Coronavirus: Ecobank CEO says COVID-19 can boost digital financial services

Once the worst of the pandemic is over, COVID-19 could be “a great accelerator,” enabling the adoption of new technology in Africa, Ayeyemi said from Lomé in Togo. “It can be an opportunity for the continent and create new business models.”

Using digital channels rather than branches has raised fears that financial services may become harder to obtain for those who can’t afford access to digital tools. Ayeyemi has faith in the march of technology.

• “The world can evolve very quickly,” he said, citing the power of modern smartphones versus old IBM computers. “Digital can work and a lot of people will use it.”
• Older technology is becoming cheaper all the time, and financial services at their most basic simply require the ability to move information about money from one party to another, he argued.
• M-Pesa mobile money was able to gain widespread acceptance in Kenya from 2007 with a much less sophisticated technological environment than exists today, he said.
• “If you have phone that can talk, that is the bare minimum.”

READ MORE: Kenya: M-Pesa and mobile data boost Safaricom’s 2019 growth

“No-one has a template,” for how to manage a bank in such a pandemic, said Ayeyemi. But the bank’s diversified, technology-based model leaves it well placed to withstand the crisis, he added.

Ecobank operates in 36 African countries and claims to have the largest African presence of any bank in the world.

‘Free Trade delay needed’

In the short term, implementation of the Africa Continental Free Trade Agreement (AfCFTA) should be delayed due to COVID-19, said Ayeyemi.

• Deferring implementation of the pact would avoid problems posed by COVID-19 being attributed to the agreement itself, he said.  “There’s a problem of timing.”

Operating conditions for the bank will be “extraordinarily challenging” in coming months, Ayeyemi said when reporting the bank’s first-quarter results on 24 April. The non-performing loan (NPL) ratio for the first quarter increased only marginally to 9.9% from 9.7% at the end of December.

• Ayeyemi used medical metaphors rather than figures to describe the outlook for NPLs. “Does the patient feel pain when coming out of surgery?”
• The bank is in constant dialogue with its clients to identify actual or potential problems, he said.
• “An exogenous shock will go through the system one way or another.”

Transaction levels are down, and customers “are not doing what they used to do in the quantity they used to do it.” Some purchases, rather than being deferred, will never take place, he said. The bank is using staff on a rotational basis to keep working while minimising social contact.

READ MORE: South Africa’s digital Bank Zero: on track to launch despite pandemic

As for a timetable for the resumption of dividend payments, Ayeyemi said he would need to call Anthony Fauci, director of the U.S. National Institute of Allergy and Infectious Diseases, to ask him when the world will defeat COVID-19. Perhaps he should try another number: Ecobank in fact has not paid a dividend since 2017.

Bottom line: Tackling the new strategic challenges posed by COVID-19 at the same time as containing the financial impact and keeping shareholders on board will be a major comnbination of challenges for Ecobank.