S TA N D A R D L E S OT H O B A N K
STANDARD LESOTHO BANK
Lesotho’s Leading Bank Takes
Digital Strategy PRODUCTION: Karl Pietersen
Standard Lesotho Bank’s Chief Information Officer, Samuel Koatla tells Enterprise Africa that the bank will be pursuing a digital strategy in order to boost growth. “One thing that all banks are looking at is the ability of mobile devices,” he says. 2 / www.enterprise-africa.net
INDUSTRY FOCUS: FINANCE
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Standard Lesotho Bank is going through something of a transformation. The largest bank in the small African nation is targeting growth as a digital provider, something which the dispersed and often rural population will surely benefit from. The opportunities for digital banking providers are big. Of the country’s 2.2 million people, just 20% are active internet users. However, around two million active mobile subscriptions exist and servicing clients through mobile channels is where Standard Lesotho sees potential. “There is no longer a question on whether we partner with MNOs
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(mobile network operators), the question is how do we partner with MNOs and think tanks,” says Chief Information Officer, Samuel Koatla. His vision is clear – move the bank’s business online, but ensure it remains in reach of everyone who needs it; create partnerships with the country’s leading tech businesses and pull in market share, while all the time delivering the first-class service that you would expect of the country’s leading financial organisation. “The uptake is ok. It is not where we want it to be,” Koatla says of the company’s digital strategy. His idea is to have an industry leading online banking system paired
with a speedy and efficient app, supported by a network of traditional branches with digital capabilities. But, ensuring no one is neglected, all of this will be underpinned by a basic service provision delivered through USSD (Unstructured Supplementary Service Data) channels. “We have to make sure we align ourselves to our customers in terms of what access they have to technology,” he says. “One thing that all banks are looking at is the ability of mobile devices. That is the direction that we are taking, and we are developing for both feature phones and smart phones. We are available on both phone types and we have USSD, internet banking
STANDARD LESOTHO BANK
// WE ARE THE BIGGEST BANK IN THE COUNTRY AND OUR CLOSEST COMPETITOR ONLY HAS HALF OF THE ATMS THAT WE HAVE // and a smart app. That covers all phones and all devices.” Koatla wants unanimous quality across all platforms. Any services that are not available on certain devices will soon be made available so that access is as universal as possible. “On USSD, a platform that does not require internet access, the uptake has been great as its possible to reach all of our customer segments very easily. Whether you’re in an urban area or rural location, as long as you have a phone, you can access our services,
so the uptake through USSD has been very good.” However, the adoption of internet banking has not been as impressive. “For whatever reason, we are still struggling in terms of internet banking. We thought that of the thousands of people with internet access, at least 80% would use our internet banking service but we are hovering at just 30-40%. This means we still have a long way to go,” says Koatla. He puts this down to the infancy of digital services in the country,
where usage increased by 78% between 2016 and 2017 and just 9% of that growth coming from laptops and desktop computers. DIGITAL BRANCH NETWORK Across Lesotho’s almost 12,000 square miles, Standard Lesotho Bank has 17 branches. Strategically positioned to offer country-wide coverage, the branch network is one of the strongest in the industry. Koatla says that no more physical branches will be opened at this stage;
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INDUSTRY FOCUS: FINANCE
// WE WANT A MIXTURE OF OLD BANKING SERVICES AND CONTEMPORARY DIGITAL SERVICE IN BRANCH // instead, the company will invest in its existing network and add more ATMs to its portfolio. Currently, there are 93 Standard Lesotho ATMs available and more will be added before the end of the year. “We are the biggest bank in the country and our closest competitor only has half of the ATMs that we have,” explains the CIO. “What is now and issue, and something that is being pushed by the government, is that we must create financial inclusion. This means we must put ATMs in places where we are not going to make much money. “In places where banking services are not readily accessible, we will place ATMs so that we can bring service to the people. We are looking at adding four or five ATMs this year
and those will be in much more rural areas of the country.” Investing in the branch network to bring the buildings in line with company expectations is already underway and has given Koatla the opportunity to install digital services in branch for increased efficiency. “In terms of the branch network, we are moving towards digital branches. We have recently opened a new digital branch close to the National University of Lesotho and people are very happy as they can access services that were previously unavailable. That is the first digital branch and the idea is that we put it close to the students,” he says. “We are also looking at the prospect of mobile branches as the Lesotho economy is driven by construction, diamond
mining, and natural resources, so there are new start-ups focussing on these industries and we want to provide services to these enterprises. We want to have a mobile digital branch that we can put close to our customers and serve people there. In terms of old brick and mortar branches, we are renovating and making sure our network is able to offer a 24/7 digital service as well. We want a mixture of old banking services and contemporary digital service in branch.” Investment of this type is all intended to feed into the digital strategy. This strategy has been developed to bring as many people as possible into the financial sector, benefitting the individual and the business. “Around 40-60% of our population use banking services,” admits Koatla.
// ECONET Telecom Lesotho (ETL) ECONET Telecom Lesotho (ETL) is at the core of Lesotho’s economy. Econet has the longest fibre optic network in the Mountain Kingdom and is the supplier of choice for most business customers. Lebohang Ramaisa, General Manager Enterprise Business, says over and above ETL’s and fiber network in the country, it is the diverse range of business solutions it offers, that has positioned it as the partner of choice to businesses and government. “The financial services providers, like our partner, Standard Lesotho Bank, have special demands for availability, security and speed. Econet supplies all of Standard Bank’s in-country connectivity and has helped Standard Lesotho Bank maintain the highest level of availability compared to all other Standard Bank group companies in Africa.” Ramaisa adds. Econet also provides secure connectivity to the bank’s point of sale (POS) terminals across the country using its 3G and LTE network. Further, Standard Bank’s internal voice communication depend on a VoIP platform that is designed, installed and supported by Econet Telecom Lesotho. Econet has further partnered with Standard Lesotho Bank in their digital transformation journey by providing Internet services for their banking websites, their Office operations and WIFI in their branches. Our innovative collaboration as includes mobile banking where our common customers are able to send money from their bank accounts to thier Ecocash mobile money wallets. Econet’s extensive fibre network reach has helped, not only Standard Lesotho Bank and the government but it has helped the growth of local economies in the deep valleys and mountains of Lesotho. Econet is a proud partner of Standard Lesotho and is inspired to change the lives of the citizens of this beautiful mountain kingdom.
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T’s & C’s apply
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INDUSTRY FOCUS: FINANCE
“Looking at those who are not active with banking, it’s not that they don’t have access to funds – they are still spending – it’s just that they are using cash and not going to the bank. There is a thought that banks can be more expensive, but our central bank has said all banks must offer services to everyone, no matter of their circumstance. “This presents a major opportunity,” he adds. Currently, there is more than 800,000 people who are ‘unbanked’. Bringing these groups into the market would increase the size of the market significantly. “For years, there were no banks coming from South Africa, but we are
hearing that many more banks now want to enter the Lesotho financial market. They see the opportunity as we do. We have around 60% market share and for the past two to three years we have seen the younger generation moving to banks with a strong digital offering and that is why we are investing heavily in our digital presence.” ROOM FOR IMPROVEMENT At the end of 2017, Standard Lesotho Bank released a mix set of results. The company’s headline earnings sat at M240 million, but this was down from M310 million in 2016 – a drop of 23%. Declines like this are obviously unsustainable and Koatla says that
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the dip forced difficult board room discussions. “We recently talked in the boardroom about how this could potentially be a reality check for the business and the country. We used to register big profits. Our ROE was 36-39% and we never asked whether that was sustainable. Now, our ROE sits at around 26% while other banks in Lesotho and other countries around Africa hover around 19%. We do not accept that, and this is why we are investing in a digital strategy to boost growth.” The cause of the dip? According to Koatla, an economic landscape influenced by political factors. “We moved from a oneparty government to a coalition government and that was new concept in the country,” he says. “The first coalition only ran for two years and we had elections again, then another government ran for two years
STANDARD LESOTHO BANK
before further elections. During that period, the government did not inject any spending into the economy and the circulation of money slowed. This is why we suffered, but it was not only Standard Lesotho Bank that was hit. All commercial banks suffered.” Standard Lesotho’s overall performance was not bad. Fees and commission revenue was exceptionally strong and resilient, recording 8% year-on-year growth. This was despite ongoing investment into a new Finacle Core Banking system – another step towards improved digital functionality. “We finished that project in March 2017 and we are now actively running on Finacle. The project was closed in December and we still face challenges, but it is a fantastic platform which gives our customers great service and great opportunities. It also gives us a competitive edge as it is better than what is available elsewhere in the market.”
BUILDING SMES A key focus area for Standard Lesotho in terms of building its customer base will be with SMEs. Big creators of jobs and important builders of GDP, Lesotho’s SMEs are a vital part of the economy but often need support. “We noted that most of our deposits come from SMEs and if we really want to create employment (our unemployment rate is very high in Lesotho), we must partner with the private and public sector to create opportunities. “We have opened our business banking suite for SMEs to use for free, there’s internet and a boardroom for free, there’s office space for free, and you can meet your prospective clients while using our services. “We are also investing heavily in training; we have spent several millions on training to help SMEs run their businesses. We started this year and the applications have been huge. We will start with 10 and expand as we get used to the programme.” SMEs developed, grown and run by young people is also a focus for both the government and the bank. “We have started Bacha Enterprises, the Sotho word for youth. This has been running for four years now and we are partnering with the Lesotho Revenue Authority and the Basotho Enterprises Development Corporation. Through this, we are funding ideas from youth which are most likely to flourish. We have given around 12 start-ups funding, and we think that is an important story to tell,” says Koatla. Bacha Enterprises intends to breed a crop of entrepreneurs who can inspire change and prosperity by becoming the creators of jobs and not job seekers. This project sets the stage for the youth to shape and determine the economic agenda of their country. The project is targeted at graduates who have completed their first degree qualification or higher and have never had any opportunity of any type of formal employment after attaining
their qualifications. While building prosperity externally, Standard Lesotho does not lose focus of building capabilities within. Employing some 800 people, this is one of the strongest employee bases in the country. But it requires constant input. Internationally respected skills are hard to come by, especially in the field of app development. “We are forced to look into South Africa for these skills,” admits Koatla. “We are advanced with website development but with app development, we look abroad to South Africa or India or the tech countries of the world. Unfortunately, the skills are not there in Lesotho.” It’s a constant and ongoing battle, but one which is comes expected for all organisations looking to lead in their chosen industry. “We look to the universities to develop these types of skill but many are running old curriculum and that does not help. We have to invest heavily and build people from scratch and then it becomes a tough fit to keep those skills.” In the future, ambitions are big and optimism is high. However, the building of sustainable relationships is key. “The biggest challenge is MNOs with mobile money systems,” says Koatla. “They are entering the banking space and we are looking at our next step. Do we try and do everything ourselves which is unsustainable? Or do we create partnerships? MNOs need liquidity and a banking partner and we can provide that. We are in a stage saying what do we give out and what do we keep to ourselves, so it is a challenging situation.” Asked for his feelings on the future for Standard Lesotho Bank and the for the country: “There are big, exciting opportunities” Koatla concludes.
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July 2018
www.enterprise-africa.net
Lesotho’s Leading Bank Takes
Digital Strategy
Exclusive interview with Standard Lesotho Bank’s Chief Information Officer, Samuel Koatla
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ENTERPRISE AFRICA
J ULY 2018