DailySun
As Ecobank Transnational Incorporated nears its 40th anniversary, the banking group, boasting the most extensive presence in West and Central Africa, is adapting to a significantly changed environment compared to its inception in Lomé, Togo, in 1985. The banking sector, now greatly shaped by technology and catering to a new generation of customers, necessitates a different strategy from its providers. This evolution occurs alongside the global and public upheavals of the past decade, which have presented substantial challenges for financial institutions among other economic entities.
Despite these formidable obstacles, the bank’s recent bond issuance turned out to be highly successful, with strong oversubscription rates indicating positive market sentiment towards the bank. “We aimed for $350m in the market,” explains Jeremy Awori regarding the bond issuance, marking the bank’s first since 2021. While there were initial concerns about the timing, Awori remains optimistic about the bank’s outlook. “We clearly articulated our strategy and the narrative we shared. We weren’t in a precarious situation, so we felt assured in proceeding with the transaction.”
In the end, the markets expressed enthusiastic confidence, offering $900m, from which the bank accepted $400m at an interest rate of 10.125%, with repayment due by October 15, 2029. Awori feels satisfied with the rates achieved.
“A few years back, we issued a Eurobond, and the spreads over SOFR [the secured overnight financing rate, a broad gauge of borrowing costs] were nearly 100 basis points lower, which is encouraging since ultimately, it’s all about your spread over SOFR.”
“The primary takeaway from the roadshow was their recognition of our strategy. They see the growth opportunities ahead for us and, in evaluating our management team—from myself to the CFO and the governance, risk, and compliance officer—they gained trust in our capabilities,” he reflects.
Growth opportunities
Given the current unpredictable environment, it’s no wonder Awori takes pride in the successful fundraising efforts. In the aftermath of the pandemic and disruptions in supply chains, along with ongoing conflicts in Ukraine and the Middle East, many investors have shifted their funds from emerging markets to safer havens in developed regions. This transition has been particularly notable as central banks in these regions have raised rates to combat escalating inflation. In Africa, worries over debt sustainability, currency volatility, and regional instability further complicate perceptions of the continent’s economic viability.
With inflation easing and interest rates returning to pre-2021 levels, investment opportunities in frontier markets may once more capture interest. Securing capital will largely depend on having a robust strategy that promises growth. Awori asserts that Ecobank is well-positioned for this. He highlights that the bank’s focus is to optimize returns through strategic capital allocation, prioritizing growth, returns, and transformation. While resources were historically dedicated to ensuring steady returns, the market—and by extension, Ecobank—now embraces a more agile and adaptable strategy, reallocating capital across sectors to capitalize on profitable opportunities.
“This is evident in our results. Our return on tangible equity is nearly 33%, which is an outstanding performance by any measure. We’re realizing growth even amidst challenging circumstances,” he states.
As an element of its growth strategy, Awori mentions the bank’s commitment to expanding into new segments, particularly in the consumer and SME markets, where it currently occupies a smaller market share but sees significant growth potential.
“There are vast opportunities within corporate investment banking, whether in cash management, payments, trade finance, syndications, advisory, or treasury services,” he elaborates. However, as the consumer base shifts to include more young, tech-savvy individuals who seek services that align with their lifestyle preferences, Ecobank recognizes the necessity to evolve to meet these demands.
“Younger clients want the convenience of banking on the go. They seek card offerings, savings options, investment products, and credit solutions such as mortgages and personal loans. Many are also entrepreneurs,” he points out.
A key aspect of this strategy lies in the bank’s centralized IT system, ensuring that customers receive consistent service at any of its over 1,600 branches across 35 African nations.
“We’re increasingly noticing our customers’ mobility. For many banks, moving from one country to another can result in disconnection; they only recognize you as a client at your original branch. However, we have the capacity to assist you, no matter where your initial branch is,” he explains.
The bank also remains optimistic about growth in its payments segment, leveraging its robust IT infrastructure and wide reach.
“Our network now facilitates real-time payments from users’ phones. You can seamlessly transfer money from [Kenyan] shillings to [Zambian] kwacha or from kwacha to [Ghanaian] cedi. This is a unique capability of our API,” Awori notes.
He emphasizes that this focus on growth is yielding positive outcomes.
“We are channeling capital into this segment and maximizing our returns. We’re seeing an increase in our fee income along with interest income, and I’m delighted to see more customers engaging with us and conducting more transactions. Ultimately, we aspire to be the preferred banking partner for our clients.”
In November 2024, ETI, the parent company of the bank, secured a partnership with Nium, a leading provider of real-time cross-border payment systems, to integrate Nium’s payment infrastructure into its operations. This collaboration will expedite and enhance international payment services for customers, reducing processing times and enabling smooth transactions in over 220 markets, including more than 100 countries. For Nium, joining forces with Ecobank opens doors to 35 new markets simultaneously.
Technology focus
In June 2023, Ecobank also emerged as one of the founding participants in the Pan African Payment and Settlement Systems, a joint initiative between the African Export-Import Bank and the African Continental Free Trade Area, aimed at streamlining cross-border payments on the continent to boost intra-African trade. Awori notes that such collaborations emphasize the bank’s commitment to digital payment solutions.
“We aim to position ourselves as a prominent player in payments across the continent,” he asserts.
The bank’s focus on technology reflects Awori’s vision for the future of banking, where technology is essential not only for delivering financial services but also for influencing the nature of those services.
“Customer service and experience will emerge as pivotal differentiators. Understanding our customers is vital because, while many can provide an app or card, the critical issue is whether these solutions operate effectively when needed. Do they cater to your specific needs at that moment?”
This approach requires leveraging data and analytics to gain a deeper understanding of customer behavior and potentially anticipate when they may need a service, fostering a more intuitive banking experience. Furthermore, Awori highlights that the rate of change is poised to accelerate.
“The speed at which businesses evolve is astonishing. One can observe significant growth in companies, which can also disappear swiftly… Changes that once took eight years are now unfolding within four months. As a result, leadership in today’s environment necessitates a fresh strategy for navigating and embracing change.”
Awori anticipates a shift in the competitive landscape, where traditional banks will not only contend with one another but also with agile fintech startups vying for market share. He predicts this trend will result in a proliferation of specialized providers targeting specific market segments. “We could witness firms dedicated solely to bancassurance or telecom companies focusing exclusively on mobile wallets. There will be entities specializing in credit for SMEs and other sectors. This indicates that both traditional banks and niche players will exist simultaneously, fulfilling distinct roles,” he forecasts.
This evolution serves as a call to action for banks to remain relevant and protect their financial health. Awori believes there are plentiful opportunities for banks to maintain their position. “We need to explore partnership options,” he advocates, identifying significant deals as a vital area for effective collaboration among banks.
“There are vast opportunities for syndication with others, particularly for large-scale projects, as no single bank can finance multi-billion dollar initiatives alone.”
In sectors such as climate finance, sustainability, and agriculture, Awori envisions collaborative prospects among banks.
Economic headwinds
Nonetheless, even the soundest strategies can be disrupted by external circumstances, and the current climate presents its own set of challenges. Concerns regarding fiscal fragility and inconsistent policies persist across various regions of the continent. Awori maintains that Ecobank’s diverse presence allows it to fulfill its commitments even in the face of these adversities.
“We are long-term stakeholders and do not retreat when challenges arise. Our strategic focus remains on the regions we wish to operate in, and our approach to these markets is clearly defined.”
On the global front, the potential for a confrontational trade policy from the forthcoming Trump administration towards China may disrupt global commerce, likely affecting African economies. If this, or any other scenarios, result in sustained high interest rates, Awori states that Ecobank will strive to maintain competitive rates.
“We must foster appropriate partnerships and risk sharing to keep our services affordable. Contrary to some beliefs, our aim is not to excessively maximize pricing.”
A vital component of this strategy involves cost reduction, an area where Awori emphasizes the bank’s attention.
“In my view, we must constantly pursue greater efficiency. Numerous avoidable costs can be eliminated, freeing up resources that can then be redirected toward new business growth opportunities rather than exclusively reinvesting in profits.”
Technology plays a crucial role in this context, empowering banks to significantly enhance outputs with fewer resources.
“We are in an age where technology enables radically different approaches in areas such as analytics, models, and processes, which is expected to dramatically transform the banking landscape over the next five to ten years. Routine tasks will be increasingly automated, while value-added functions will require human intervention.”
Awori’s confidence in his projections is reinforced by significant accomplishments already apparent.
“For instance, when I joined, we had 15 or 16 business units where the return on equity exceeded the cost of equity. Today, that number has risen to 26, potentially even 27. This reflects the reality of a business focused on returns.”
Mission to transform
Ultimately, the goal is to transform the bank, not only through process improvements but also by nurturing a culture of ongoing enhancement in its workplace ethos.
“This requires reevaluating how we operate. You can observe changes in our brand, customer experience, and the streamlining of customer journeys.”
The bank has set up transformation offices to ensure progress stays on track and effective implementation occurs. Nevertheless, the success of this initiative may ultimately depend on the individuals driving it.
“By 2030, we will have a significantly younger workforce. Adapting to their working styles, motivational factors, and engagement strategies will be crucial. Clinging to outdated practices will impede our ability to attract top talent,” he warns.
In a competitive talent environment where numerous global firms vie for local expertise, Ecobank’s ability to attract and retain the best talent could be pivotal in shaping its future.
