The Financial Alliance for Women recently welcomed First City Monument Bank (FCMB) – Nigeria as a new member. First established as a stock brokerage in 1977, today the bank serves more than 5 million customers in 275 branches across Nigeria and its subsidiary in the UK. In this interview, Bukola Smith, Executive Director, Business Development, spoke with us about financial inclusion of women in Nigeria, the bank’s strategy for supporting women in the country and their decision to join the Alliance.
Financial Alliance for Women: As context for our global readership, can you share FCMB Group’s market position in Nigeria and beyond, and overall strategic vision for the organization?
Bukola Smith: The FCMB Group is a leading financial service institution in Nigeria, offering full universal banking services. The Group has seven subsidiaries that are market leaders in their respective segments. The commercial bank, FCMB Ltd, is currently one of the top 10 banks in an industry of over 30 banks, with an asset base of approximately US$4 billion.
Some of FCMB’s strategic imperatives for winning in the market include building a high-performance organization centered around customer experience, driving aggressive market penetration in emerging SME segments like renewable energy, IT and women in business, as well as investments to drive future growth in these areas and beyond.
Alliance: As per the 2018 Little Data Book on Financial Inclusion, only 27.3% of Nigerian women above the age of 15 have access to an account, versus 36.9% for the Sub-Saharan region and 64.8% globally. Are there any government initiatives or public-private partnerships in place to help increase women’s financial inclusion?
Smith: While the government does not have initiatives specifically for women, they are implementing a national financial inclusion strategy at both federal and state levels. It includes a payment systems framework jointly agreed between the telco regulators and the Central Bank of Nigeria. The central bank also introduced a regulatory sandbox that will allow FinTechs to test solutions in a controlled environment. And beyond that, they are in the process of launching the Shared Agent Network Expansion Facility – in collaboration with banks, mobile money operators and super-agents – that will comprise a network of 500,000 agents offering basic financial services. FCMB currently has an agent network of 768 who will support this initiative, and we plan to increase this to 1,200 by the end of the year. Our 5-years plan is to have 1,500 agents.
We’re also working on financial inclusion at the bank level. With the recent launch of our “EASY” savings scheme, low-income workers in the informal sector such as artisans, agricultural workers, tailors, students, traders, businessmen, housewives and entrepreneurs can open savings accounts with as little as 500 Naira (less than US$2) via our mobile app. Our ambition is to offer access to finance to 4.5 million farmers by 2023.
In terms of the female economy, FCMB has been at the forefront of women empowerment since 2015, when we introduced our micro lending initiatives. Today these initiatives have over 145,000 clients, with 98 percent being women. We adopted a group lending methodology, through which we disbursed a total of US$50 million in micro loans to women who live below the poverty level in Nigeria.
Alliance: How does/will FCMB intend to collaborate with the public sector/government to create a more female-friendly enabling environment?
Smith: FCMB is currently collaborating with some state governments on female financial inclusion programs in key sectors like education, creative industry and agriculture. We provide financial literacy training and plan to extend our She Ventures proposition – which is our women banking initiative – to these partner states. We also work with the local development finance institutions to disburse loans to female-owned businesses at interest rates slightly lower than commercial loans.
One area we feel we can further collaborate on with the government is in risk-sharing, where through the local development finance institution we can de-risk some of the transactions our female SMEs have – especially those that will lead to expansion of their businesses.
Alliance: As per the 2017 Global Findex data, women are still less likely than men to use financial services. Nigerian women are no different, with only 4 percent of adult women having borrowed money from a financial institution. What do you think are the main reasons for this gap, and how has your bank addressed this issue?
Smith: In my view there are a few main reasons. Fear of borrowing and not being able to repay due to the prevailing high interest rates is a key concern. And we have also seen that women may have some inertia toward risk taking. They also have relatively lower levels of financial literacy in comparison to their male counterparts. Women also suffer from a lack of access to collateral to secure loans.
We recently launched a zero-interest loan, where short-term working capital loans are given to select micro and medium-sized female-owned entities to assist them to scale up their businesses. We further support these businesses with training and mentorship programs during the life of the loan. Understanding that collateral is a major issue, we have risk-sharing arrangements with our partners, which enables us to minimize the request for collateral. We have already seen these measures improve women’s participation in the financial sector.
Alliance: How does FCMB differentiate itself in a crowded banking market? Is targeting women a part of this differentiation strategy?
Smith: We differentiate ourselves through our services and in-depth understanding of our customers’ businesses, which enables us to offer solutions to meet their respective needs. Our SME advisory team was set up to address gaps that could hinder businesses from accessing finance. The impact has been encouraging, and we intend to scale up the area a lot more.
Yes, targeting women is an integral part of our strategy, which is why we launched the She Ventures proposition to address the needs of our female-run businesses. Since the launch of this strategy, we have seen acquisition of women-owned accounts in the bank move from 11 percent of total acquisition in 2018 to 21 percent in 2019.
Alliance: Why did the bank decide to develop a strategy for the female economy, and what stage are you at?
Smith: Regular engagement with our customers led us into realizing there was a gap in our service proposition to the female segment of our customer base. We validated this hypothesis with research, including a focus group session with several female business owners. This led to what today is known as FCMB She Ventures. Also, our overarching ambition to constantly equip our valuable female business owners with the knowledge and techniques to thrive in the evolving business world, and at the same time reduce the failure rate amongst SMEs in Nigeria, played a major role in this business decision.
In less than 2 years, we have impacted businesses, given out loans, mentored and trained hundreds of women in business, and several currently have access to interest free loans. We are still in our infancy stage, but we are very excited about the progress we have made within this short period.
Alliance: How are you segmenting the female economy? What is your financial services and non-financial services value proposition to each segment?
Smith: Our current value proposition for women is focused on micro, small and medium enterprises. The commercial bank focuses on the formal SMEs, and our microfinance business focuses on the micro businesses.
Our value proposition for financial services includes the zero-interest-rate loans I mentioned earlier, which are offered to a select number of female-owned businesses who fulfil certain criteria. We provide loans to other qualified women-owned businesses, layering with risk mitigants where required. Furthermore, we partner with development finance institutions to provide funding, guarantees and grants to these businesses. Our businesses also have access to insurance and various savings products. In addition to this, we have trained our workforce to effectively attend to women customers, and we also offer mobile banking and other online platforms to ensure convenience.
On non-financial services, we provide access to information through our SME Advisory services. We also offer capacity building sessions and mentorship programs tailored based on business level. We are building a community for our women customers where they interact with one another through various online platforms and networking events. We also have partnerships with various third-party providers – including tax consultants, HR consultants, etc. – where our customers can access relevant services at subsidized rates.
Alliance: Capturing sex-disaggregated data is crucial to establish a baseline and monitor the program. Have you already started sex-disaggregating your data internally? Did you face any challenges?
Smith: When we started this journey 18 months ago, 98 percent of our SME accounts didn’t have a gender notation, and less than 1 percent of our businesses were classified as women owned. We embarked on a data clean-up exercise of our existing customer base, and I will say that historical data is now about 60 percent sex-disaggregated. We continue to work on this as we do not want any of our women business owner clients to miss out on the opportunities. We also now are seeing women coming forward to be recognized as a woman business owner, and this has also helped. To ensure that women’s businesses are distinguished going forward, we have amended our account opening documents to capture gender, and we believe this has been and is quite effective. It became even more relevant when we launched the interest-free loan, as we occasionally saw male-run business try to access this facility.
Alliance: Can you tell us about your overall internal diversity and inclusion strategy? What’s your vision on that front going forward? Do you have initiatives to get more women into leadership positions?
Smith: Our organization is quite deliberate in having a gender balance, and this is monitored and supported by both the management and board of directors. Currently 43 percent of our workforce is female, which is above our 40:60 target for 2019.
A study was carried out some years ago on why women dropped out of the bank at middle-level management. We saw that this period coincided with when they got married and started having children. As a result, we put in place some interventions like enabling women to work close to home and offering mentoring by senior colleagues, and we have seen a reduction in our attrition levels. Soon, we plan to introduce flexible work hours and have creches near office locations to further improve women’s ability to stay in the workforce after starting a family. Currently we have a 50:50 split within executive management, and we believe that these initiatives will help improve the ratio at all other levels.
Alliance: How did you first hear about the Financial Alliance for Women and why did you decide to join?
Smith: Once we decided to focus on women-owned businesses, we started researching and speaking to partners, including IFC. Some of our colleagues attended an IFC-recommended conference thereafter on women banking, and it was at that session we were introduced to Financial Alliance for Women. The value the Alliance brings to the table was very convincing, and as they say, “the rest is history.”