Union Bank, First Bank. Riding on past glory.
April 11th, 2007 Ogbuotobo Chuks || chuks@stockmarketnigeria.com
By Ogbuotobo Chuks
If present day banking and banking dynamics are anything to go by, the likes of Union Bank of Nigeria and First Bank of Nigeria would most likely not occupy the spots they presently occupy now.
A journey through the city of Lagos- known to be the commercial nerve centre of Nigeria would reveal the alarming rate at which the new generation banks like Zenith Bank, Oceanic Bank, Intercontinental Bank etc are reproducing themselves through establishment of branches.
It is a known fact that one of the most important factors that determines the height of profitability of a company is the amount of deposits received. This is because it is from this variable that loans and other profit generating vehicles are divested into. Significant increase in deposits in most cases indicates customer confidence and subsequently significant profits.
This being the fact, it is quite understandable that some banks are doing all within their wits to spread their tentacles. Just recently, Zenith Bank UK was commissioned – the second indigenous bank after UBA to have an international branch outside Africa.
KEEN COMPETITION
Competition is the spice of the industry, because it brings out the creativity in most of these banking institutions. Most of them know the importance of increasing their customer base and this is addressed by aggressive retail banking. This of course is reflected in the share prices of these banks, as investors know or can perceive where most of the money is going to.
RETAIL BANKING
Retail banking can simply be defined as banking that aims at solving the problems of or making life easier for customers through creating new products or improving existing ones per time.
Note that the key words are solving problems, making life easier, creating new products and improving existing ones.
The rate at which you develop these four phrases determines the extent to which you remain relevant in the banking sector.
Most of the new generation banks have succeeded and are still succeeding in wooing customers through the products they develop. If ratings were to be done based on product development, union bank and first bank would probably not rank tops in this aspect
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