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Africa Outlook

of
National
Bank
Kenya

NATIONAL BANK OF KENYA

Banking made easy



After a recent rebranding, National Bank of Kenya are expanding their reach with the help of skilled staff and by embracing new technologies

Writer Emily Jarvis
Project Manager Sheridan Halls

In recent years, the National Bank of Kenya (NBK) have undergone one of the biggest transformations of an African financial institution. From its inception in June of 1968, NBK used to be entirely government-owned bank, with the sole objective of creating credit access for Kenyans. At this time – immediately after independence – most of the banks were multinationals and so the government wanted to ensure that they had their own hand in the finance business. After this period in time, there was a realisation that the bank would need to extend its reach in order to continue doing business to meet the changing needs of the public. Therefore, NBK made a decision to list its shares on the Nairobi stock exchange. This is when NSSF took a 48.5 percent stake in the bank, with the government through National Treasury retaining 22.5 percent and 29 percent going to the public. "This shift in ownership meant that NBK was no longer considered a government bank. Of course, we owe our founding days to the government, but right now, we are moving forward with new found vigour," explains Chris Kisire, Chief Financial Officer of National Bank of Kenya.

Rebranding
In May 2013, NBK rebranded and transformed in an effort to stand out from the crowd and Kisire is pleased with the outcome: "The reason for the rebrand was that we wanted to come out of the old National Bank image people used to know. One thing that takes you to a new level is to have a new image – to come out and say we are now different. We wanted to tell the market 'here we come, we are new, we look different, and we have different products that are more relevant to you, and that we can serve you better'. This makes customers look towards us and see that we are unique and different." the rebrand was such a great success that the bank was awarded the Rebrand Global Award last year. Further, the managing Director/CEO Mr. Munir Sheikh Ahmed won the CEO of the Year in the recent East Africa Banking Awards. The bank also won 2nd runners up in product innovation and 2nd runners up in the fastest growing bank. These awards solidify the bank's achievements and put the bank in good stead for the future.

Business Growth
For the last few years, NBK have been trimming the bottom line of some of the non-performing loan books in order to focus on growing their business. As a result, there is a new found emphasis on revenue growth, which is the basis for the balance sheet growth of the business. In his interview, Kisire discussed in detail the key areas for the bank's success: "Firstly you must have a good network of branches that are easily accessible for your customers. In order to achieve efficiency and excellence in all that our staff are doing, we have had to centralise our operations to take some of the pressures away from our individual branches. This has enabled them to focus on selling and growing the loan book and customer deposits." NBK are also seeing a growth in Islamic Banking, with the hope that in the next two years it will become a subsidiary of the bank.

Further to this, NBK have also invested heavily into the latest banking technology in order to provide excellent service to their customers. "We replaced our core banking system in 2012 and have since implemented other new software across the entire bank's operations. Further, we are looking at improving the back support in finance, procurement, project management and so on to give better service to our clients; whether they are customers or vendors, we are making efforts to ensure that we have faster processing systems and good infrastructure in place." NBK are hoping to implement a robust financial system (ERP), which is a piece of business software that allows complete integrated management of many banking operations. "We want to ensure we have integrated our business processes in order to process information quickly and efficiently," Kisire added.

NBK are embracing new technologies in the banking space starting with the re-launch of their internet and mobile banking services in the coming weeks. "Mobile banking is the in-thing and customers are now quite knowledgeable on the mobility of gadgets that can access banking applications. As such, the re-launch is important in order for us to take as many services to the doorstep of the customer as possible. Mobile banking is driving the money convenience business and it is an area which we stand to grow business from," affirms Kisire. To accompany this, the bank have grown its ATM network to include offsite ATM's – those not attached to their own branches and through agency recruitment. "We have brought on board a further 1,400 agents in collaboration with the Postal Corporation, Postbank Savings Bank and Kenswitch which will extend our channel distribution points countrywide," Kisire says.

Moving into Insurance
Now that NBK has an excellent framework in place to support the fast-growing nature of their business, the financial institution has been able to focus its efforts on the insurance arm. National Bancassurance Agency is a legal entity owned by NBK with its own management outfit, encouraging customers to give priority to their own insurance agency when taking out loan products with the bank. "We have identified that for quite some time, the insurance market was not allowing banks to have a Bancassurance relationship with customers. But this has since been approved, allowing NBK to become like a one stop shop for the customers. As you can imagine previously, for a customer coming to us to take out a loan and then having to tell them that they have to look for their own insurance cover from a company of their choice was very impractical," Kisire emphasised.

Expanding the Bank's Reach
2014 is an exciting year for NBK. After rolling out 10 new branches last year, NBK will continue to expand its branch distribution network, with 4 new branches already opened this year and a further 4 expected by the end of the year. Moreover, they are looking to expand beyond the Kenyan borders into South Sudan and Uganda, with an aim to be East African giants as Kisire identifies: "there are a lot of opportunities across the border and it is now time that we tend our business beyond Kenya." Assisting in these plans is the new vibrant, experienced team of staff, who are driven by fresh performance management systems. "With around 120 new mid to top level managers, we can really change the way we work."

In addition to new staff, NBK have allocated an entire floor at their headquarters to its learningcentre for training. "We look for talent, develop and retain it. We implemented a robust performance management system to reward high achievers and at the same time put those who are performing below expectation in a performance improvement program. this is one of the ways of delivering value through utilisation of human capital." management are given the opportunity to pass on skills to new members of staff as Kisire cites: "This is a good model that really works and we want to look into this further as it is clear that good people are key to the success of any business, especially in the service industry."

With all these internal and external transformations running through to 2017, there is a need to secure resources. Therefore, NBK have decided to go into the market to secure additional capital through Rights Issue. "We want our shareholders to put in more money and unlock the potential of the bank. The positive feedback we are receiving from our transformation cannot be ignored."

The strength of the rebranding and operational excellence coupled with an efficient IT infrastructure and improved service delivery to customers are ensuring that NBK are taking the necessary steps to grow its business in a more effective manner than ever before. By implementing better risk management and new mitigating factors, the bank are working hard so that their customers get the best service. "This is by no means an easy feat, but we have come a long way, including the advent of a customer services department which is equipped with the new back support technology. We have adopted a systematical approach and are seeing the benefits come through," Kisire surmises.