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Banks are closing superfluous branches and sending employees into labour market

Even as reactions continue to trail recent job cuts at Ecobank Nigeria, there are indications that a fresh wave of retrenchment is imminent in the banking industry as lenders increasingly embrace digitalisation.

New Telegraph’s findings show that the increasing popularity of digital banking and the rising use of technology in back-end processes, coupled with lenders’ efforts to cut costs in order to cope with tough times, is pushing deposit money banks (DMBs) in the country into closing unprofitable branches, thereby leading to job losses.

Indeed, before the recent job cuts by the lender, Ecobank Nigeria was among DMBs, especially in Lagos, that had started closing branches considered superfluous to requirements. For instance, the lender recently closed the smaller of its two branches on Adeniyi Jones Avenue, Ikeja.

It has, however, denied reports in some quarters that it was responsible for the recent sack of hundreds of its workers across the country.

In a statement entitled: “Cessation of Contract Engagement of Vendor Managed Personnel,” made available to New Telegraph, the lender stated: “Ecobank Nigeria did not disengage its staff. The bank decided not to renew the contract of its third party recruitment agencies, which expired recently and, as such, returned this category of personnel back to these agencies who are their employers.”

The statement noted that although the affected personnel were employees of its contractors, the lender, out of “compassion” still went ahead to put in place palliative measures to cushion the effect on them.

“These include payment of contract cessation packages of over half a billion naira already paid through their employers as well as opportunity given to those with requisite qualification to apply to the bank for permanent employment,” it stated.

The lender further disclosed that as part of its business strategies, it was “investing in the employment of full time graduates and as such over 300 graduates are currently undergoing training at the bank’s state-of-the-art academy, which was recently accredited by the Chartered Institute of Bankers of Nigeria. “They are to be absorbed into the system at the end of their training as permanent staff.”

However, a fortnight ago, members of the National Union of Banks, Insurance and Financial Institutions Employees (NUBIFIE), picketed the headquarters of Ecobank Plc. in Lagos over non-payment of severance allowance to the over 900 staff allegedly sacked by the lender.

Apart from Ecobank, Standard Chartered Bank also recently embarked on what it described as “branch optimisation” in its Nigerian operations.

Specifically, the lender, at the end of last year, closed its imposing branch at Agidingbi area in Ikeja. A notice pasted at the entrance to the branch informed customers that the closure was part of its branch optimisation strategy and advised customers to conduct transactions at the closest Standard Chartered bank branch.

Attempts by this newspaper to obtain details of the “branch optimisation” exercise and how many branches and staff would be affected by it were not successful as the Head, Corporate Affairs, Brand and Marketing, Nigeria and West Africa at Standard Chartered Bank, Dayo Aderugbo, neither answered phone calls nor responded to a text message sent to her on the issue.

New Telegraph, however, gathered that the branch closure affected some of the bank’s branches in Lagos and that the exercise was part of the lender’s digital transformation strategy.

In fact, in a recent statement, the bank announced that it had completed a simultaneous multi-market launch of its digitally-led retail banks in African countries such as Tanzania and Ghana. It had launched the digital offering in Uganda in January this year and Côte d’Ivoire in 2018.

Commenting on the launch, Regional CEO, Africa and Middle East for the bank, Sunil Kaushal, was quoted to have said: “Digitising Africa continues to be an integral component of our strategic transformation, and we have been steadily expanding our footprint across the continent.

“We are constantly looking for ways to push the boundaries, by providing our customers innovative solutions and technologies. Ultimately, it is about listening to what our clients want and meeting their banking needs by offering a digital platform to do their banking anytime and anywhere, through the channel they prefer.”

Also, Managing Director/Chief Executive Officer of Fidelity Bank Plc., Mr. Nnamdi Okonkwo, assured shareholders at the bank’s annual general meeting in April this year that they would reap greater return in this 2019 financial year, as the lender’s sustained investment in digital innovations would engender enhanced customer service delivery, and open fresh streams of revenue.

According to him, the bank will not relent on its efforts to increase the adoption and migration of customers to its digital banking platform.

He said: “We are investing heavily in digital technologies to drive our retail strategy, reduce cost, and consequently improve revenue and returns for our shareholders.”

Noting that 25 per cent of the bank’s fee-based income came from digital banking, Okonkwo disclosed that the lender was introducing a digital lending solution and AI-Chatbots to improve operating efficiency and help the bank achieve its objective of breaking into the league of Tier 1 banks by 2022.

In a chat with New Telegraph, a general manager with a tier one bank, who did not want to be named, confirmed that lenders were closing unprofitable branches and had generally halted branch expansion.

The bank official said: “Unlike in the past when banks used to scramble to outdo each other in terms of who has the most number of branches, the focus today is all about reducing costs. For instance, instead of the four new branches we planned to open in Lagos last year, we reduced the number to two.

 

NewTelegraph

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