COMPANY PROFILE
2014
Zanaco
+260 211 228979/ 221355/ 221380/ 221404 | www.zanaco.co.zm
company profile
Banking on achievement Editorial: Helen Lake Production: Chris Bolderstone
Zanaco saw outstanding financial results at the end of 2013 and recently invested US$13 million in its IT Infrastructure. IndustrySA speaks to Managing Director Bruce Dick about this huge investment and its ongoing plans for growth. Zambia National Commercial Bank (Zanaco) was privatised by the Zambian government in 2007 with Rabobank acquiring a 49% stake. In 2008, the bank was listed on the Lusaka Stock Exchange and now 29% of the bank is represented by the public. This privatisation turned out to be an exceptional move by the Zambian government, resulting in an increased client base of 600,000 customers taking the bank from a client base of only 200,000 to a vast 800,000 customers. Managing Director, Bruce Dick, was appointed to his position in March 2014 after serving as Chairman of the Board of Directors from 2010. At the end of 2013, Zanaco saw big success in
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its financial results and also embarked on its 18 month Business Efficiency Programme, the most notable feature being the US$13 million IT infrastructure development.
INVESTING IN EFFICIENCY The US$13 million IT infrastructure investment was one of the largest single IT investments in Zambia and was aimed at upgrading Zanaco’s core banking platform as well as building a stronger tier 3 data centre and disaster recovery site. The reason for the investment, according to Dick, is the need for the bank to remain sound in its infrastructure, ready for future business growth.
Zanaco
“It is basically a statement about how we see the future and our confidence in investing for the long term. It was to set the business up so it could grow and continue to develop,” he says. “If you look at any bank, there is obviously a continual program of investment. I don’t think you ever get to a point where you can put a system in and it can go sleek for 20 years, it doesn’t work like that. It’s one of those ongoing upgrades that you do. I think the life of a system can be anywhere between seven to ten years if you’re lucky. You just have to continue to keep these things modernised to reflect efficient ways of doing things. So it comes with a bit of efficiency, it goes a bit faster, it can cater for
more customers, more products and so it gives us a lot more flexibility about how we can grow the business for the future.” According to Dick, the next step for Zanaco is building on the foundations that this new system gives the bank in a way that will allow it to better serve its customers. However, these plans are not in fruition just yet, as Dick tells us: “Customers don’t see a lot from the existing change because it’s more about speed and enhancing the reliability of things… The real advantage for customers is that hopefully we can provide more products and services. They have yet to see the full benefit - we’ve seen more of it in the back office.”
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company profile
BANKING THE “UNBANKED” Zanaco is making a big push to provide products and services to people who have previously been underserviced. The focus is specifically on commercial farmers who have usually been affected due to their location. “In terms of the ‘unbanked’, there is a huge population of people
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who have largely been in cash economies, or cash societies, where if you can link them into the financial world, it gives them a lot more security over their cash flows and how they handle their money,” says Dick. “We have that social agenda or that strategic focus that some of the other banks don’t have as a cornerstone to their businesses. That comes a bit from our shareholding base
Zanaco where what we see as the primary objective of the bank, is to try and extend banking services to the outlying areas, particularly into the rural areas where there may be the kind of people who don’t
“It is basically a statement about how we see the future and our confidence in investing for the long term. It was to set the business up so it could grow and continue to develop” get access to bank accounts.” Many of these people, the ones who are based in the rural areas and could benefit from banking services,wizz.int.advert.FINAL.pdf are farmers. Zanaco not7/29/14 only wants 1:41:27 PM to reach the business of the large commercial
farmer, but it specifically wants to service the emergent farmers – farmers who run commercial enterprise on a much smaller scale. “These are the people that are not commercial farmers, but they are just a bit less than the commercial activity and these are the people for the future - the ones that can grow and develop – and we put a big focus on that,” Dick explains. “There is another group before you get right down into the subsistence farming who are basically the small farmers, the small croppers, the people who do get a cash return out of their crop but it’s a relatively small amount. It’s those people who we try and organise into cooperatives and we try to service that though the Zambian farmers union and that works well.” One of the questions that comes to mind is how Zanaco is able to stretch its services into these areas that were previously unserviceable. “The mobile phone is the technology platform for banking for the personal consumer and it does everything that a customer needs to do – they can shift money around, they can make deposits, get cash and pay transactions. For all intents
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and purposes, most people have a phone and you don’t need a high powered phone to do it, you need a basic phone. It works very well for the unbanked and personal consumers. It also reaches out to the outlying areas – the network coverage in Zambia is quite good and if you have a phone, you can operate in most parts of the country. From that perspective, it does allow people to become connected to banking,” Dick explains.
AGENTS OF CHANGE Mobile electronics is used in combination with branches and with Zanaco Xpress Agents. “Quite often in outlying areas, there is only a small customer base so setting up bricks and mortar doesn’t make a lot of sense and it’s a very expensive distribution platform. The other thing is that the mobile is a distribution platform in itself and they can reach pretty much everywhere in Zambia’s case – so it’s a combination of bricks and mortar, agents and electronic connections,” says Dick. Zanaco Xpress Agency is a model whereby Zanaco appoint Small and Medium Enterprises (SME’s) to act as agents on its behalf. They are
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able to provide basic banking services such as opening accounts and giving out and taking in cash. “You can arm these people with a Point of Sale device and they can do the simple things... It’s a way to reach out to relatively lowly populated areas and put in place an infrastructure that allows people to be connected closer to their homes,” Dick says. The agency model started off as 65 agents in 2012 and grew rapidly to 160 agents in 2013. The use of agencies is a popular practise, Dick tells us: “People have found that if you go back to the conventional opening of a branch that it’s a very expensive model to try and roll out to outlying areas. People had to come up with a more creative solution and we went down the agency route. It’s one that is becoming quite widely practised in Africa so I think it’s not only true here, it’s also in other African countries. You’ll find that the agency model is being extensively used as a distribution platform.”
YESTERDAY’S SUCCESS TOMORROW Whatever the economic future may hold, Zanaco is in a strong position to keep striving forward.
Zanaco “We’re in the corporate market, the government sector, agriculture and we’re in the personal segments with private customers so the spread of the business means that even when the economy is going through more difficult times, there are parts of it that are working very well and there will be other areas where the growth isn’t there for the time being. The spread of the business protects your ultimate long term growth plans,” says Dick. After the success of 2013, Zanaco is still set to continue on its rollercoaster of accomplishment. For the past few years, Zanaco has expanded consistently at approximately 20% per year and in an economy that is growing at approximately 6 – 7% per year, it is easy for banks to perform well. “It’s a market where there is quite a lot of competition between the banks, with quite a big proportion of the population that doesn’t have a bank account. There are lots of new customers that we can attract so it makes expansion a bit easier,” Dick explains. “We are not announcing anything yet, but we are on track for continued growth and that’s what we prefer to do – we like to be a steady, consistent performer.”
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Zambia
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