Money Markets
Bottom of the pyramid plan boosts revenues
Illustration by: J. Barasa
Family Bank has transformed itself from a building society formed in 1984 to a fully-fledged bank. The indigenous bank has since its conversion in May 2007 been on a growth path in terms of customer outreach and the bottom line.
It boasts of 44 branches spread across the country. Within the last one year the bank has added 11 branches to its network ,indicating its growth momentum. Operating in an increasingly competitive market, the bank has managed to hold its head high among its peers by being innovative and customer driven.
Indeed, it’s the only bank that offers paperless banking — no filling of deposit or withdrawal slips — which has enhanced its service delivery by eliminating an otherwise tedious process.
Business Daily spoke to the CEO, MrPeter Kinyanjui, about the bank, the economic recession and its operating environment.
Family Bank has managed to grow on all its key fronts of branches, customer numbers, deposits and loans within a relatively short period of time. Please explain.
Since our conversion in May 2007 from a building society to a fully fledge commercial bank, we have extended out reach across the country allowing us to reach existing clients and enrol new clients.
As a commercial bank we have increased our branches, to 44 within two years, raised our asset base to Sh11 billion, grown our loan book to Sh6.8 billion and our deposits base to Sh8.6 billion. All these have been achieved through a rapid focused growth strategy that intends to place us among the top ranked banks.
There have been speculation that the bank plans to carry out a listing in the near future as opposed to an initial public offer (IPO). How far have you gone with the preparations and when will the listing be done?
It’s true we are preparing to list the banks shares at the Nairobi Stock Exchange. Our intention is to help current shareholders to realise the true value of their investment.
It’s important to clarify that it will not be an IPO but a listing through introduction, which involves taking the current shares to the market for their true value to be realised. However, after listing our shareholders will be free to trade their shares.
With our ongoing expansion plans to reach more Kenyans and grow our deposit in order to increase our lending ability, the bank still retains the option of carrying out a public offer as one way of raising funds among many other at it disposal. This will be dictated by the prevailing economic conditions and the need for funds.
The bank is in the process of replacing the current core banking system with a new one. What are the key features of the new platform?
We have been implementing the new system for the last three months and hope to have it running in the next couple of months. We expect the new system, which is very robust, to significantly reduce our cost of operation hence increasing our return on asset (ROA) and return on investment (ROI).
Secondly, the system which has a central server will allow us to roll out more branches cost effectively, unlike in the current scenario where we have branches having their own servers. In addition, it will allow us to introduce more products and services and consolidate our operations.
We expect the core banking system to eradicate back office services, releasing our staff to concentrate on their core functions of serving our customers hence increasing their productivity. The bank will integrate some of the critical functionalities such as paperless banking in the current system into the new platform.
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