KBA CEO CHAT - Banking Industry Growth and Consolidation Trends Amid Heightened Uncertainty

CEO | John Gachora, NCBA Group , Group Managing Director
MONTH | October 2020
Chat Admin
Good morning everyone. Glad to have you on the chat
Wandiri Gitogo
Godd morning Admin, looking forward to an insightful discussion
Chat Admin
Pleased to have here you Wandiri. I see you are an early bird!
Chat Admin
Today's chat topic is Banking Industry Growth and Consolidation Trends Amid Heightened Uncertainty. The chat will be hosted by Mr. John Gachora, NCBA Bank, GMD
nuru mugambi
Habari za asubuhi im looking forward to today's chat
Chat Admin
Welcome Nuru. Glad you could join us!
Chat Admin
As we await the official start, we welcome you to reflect on the chat topic and discussion areas. You may also start posting your questions and comments so that we hit the ground running at 10am
CEPHAS MUTAVI
Good morning am looking foward for a good conversation
Rosalind Gichuru
Good morning All, looking forward to today's session!
nuru mugambi
Hi Rosalind
Martin Mwanthi
Good morning everyone
DAVID KILONZI
Good morning
Michael Makanga
Hi all, hope to learn something
maina NJUGUNA
Good morning, it's nice to be back here.... The big elephant in the room.... Has NCBA finally played the system downtime ghosts and what is the situation on CBALoop that has been having issues on and off....
Jyoti Patel
Good Morning to all.
Alfred Mairura
goodmorning
Chat Admin
Ladies and gentlemen, our host is here. Please welcome our host Mr. John Gachora, NCBA Group, Group Managing Director
Patricia Gathuri
Has the talk it started or is it my audio?
John Kimani
good morning to you all and welcome
VALYRIAN STEEL
Welcome Mr. John Gachora
John Gachora
Welcome everybody to the CEO Chat, Im excited to be hosting it at a time like this...the topic is such that everybody is alive to the effects of the COVID 19 pandemic and also given that before the pandemic, there were a number of mergers and consolidations in this market therefore the topic is apt. Having gone through a merger ourselves to create NCBA, I feel I am in a good place to answer some of the questions you may have.
Victor Thuku
Good morning everyone and welcome Mr. John Gachora, looking forward to the chat.
David Indeje
Q: What would a second Covid 19 wave mean for the banking sector in Kenya?
Martin Mwanthi
Welcome Mr John Gachora. looking forward to learning something new
Paul Gichanga
Good morning welcome Mr Gachora.
FRIDA ` NGARI
Hi all, I am looking forward to learning how banks are supporting Education Technology innovations since Schools and Institutions were affected by COVID19 pandemic.
John Gachora
Hi Patricia, Maina, Marian and others...thank you for joining this discussion.
Michael Makanga
Good morning
waithera Muiruri
Hi Mr. Gachora, Is it probable that we may witness more mergers in the financial sector to create more formidable institutions as our market grows as has been witnessed in larger economies? What are the key benefits of this?
John Gachora
Hello Maina
Raymond Mikwa
How are the banks managing in this new normal on the backend of runways loan defaulters
John Kimani
Welcome Mr. Gachora am interesting to know how banks are navigating increase in NPL loans during these times of COVID
Jason Wang
Good morning Mr Gachora. Look forward to hearing your insightful perspectives.
Patricia Gathuri
Thank you Mr. Gachora. Learning is continuous and I am all eyes!
John Gachora
I believe the worst is behind us. We have communicated with all our customers the different support we have been able to offer; Loop was not part of the system integration but I do recognize that it has been having a few challenges as well. And I am happy to say that we are on top of it.
Michael Makanga
Is it likely that many industries will have to start a fresh because of Covid?
John Gachora
Frida, thank you for joining, the point you raise is very timely given the pandemic.
Samuel Kinyua
Morning sir happy to join the conversation.....
Raymond Mikwa
How are we transforming the banking processes to ensure we are future ready and pandemic ready
Martin Mwanthi
Mr Gachora, why the mergers and consolidations in the banking industry? Is it to build stronger muscles to take on the competition?
Fredrick Juma
Glad to be here today.
Jyoti Patel
Welcome Mr Gachora. We are not sure what stage of the pandemic we are in - end, middle or is it still the beginning? So How long do you feel, banks will survive this period of pandemic - as the IFRS 9 provisions are being to take a toll on the financials?
Alfred Mairura
morning sir. what will be next action as NCBA boss on the employment
John Gachora
Frida, banks support to education is through helping schools manage their cash flows so they can invest in the necessary technologies required during this period. Therefore, most schools have received moratoriums on their loans or donations through bank CSR programs to help them access the required technology.
FRIDA ` NGARI
Thank you Mr. Gachora. I worked in the banking sector before moving to education to support Accounting and Business Education.
Fredrick Juma
How are the Kenyan banks coping with the new normal?
Jyoti Patel
and is consolidation one of the solutions for banks to survive the pandemic?
John Gachora
Hello Waithera, the answer is yes: we should expect that for a country of our size, fewer but larger institutions will emerge. The benefits are that the key economic support for growth is the banking system, no country ever grew without a very strong banking system. And we cannot continue to fund key infrastructure projects by relying on banks outside of the country.
Rashid Abdalla
Hi, do you offer internships at NCBA .
Rashid Abdalla
Morning Sir, how do you plan to address the growing queus at your banking halls following the merger?
maina NJUGUNA
How is your bank NCBA handling the SMEs that you financed to acquire equipment now that the moratorium by CBK has ended and maybe the businesses have not picked up their operations due to covid19?
Jyoti Patel
What was the difference in the cultures of NIC and CBA? and how have you managed to redefine the NCBA culture?
John Gachora
Hi Raymond, the pandemic has affected everyone, and we are still trying to establish the new normal. Banks are clear that what is important is to support customers even after COVID. Actions that banks are taking today are aimed to help customers survive -- often at the banks expense, so that customers are there and even when the new normal is established.
David Indeje
Q: The shift towards increased digital transactions, are there discussions to ensure that the cost issue is also addressed going into the future?
Thuku Thuku
Morning Mr. Gachora. What are your thoughts on the future of banking in Kenya, ie, will it be driven by retail or SME's?
John Gachora
Karibu John. You will notice banks are acknowledging larger NPLs or non performing loans on their books, that said, behind the scenes banks continue to work very closely with their customers to manage these risks. Banks are clear that this period is not about profits, but maintaining resilient balance sheets for a sustainable future.
Wandiri Gitogo
Morning Mr Gachora, what are some of the digital and mobile banking solutions that in your view will help steer the banking industry growth in the post-pandemic era
Dennis Nzuki
Hello all and thank you Mr. Gachora. In each election period, the business environment has always remained pensive due to perceived political instability. Now that Covid-19 has hit the economy hard + an upcoming elections in 2022 what areas of investment would you foresee as being stable or viable?
CEPHAS MUTAVI
Q:Good morning Mr.Gachora how should SME's be treated especially when they are undertaking projects that require frequent cashflows yet the banks are slow on lending.
John Gachora
Michael, I would say that there are businesses -- not necessarily industries -- that will have to start afresh. My guess is that 10 to 20 percent of businesses may close permanently; however, this will create opportunities for new entrepreneurs. I am guessing that in 2 years we shall be in a boom season.
muendo kilonzo
What role is NCBA playing on diaspora remittances? Who are your partners?
Jeffrey Masita
Good morning John. There has been clear signs of internal wrangles between NIC and NCBA staff that have manifested in the chaotic banking system integration. Moreover, the leadership in the IT Department was either vacant or in a state of transition at this critical moment. Please elaborate on what has transpired on this front.
Brian Maiko
With latest mergers and acquisitions, how has this affected service delivery and your bank brands and association?
John Gachora
Hi Jyoti, no one has the crystal ball on this pandemic...what is important is to stay very close to our customers to understand how their businesses are changing to cope with this prolonged pandemic. My guess is that recovery will be slow and perhaps good signs may appear later next year. A lot will depend on what our policymakers and government do to assist the economy.
Brian Maiko
How does these mergers affect your staff considering that there is an urgent need for internal restructuting that either sends home some staff, others feel demoted while others are elevated?
John Gachora
Hi Rashid, in the past NCBA has offered internships, we do hope that once we are behind the pandemic we will bring back this program. Keep an eye on our social media.
David Indeje
Q: Based on your response to Jyoti, from a banking sector, what kind of policies or frameworks would the sector want to see going into 2021?
John Gachora
Rashid I see your question about ques, we should see them reduce now that our system has stabilized. Furthermore as we have announced, we intend to open several more branches.
Agnelo Fernandes
Hello MD Gachora
John Kimani
thank you Mr. Gachora what's your view on the economic outlook our country considering we are in a pandemic period and again we have entered another period of politics and very close elections period.
Agnelo Fernandes
Hi can we schedule a meeting to further elaborate on the IT problems at NIC and now at NCBA?
John Gachora
Thanks David, as you may have noticed, banks and telcos have reduced or eliminated certain charges for digital transactions during the pandemic. This has come at a great cost to the sector, however, I believe it was the right thing to do. Given the competition, I do expect that overall costs of digital transactions will come down even post the pandemic.
waithera Muiruri
Are you confident with the efforts of the govt to curb / prosecute economic crimes perpetrated by bank owners and officials - looking at the last two banks that collapsed and the lack of progress on persuctions and recovery of funds - does this give shareholders investors and customers confidence ?
Betty Biwott
No
Rhoda Odupoi
Hi Gachora, I am a customer with NCBA. I would like to request that the bank consider provisioning to its customers who depend on realtime MPESA payments that fail on the bank side. It is very frustrating that we have to wait until the bank sorts out their backend. Thank you.
John Gachora
Good morning Wandiri. It is clear that customer behavior has changed irreversibly, so digital innovation will continue to be at the core of banking. For Kenya, where close to 90 percent of new phones are smart phones, I expect that digital banking will be the new frontier.
Jason Wang
The future of banking will be on the payment space I think. If the bank is not playing in this space, it may be limited to traditional services of lending, and as new intelligent lenders with algorithms and machine learning come in to lend to banking customers, the portion of that market will start shrinking. So what kind of strategy that NCBA will take in the future to attract more bank subscribers and expand the business?
EDDIE SIMIYU
Consolidation generally leads to economies of scale, which has led to financial conglomerates especially among the Tier I banks, in your opinion does it affect the regulatory structure . Having the hindsight of Parastatals reforms of 2016.
Elijah Njuguna
Good Morning Bw. Gacora, Are you planning to expand your footprint into Central Kenya specifically Nyeri county in the near future?
Kibia Charles
Hi convenor, I’m particularly concerned that the KBA seems to be in comfort zone as the unregulated money apps mushroom and making ungodly ripoff interest rates. What are you doing about this unregulated trends.
John Gachora
Hi Dennis, there will be always risks in every investment that we make; one can argue that todays stock market is heavily discounted and offers good opportunities. However, government bonds, fixed deposits, and unit trusts offer a safer investment for those concerned about market volatility before the elections.
John Gachora
Thanks Thuku, with SMEs accounting for approximately 80 percent of jobs in Kenya, they continue to be key growth engines even for banks. I expect we will see more and more banks coming up with innovations targeting SMEs.
Dennis Nzuki
Thank you Mr. Gachora.
Kibia Charles
2. This may be thorny but has to be addressed, whereas banks are regulated by CBK in cash and financial trading, safaricom does the the same in a different regime that dodges CBK, yet the platform should be levelled and rules of engagement standardised.
John Gachora
Good morning Cephas, it is important to note that banks make money only when they lend, so it is in their interests to lend to SMEs. That said, this money is depositors money and as such banks have a fiduciary duty to measure the risks on a continuous basis; SMEs must be able to demonstrate that what they are doing does not put depositors money at risk.
Jeffrey Masita
Hello John. News just in is that many members of staff at NCBA across all departments have just been offered VER/redundancy packages. Is this so and what is the strategic significance of this for the bank? Why now during such a tough time for employees?
John Gachora
Thank you Muendo, we work with several partners, and we are constantly evaluating additional partners. It would be interesting to know which you would like us to include in our list.
eric asuma
Greetings Mr Gachora, is NCBA considering partnerships with Fintechs and other technology companies to develop products for the market and if so, how can one get in touch?
John Gachora
Agnelo, we indeed held a customer webinar to discuss the system challenges, we will be sure to share with you the information from that session.
EDDIE SIMIYU
How far are the commercial banks, as guided by the Central Bank , in Implementing the BASEL accords, I, II and III , is it wholesome or piecemeal .
John Gachora
Rhoda,thank you for banking with us, we hear you loud and clear.
John Gachora
Jason, as you may be aware, NCBA has been at the forefront of digital innovation through M-Shwari and Fuliza in partnership with Safaricom, furthermore, NCBA is the only bank with a true digital banking proposition called Loop whose biggest customer value proposition is on payments.
John Gachora
Kibia, the question you ask is one for the regulator, I know for a fact CBK is well seized with this issue.
John Gachora
Hi Eddie, larger and larger banks means many business segments are housed under the same institutional umbrella, this may require several regulators to be involved, looking at the same institution. As we have seen in other markets, sometimes regulators have had to reorganize themselves to effectively monitor the activities of these many businesses.
maina NJUGUNA
Have you thought about having a hackathon that will bring together white hat hackers to test the resilience of your banking system to hacking?
John Gachora
Elijah be on the look out for NCBA!
Agnelo Fernandes
Your response appreciated, John and your promised webinar output.
John Gachora
Hi Eric, NCBA has many partnerships and is open for more. You can reach us at contact@ncbagroup.com.
Henry Gisoi
Most banks encourage customers to use mobile banking, with the increase of cybercrime how is your bank prepared to protect its clients when transacting .
Agnelo Fernandes
I still would like to engage you again with my suggestions on the long-term IT frustrations being experienced - could you ask your PA to contact me for an appointment? No charges!
Martin Mwanthi
hi Mr. Gachora, is NCBA considering having agency banking like other banks to serve customers who may not be techsavvy, and may not access ATMs located in the banking halls? Just like we have equity, coop or kcb agents...
John Gachora
Eddie, as you know, banks are heavily regulated. For Kenya, banks have adhered to the requirements of the CBK. Basel accords have been modified appropriately to fit the different economies.
John Gachora
Maina, thanks for the idea, we have done that and will continue to do so.
John Gachora
Martin, thank you for your question on agency banking, the answer is yes.
Hesborn Nyakundi
NCBA turned one year recently. What has been your experience as a merger in terms of operational and customer service.
muendo kilonzo
Thank you John, I would appreciate to see you intergrate with Sendwave for the the US market, moneygram digital transactions( in addition to cash pick ups)
Rhoda Odupoi
Gachora, I will be holding you up to it. On the issue of expansion, NCBA has been a tad rigid on extending its platforms to techies. Please, may I ask your IT department to move from offering your services on SOAP to Rest for easy integration? It's a win win for both of us.
EDDIE SIMIYU
There are many partnership and collaborations tha you have with private universities , I'm not sure, if any , with public universities . Any particular reason .
John Gachora
Henry, banks invest heavily in systems to manage cybercrime. CBK has also come up with certain guidelines that all banks must adhere to to protect depositors money. An annual IT audit is required by the regulator which takes into consideration how banks have responded to the latest trends in cybercrime. The KBA Kaa Chonjo campaign aims to educate customers on what they can do to protect themselves.
John Gachora
Hi Waithera, I see your question on economic crimes, we must admit that the government has done a whole lot in this area. Whereas it may be difficult to prosecute for financial crimes, we must give credit to the various arms of government for developing and enforcing the POCAMLA laws and several others aimed at eliminating financial crime.
waithera Muiruri
Much appreciated Mr. Gachora
Chat Admin
Hello ladies and gentlemen, time has gone fast and our host will be wrapping up the session soon
John Gachora
Thanks Hesborn, it is indeed our one year anniversary! Time flies fast! We have gone through immense change over the past 12 months, we are humbled that our customers have walked the journey with us and they continue to do so. The most important thing in these mergers is not to forget your customer. Everything else will change.
Jyoti Patel
Thank You Mr Gachora. Really appreciated.
ben asira
thanks a lot though i was very late
Wandiri Gitogo
Thank you Mr Gachora for an insightful discussion, be sure to find an article on the same on Kenyanwallstreet.com in the next few hours
John Gachora
Hi Eddie, we did have partnerships in the past with public universities. This is an area we continue to look at.
maina NJUGUNA
Looking forward to that article on the KenyanWallstreet
Patricia Gathuri
As an NCBA Alumni and Customer, I can assure you all that you are in the right bank, and if I may say so, your best bet!
John Gachora
I would like to say thanks to everyone for joining me this morning and for the engaging conversation we have had.
EDDIE SIMIYU
Thanks a lot.
Eileen Ndegwa
Thanks Sir
Wandiri Gitogo
Thank you Mr Gachora, it was indeed a pleasure to host and learn from you
Martin Mwanthi
Thanks Gachora for insightful conversation. Wishing NCBA, of which I'm a customer, all the best as you streamline all the operations after a successful merger. Happy anniversary.
Rhoda Odupoi
Gachora, we look forward to engaging you more. 1 hour is indeed a short time. Thank you.
John Gachora
I believe mergers will continue to define the future of our banking sector. Through mergers we shall create larger, more resilient banks that are able to be partners with government and the private sector in developing our country, including large manufacturing and infrastructure projects.
FRIDA ` NGARI
Thank you Mr. Gachora. Wishing NCBA all success
Michael Makanga
Thank You, I learned a lot.
muendo kilonzo
Thank you sir. We wish you all the best as you lead one of our banking sector giant in Kenya.
waithera Muiruri
Thank you Mr. Gachora, it was a pleasure learning from you! God bless you.
John Gachora
Larger banks are able to invest in safer, better systems, and invest in innovation (research and development) which will be key for the fourth industrial revolution or 4IR.
John Kimani
thank you Mr Gachora for that informative session
Josiah Kimanzi
Thank you Mr. Gachora for a very enlightening session. Be encouraged that the current challenges that you face (at NCBA) in the period of transition will serve as a playbook for learning's in the future. It shall be well, Go for it!
John Gachora
All that said, I must recognize that even in their current size, Kenyan banks have stood with their customers, especially through this unprecedented pandemic -- both small and large banks have offered moratoriums, extended loan terms, made billions worth of donations, and sacrificed profits to put the country in a better footing. Our staff have been on the front lines, to ensure customers continue to receive service -- even at the cost of their own health and wellness. For that we say asante.
John Gachora
For our customers, we appreciate your resilience and understanding during this time. We shall all be there post COVID.
ben asira
Indeed indeed, the banking fraternity are also our frontline workers!
John Gachora
Thank you and have a good weekend.
Chat Admin
Ladies and gentlemen, we have come to the end of our session. We greatly thank our host Mr John Gachora for an insightful session!
Chat Admin
We wish to thank all our participants for taking the time to log in, share insights, questions and general thoughts. You have all made today's session a success
Chat Admin
A transcript of today's session will be available on the platform even after we close the chat room. So not to worry if you joined the session late. You will still be able to access today's chat discussion on the transcript and benefit from it.
Chat Admin
We will be closing the chat room soon. Thank you once more and have a wonderful and blessed afternoon and weekend ahead!