Not so long ago, I&M Bank had to emotionally bid farewell to one of its longest serving Managing Directors Mr. Anand Sanjeev. But all was not lost, as the multinational Bank ushered in yet another highly experienced Banker Mr. Robin Bairstow (in Picture) as its new MD. As the English adage goes: “Experience is the best teacher” the Bank looks to the future with enthusiasm as it welcomes Bairstow to its helm. He joins the bank with a 24 year professional banking career and has served in South Africa, Zambia, Uganda, Singapore, Indonesia and his previous job was with another international bank in Kenya where he had served for 15 solid years. He has indeed juggled well his banking profession; serving in different positions—from marketing to retail banking and so on. IGIHE caught up with Mr. Robin C. Bairstow in his office right at the heart of Kigali City at the Bank’s head office and discussed a wide range of issues concerning I&M Bank and Rwanda’s financial market in general. Excerpts follow below.
IGIHE: At 52 years, I&M Bank is arguably the oldest bank in Rwanda and incidentally one of the top performing banks. How sounding have you found the Bank and strategically where do you want to take the bank going forward?
ROBIN: Truth is, I find a well structured bank. It has been doing well over the last 5 years under the stewardship of a good leader. Indeed, he left it in good shape. Our challenge is to sustain, consolidate and even upscale what was achieved.
Looking at key indicators of a healthy financial entity like capital adequacy, assets growth rate and non-performing loans (NPL), among others. All is well. For instance, the Central Bank wants all players to be below 5% on NPL, the industry average now stands at 5.9%. I&M bank’s is at 6.4%, and we are working hard to bring it down by at least 2% in the very near future.
I found a Bank with a well developed corporate banking structure and business. A burgeoning retail and SME banking unit perfect at tapping into the available Government opportunities like the BDF (Business Development Fund) and Hanga Umurimo Programs. There are still more opportunities to explore in terms of tapping into the fast growing SME sector, the huge unbanked Rwandan population using innovative digital platforms.
The Bank is very liquid. It enjoys an asset to deposit ratio of 51% which is good by any standards. It is well capitalized; whereas minimum capital adequacy ratio set by the Central Bank is 15%, I have found I&M Bank’s at 22%. The Bank is one of the top performing Banks in terms of Return on Equity (ROE), meaning we are very profitable in the market. We are number 3 in the market and we hope to maintain or even improve that position. Going forward, future investments will be prudently geared towards the right sectors. Sustaining this growth is going to be determined by making the right investments choices in a perfect financial market. Banking is more than slick pay-off lines and running fantastic adverts. It is more about reputation and integrity within the financial market. I&M Bank is fairing quite well on both fronts and I hope to maintain that. I find it extremely important to put much more emphasis on product development and innovation. We need to get the people’s perception right—we ought to be perceived as a stable and reliable partner.
IGIHE: You join a market where over 90 % of the businesses are Small and Medium Enterprises (SMEs) who are characteristically risky to lend to. Rwanda’s financial sector is extremely competitive. Despite of the credit risk associated with the SMEs all banks seem to rush to the bottom of the pyramid. But it will probably depend on style and belief. Do you think it is a wise idea to reposition I&M as an SME Bank or Corporate Bank?
ROBIN: I&M does not position itself distinctively either as an SME or Corporate bank, it serves both segments equally. Our conviction and belief is that it is a growing curve—SMEs once well nurtured can potentially grow into good corporates much as there could be many casualties along the way . I&M Bank funds many start-ups through special programs that are run jointly with the Government (among other stakeholders). The Guarantee Scheme provided by I&M Bank buffers the shocks and mitigates risks associated with the start-ups. The Bank has witnessed consistent growth in this area and on average more than 50 start-ups are funded a year. Dealing with start-ups under this arrangement has provided the bank with enormous lessons and experiences that provide a good basis for review and improvement.
For instance, we have learnt that start-ups need education. In responding to this need, the Bank is working with partners like European Investment Bank (EIB) among others to do Financial Skills trainings for entrepreneurs. A similar training will be conducted before end of this month (October).
IGIHE: Our long experience covering Rwanda’s financial sector has shown us that competition has pushed financial institutions to roll out a lot of innovative banking products and services to benefit their customers. However there is generally less uptake of such banking products and services. A case in point is the low uptake of online banking services and products. Banks have been blamed for weak marketing and less effective communication methods used to promote products and services. What is your take, looking at the portfolio performance of I&M Banking Products and Services?
ROBIN: Looking at the uptake levels of I&M Bank’s products and services, it is satisfactory but more could be done. To improve this, the bank aims to explore possible market linkages and synergies. The bank is capitalizing on reviewing its product and services, leveraging on the available digital payment and transaction systems like Point of Sale, Online Banking, Mobile Banking, mVISA etc to ensure minimal use of cash because it has proven more expensive. Note that, the more you explore alternative, cost-effective transaction options, the more you reduce the cost of delivery and the beneficiary at the end of the day is the customer.
IGIHE: It is evident that the recent innovations in the telecom industry like mobile money services have to a large extent affected the performance and relevance of the Bank’s online products and services. Subscribers (of telecoms) who are apparently Bank Account Holders have found them more convenient, reliable and cheaper. In your view, should this cause panic among banks?
ROBIN: Banks should not be concerned about the innovations in the telecoms because they have unlocked a number of opportunities for banks. Moreover, they are bringing many unbanked citzens in the equation that incidentally end up using banking services in one way or the other. In other words, telecoms have played a complimentary role. As banks, we may lose in one area but in aggregate terms the gains are much more. Banks are increasingly exploring synergies with telecoms to serve customers better. The rise of money transactions in telecoms has nothing to do with the slow down in growth of the banking sector—keep in mind that growth in GDP has a direct correlation with the growth of the financial sector. In Rwanda for instance, where the GDP is reportedly 6.5-7%% percent (highest in the region), it is apparent that the banking sector is growing in matching terms. Banking sector in Rwanda is growing extremely well, at about 20%. Just imagine, despite of the huge volumes of transactions by telecoms, they still hold their trust funds with the banks—which is still big business for us (banks). It is a complementary service other than a competitive service.
IGIHE: Going by the trends, smart companies have now strategically started repositioning themselves as regional business entities—also aiming at tapping into a larger and more lucrative EAC market with 130+million people. A number of regional and continental banks like I&M Bank have opened shop in Rwanda. Traders trading across the borders have not been much attracted by the banking services and products offered by regional and continental banks due to high transaction costs. In your view what is the problem? What specific innovations does I&M Bank plan to deploy to improve in this area?
ROBIN: I&M continues to establish its footprint in a chain of regional economies. It is putting up very strong performance in Kenya, we are Tanzania and now in Rwanda as well and the 50% acquisition of Bank One in Mauritius allows us access to funding opportunities. The cardinal aim of spreading our operations in the region is to tap into the growing trade flows across the region. If you analyse the banking transaction statistics within the EAC, it is evident that it is not yet a homogenous market and that affects (slows down) innovations in banking services. The EAC integration agenda is progressing and the financial sector will have to match the pace (of integration) and this opens up opportunities for players and consumers. I&M Bank in 2016 will be rolling out a new operating system which will be a catalyst in getting closer to being a fully networked bank. This will allow us to run products and services jointly as one I&M Bank Family across the network in the region. The Bank offers services across counters in Tanzania, Kenya and Mauritius (as Bank One) to its customers.
IGIHE: Rwanda’s financial sector is also still faced with a number of challenges, including legal and regulatory challenges, market structure related challenges etc. Through the Rwanda Bankers Association (RBA) and other pressure groups your concerns could be heard and solved. What is your take on the state of the organization of the financial sector in Rwanda? From your rich banking experience, what more do you think RBA or Chamber of Financial Institution could do to ensure effective policy and strategy advocacy?
ROBIN: As a lobby group, you have a much better voice to the regulator. Building a common understanding of prudential guidelines issued by the Central Bank is key and we work together to achieve that. There is need for regular, informed and well-structured engagements within the structures of the (financial) chamber and the association (RBA) to responsibly and realistically engage the regulator. The advantage we have is that it is a ‘listening’ regulator.
IGIHE: A while ago, there were plans of I&M Bank listing on Rwanda Security Exchange (RSE). Although this has been delayed due to reasons beyond the public’s know. What is the latest? Are there specific reasons that stalled the move?
ROBIN: The planned IPO is not a capital raising exercise for the Bank, it is one of the shareholders looking to exit their investment. This is an opportunity to further deepen the local bourse’s financial sector and at the same time a chance for local investors to gain a share of a well-established, performing local financial institution. The timetable is yet to be agreed and a formal advisor appointed. We certainly remain excited about the prospect.
IGIHE: Looking at the values, vision and mission of I&M Bank paints a picture that you’re customer-focused, customer-centred Bank. But it is easier said than done! What do you promise?
ROBIN: Customers are the core of our business. If you look at the profile our products and services over the last 5 years they have been growing quite well at over 20%. It implies we must be doing something quite correctly. We will continue to review our processes in offering products/services; underpinning convenience and reliability. A case in point is the ATM uptime—we get to look at the efficiency of the entire process to ensure a seamless service. Our banking halls will be like our seating rooms at our homes. Customers do not just come and wait in a queue to be served. We take advantage of that moment to talk to them and generate important feedback that helps us improve and serve them better. I do believe that the tradition of opening bank branches for purposes convenience is not dead yet. Our societies have not grown to a level where we do away with branches completely. It is possible but it is going to take a little longer before we realize a totally cashless economy. In the short to midterm, majority of citizens will still need that branch next to them to physically transact. Therefore, we shall combine both; investing in more bank branches across the country and up-scaling our digital banking platforms for maximum convenience and reliability.
IGIHE: In your parting short, what promises do you give I&M Bank Customers and Rwandans in general?
ROBIN: We will continue to innovate. We will continue to grow, particularly in areas where we traditionally are known to be strong. We have a major focus on SME and consumer banking. We will be rolling out more products—watch this space. We have a very exciting campaign coming up this October—focused heavily on home ownership. Our promise is to roll out products that not only meet customers’ needs but satisfaction as well.
As member of corporate society, we have areas we would like to continue extending our support, particularly in education and health. We shall continue to concentrate our efforts in certain areas where we can make a difference and positive impact in the society.
