Oral East Africa>Why banks are finally interested in business At the hut of the story

Written by Otiato Guguyu

At the heart of Kisumu city’s public square lies a directional sign that could point your way to a couple of cities around the world. The Rotary Club has installed the directional sign at 34 degrees South, 45 degrees East, 0.05 meters above sea level that shows you where to go when you leave dala.

Besides it the banks, led by Absa Bank, then Cooperative Bank, followed by EcoBank on the left, form blocks on the sides of the public square. A city clock tries to make a roundabout at the center of the square where the road aligns with NCBA at the base of the monolith of Kentons, and then Bank of Africa takes the adjacent corner to the right before cutting back down with Family Bank on the other end; and Bank of Baroda and KWFT comes all the way back to the directional sign.

The Rotary Club has installed a directional sign at 34 degrees South, 45 degrees East, 0.05 meters above sea level that shows you where to go when you leave Kisumu.

Outsized

The position of Absa Bank Kenya at the premium real estate leading the banks that surround Kisumu’s public square has held larger-than-life significance to me. It represented a personal history.

My father worked for Barclays Bank for his entire adult life and here I was getting sent to the very branch from which he operated in for the early days of his career.

The now-rebranded Absa Bank Kenya gave us a shot at taking their photos for Kisumu Business Club Caravan, ushering us into the space of corporate events that we have been hoping to get into since we started Seamless Frames eight months ago.

On Friday morning I returned to the solid Lamu doors of the white expansive Absa bank branch building, where it looked less intimidating as it had as a child. The last time I was here, I had come to see the old man and everyone was fascinated about the little boy that resembled Old John.

The building had forgotten me, and so had its people after generations had replaced generations and only now, new young workers remained.

Natural attrition

The branch was smaller than I remembered it, and the staff trimmer, a reflection of the years banking has slowly turned to the mobile phone channel over direct sales. The rise of the tech age that pushed over 90 percent of bank transactions into the palm of our hands has also meant fewer front-facing staff.

While this might have been ideal during the years of investing in government paper that has seen banks earn billions of shillings without lifting a finger, it may need a rethink under the current business environment.

With high local and global interest rates the situation where government securities accounted for 27 percent of banking assets became untenable. The government has become riskier with credit ratings downgrades and demand from small businesses has fallen on tax austerity policies.

With markets tightening, the need to diversify from government lending back to customers has pushed banks back to their customers.

Also despite the ability of technology to reach customers across vast geographies remotely, it lacked the personal touch of directly talking to customers, a skill that will be crucial in the current tough economy.

Door to door

The next frontier for bank customers is circling back to the strategy of door-to-door. According to the Kenya Bankers Association (KBA) 2023 Customer survey, while 45 percent of respondents prefer fully automated or self-service modes including mobile, internet, and chatbots, the survey showed physical presence is still an integral part of the banking experience with respondents still preferring a physical experience for some services.

This has informed the need for Banks to return to opening branches sustainably targeting smaller branches in carefully chosen locations to use them more for advisory services.

Banking jobs are also returning to drive revenue in new segments, including asset management and custodial services.

The Central Bank of Kenya data shows jobs in the banking sector rose to a seven-year high of 36,107 in 2022 as banks added 3,667 new staff. The apex bank followed up on this trend with insights from July perception survey showing 29 percent of banks will “definitely” add jobs this year while 42 percent said they “probably” will.

wezesha caravan

Absa Bank Kenya Plc which added 526 new jobs last year as it embarked on a new growth strategy anchored on diversifying its business lines and gaining market share has rolled out a strategy to move around the country hosting Business Club forums.

With this strategy, called the Wezesha caravan, the bank hopes to leverage local club networks to draw in small businesses into their banking ecosystem and cross-sell financial products across banking and insurance.

Last week Absa returned to Kisumu on the trail of the roadshows, hosting 200 enterprises for a Business Club Forum as part of the Bank’s Western Kenya Caravan that had just left Bungoma, Busia, Kericho, Kisii, Migori, and Homabay. Businessmen took an entire day off their workstations to discuss issues of resilience and to support SMEs during the tough economic times.

The bank has been on a tour through Nakuru County, Mombasa County, Nyeri County, empowering entrepreneurs and equipping them with the necessary skills to thrive in the volatile business environment.

“At Absa, we believe that every story is unique and therefore support our clients with financial and non-financial skills to scale their businesses. As a Bank, we provide access to sustainable finance, information, markets and coaching and mentorship.

We ensure that we provide platforms through which we can interact like this one convened by the Business Club. As a Bank, we are present in 12 countries across Africa and are encouraging our customers to take advantage of the opportunity provided by the different markets in the continent,” said Absa Bank Kenya Head of Small and Medium Enterprise, Erastus Muthura.

It tells that the bank is interested in its customers, is invested in their business and promises to pay more attention to the customer needs and tailor products, that make sense to their business cycles and unique cash flows.

You could see that the staff had learned a lot about this country just moving from town to town and talking to businessmen about what sort of solutions they needed. They made reference to what they had learned in other towns and inferences for what was needed here in Kisumu.

Absa bank marketed products that resonated with locals including business support for women led enterprises, supply chain financing with cross guarantees, flexible repayments and cheaper costs as well as simplified currency hedges to ride the current shilling volatility.

The bank attracted a sizeable crowd of businesspeople who networked, formed cross-connections, and learned about the portfolio options offered by Absa Bank’s ecosystem. I saw customers who have been with the bank for years, talking about the relationship that changed their fortunes, and I do not think I have seen better marketing than this.

With credit to the private sector having tumbled to 3.7 percent in July from 13.9 at the end of last year, banks are coming to knock on your door, those who cultivate these relationships are the ones that will come out on top.