geared towards having a very sound and strong financial system. Because when you don't have a stable system, then the economy cannot be stable. Though, a financial system that is sound and healthy is a prelude to a sound economic system. I think a good job is being done by the Central Bank of Nigeria, Ministry of Finance and other government regulatory agencies like Security and Exchange Commission (SEC), Nigerian Stock Exchange, Nigerian Deposit Insurance Corporation (NDIC) and others. Everybody is following in the same direction for a very strong and credible system.

Where do you want to see Diamond Bank in the next five years?

A very strong bank stronger than what it is today. Today it is very healthy founded on the tenets of ethics, integrity and professionalism. We want to do a whole lot of that, to be a very efficient electronic driven bank, more efficient and stable than we are today. We believe that we have what it takes which is particularly people. We intend to empower, train, tutor and mentor them the more; to ensure that we have an army of leaders that can lead the bank to become a leader in the industry.

Abuse of corporate governance code by various banks' managements was largely blamed for the crisis in most institutions, prior to 2009. As a bank chief executive, have you seen any improvement in the management of financial institutions in the country?

There is a whole lot. We are all previewed to what has happened in 2009. In addition to the abuse of corporate governance, there is also the global crisis. We saw the oil prices coming down from $147 to less than $40; an import dependent economy and oil dependent economy would necessary face the hiccup at the end of the day.

I think the regulatory frame work has been strengthen, the CBN has done a whole lot in cleansing the system and setting the rules and the guidelines and monitoring them and regulating to ensure that the banking industry is sanitized. We have seen a stable industry today; the crisis of the industry has been resolved, the establishment of the Asset Management Company (AMCON) has taken away most of the challenges and CBN continues in its function of ensuring that the system is self-regulated. I think this is very important because we are aware that Central Bank of Nigeria is coming for another round of supervision and stress test.

Management style
Our management is participatory; we have people who are very empowered in different areas where they work. The greatest asset for this institution is the people. Management is an open system where people air their views and express themselves, people have the right to disagree and the right to debate issues thoroughly. Best decision comes when they work together as a team, knowledge is shared through all source of media we have in the bank. Diamond Bank is a learning institution and a knowledge based institutions that is been encouraged by the current leadership.

Challenges in banking sector
One of the major challenges is the infrastructural deficit; we have over 220 branches and in each of the branch there is two generators. So, greater chunk of our cost goes into diesel purchase, if we have stable power we don't need to buy generators. It also makes it impossible for us to do some of the things we can easily do, including the cashless society being talked about. Another challenges is that we need to upgrade the quality of education in our tertiary institutions because sometimes you see in an interview panel, people who show up with 2:1 grade but you are unable to hire them because the quality of education they received in the university is sub standard. There are whole lots of them but these are the two major ones.