Markets & Finance

Why M Oriental Bank is dumping ATMs and targeting family businesses

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M Holdings Group chief executive officer Sanjeev Kumar. PHOTO | FILE

Bank M of Tanzania last month became the first Tanzanian lender to enter the Kenyan market after it bought a 51 per cent stake in Kenya’s Oriental Commercial Bank.

The deal has since seen Oriental Commercial Bank rebranded to M Oriental Bank and its new Tanzanian majority shareholder Bank M Tanzania Plc said it will henceforth target family businesses in Kenya.

To get ahead in the crowded banking market that Kenya is, M Oriental’s new owners said they intend to replicate a niche business model that has seen the group’s Tanzanian unit succeed in banking high net worth individuals and family businesses.

The Business Daily caught up with M Holdings Group chief executive officer Sanjeev Kumar for insights into what M Oriental Bank has in store for the Kenyan market. Here are the excerpts.

You have just rebranded and announced a new business strategy for M Oriental Bank. What will happen to the bank’s existing clients?

While we will focus on building relationships with large business families under our whole banking business strategy, we plan to retain our relationships with existing clients.

These are clients who have stood by the bank in difficult and trying times and should be allowed to enjoy the benefits of higher levels of efficiency and client care that we are rolling out.

You said you have stopped offering automatic teller machine (ATM) services in a strategic shift that will see you target wealthy family-run businesses. How many clients does the bank have and what happens to those who have ATM cards?

We have 2,587 active clients, who will continue to enjoy the bank’s services, excluding the ATM services. ATM usage by individual customers has historically been very low — in single digits.

We feel that the existing savings bank customers would actually be shifting from impersonal ATM-serviced environment to a highly personalised customer care business model we are confident our customers will come to love.

You have stated that you plan to target 600 clients with a minimum client coverage standard of at least one client-facing staff member for every three clients, this automatically means you will have high operating costs. How will you cope?

Having a basic minimum staff for servicing a client is the means to ensuring that our Service Standard Guarantees are met on a consistent basis and in line with our client care philosophy.

Inherent in this promise is the potential for a high cost operating business model, which is quite acceptable to the bank, as this will, in turn, lead to easy rendition of client care unmatched by the rest of the industry.

Such high standards of client care should enable the bank to attract larger volumes of business. It is this extra volume of business enthusiastically given to us by happy and satisfied clients that has helped the bank to operate with one of the lowest Cost to Income Ratio in Tanzania. 

We are confident that the adoption of the same business model and strategy in Kenya will help us to achieve higher top-line, which should in turn lead us to one of the lowest Cost to Income Ratio in the Kenya where operating expenses look quite high. 

What will you be offering the large business clients you have set as a target market that is unique?

What makes us different is that we do everything possible to facilitate our clients to transact their business at a time and place that is convenient to them while expecting and receiving personalised services.

Some of our very unique products would be cash delivery/pick up with risk transference at client premises, non-cash documents delivery/pick-up, remote cheque upload, an integrated cash management product incorporating collections, payments, liquidity management, MIS features and super power-packed current accounts.

What does it take to open an account at M Oriental Bank?

We are positioning M Oriental as a wholesale bank focused on large business families. The client acquisition process at M Oriental would follow a holistic approach for entering into a lasting business relationship with the clients, who fit into the overall business perspective of the bank.

The screening and due diligence process on potential clients, even before approaching them with service offerings, will be an essential ingredient in the client acquisition process and should help the bank to adopt an aggressive marketing stance.

The client identification process will be based on prospects’ market reputation and standing, integrity and credit history as well as quantum of banking business on offer from the prospects.

The bank will select the clients fitting into its business strategy for inclusion on the Prospect List. Our experience in Tanzania is that there is a sizable segment of clients in the market that is willing to pay a premium for customised products and services delivered within pre-agreed timeline through innovative delivery channels. M Oriental will offer its services on a “Banking by Invitation Only” basis.

What is the definition of a large client as per your target market?

The desired level of relationship trigger will be a total business volume equivalent of $2 million (Sh200 million) and above from the family, either on asset side or on liabilities side or the non-funded business or combination of all three.