Nairametrics| Suntrust Bank, Nigeria’s premier Fintech bank recently released its financial statements. Profit after tax grew from N121.8 million in 2015 to N212.7 million in 2016. The bank also grew its deposit base massively by 432% to N4.2 billion, a big achievement for a bank operating in a niche space. The bank focused its lending on SMEs, retail consumers and emerging corporates. In short, all the spaces the regular banks are playing in.
While the bank has not stated the demographics of its deposit base, surely it cannot be an equal proportion to all three tiers. The best move for the bank would be to focus on SMEs and corporate lending. The absence of a branch spread means it is unable to build the required relationship needed for successful consumer lending. The tough macroeconomic conditions will leave most consumers with less funds in their pockets and many struggling to survive. A random survey carried out by Nairametrics revealed that many consumers had never heard of the bank before. How then will its retail banking work?
The banks decision to lend to the agro value chain is also flawed as agriculture requires long term capital. For a bank that is just a few years old, and with a capital base that would rank it as Tier 2, agro financing will put a strain on its reserves. Agriculture is mostly practiced in the outskirts of town and far flung areas, places in which Suntrust barely has any presence.
Pursuing all types of lending will leave the bank playing second fiddle to the larger banks. It therefore must find its niche and stick to it.
