Interview to Ms Nyambura Koigi, Kenya Post Office Savings Bank [Postbank]
Interview to Ms Nyambura Koigi, Kenya Post Office Savings Bank [Postbank]
Located in Eastern Africa, the Republic of Kenya borders the Indian Ocean and lays between Tanzania and Somalia and Uganda on the western side and is home to 34 million people. WSBI member Kenya Post Office Savings Bank [Postbank] is active in the extension of access to professional financial services to the population at large. News & Views has asked Ms. Nyambura Koigi, Managing Director of Postbank, to present the activities and ambitions of her institution. As President of the WSBI Africa Regional Group, she also carries a message to other African WSBI Members.
Q: Ms. Koigi, the mission of Postbank is to create a savings culture amongst Kenyans. How does your institution achieve this goal?
A: The vision of Postbank Kenya is to be the “Bank of Choice” while the mission is to provide accessible and sustainable banking and other related financial services through innovative delivery systems to the benefit of customers and other stakeholders.
We endevour to attain this great mission of creating and stimulating a savings culture, through dissemination of information, through financial education and targeted communications. With targeted communication, I mean being present at trade fairs and exhibitions, at district development forums, but also giving presentations in schools and colleges and participating at radio programs.
A concrete example of a savings education initiative is the programme we developed with the fishing communities in the Lake Victoria region. We helped them see the importance of savings. Together we identified their saving needs and recommended to them the most appropriate products for their businesses.
Postbank has been instrumental in working with other strategic partners in the design of posters to give savings education in a simplified way. We also work with university students and youth groups to promote entrepreneurship and small businesses and teach them about savings. For example we have been sponsoring the SIFE Kenya initiative (Students in Free Enterprise) to nurture entrepreneurial skills and encourage savings culture among the youth. Through these initiatives, Postbank is making a difference in the society and community we operate in.
Q: Which products are most successful in this context?
Savings products take an important place in the total product range of Postbank as the bank is not mandated to provide credit services. The savings products include the Postbank Savings Account, the Bidii account, the Save-As-You-Earn [SAYE], the Premium Savings account and the STEP Account, which specifically target students. The Postbank Savings account represents 68% of total deposit base, while the Bidii account is the fastest growing: it was rolled out in 2002 and now has 232,103 accounts valued at Kenya Shillings 2.6 billion [USD 38 million]. We also offer Fixed or term deposits.
Saving is very important for our clients, which are in the low and middle income segment of the market. They save for various reasons the key ones being for school fees of their children, for house construction and general home improvement, for starting or growing their businesses. An important stimulus for the savings effort has come from the Government: all Postbank’s savings products are tax free. The just approved amendment to the Banking Act [which became effective on May 1st, 2007] gives guidelines on the interest fees chargeable to savings and loan accounts. Though Postbank does not operate through the Banking Act, changes in the industry will indirectly affect the operations of the bank.
Postbank also offers payment services such as the Visa credit card [through the sponsorship of a commercial bank] and Money Transfer services through the Western Union brand. We offer disbursement and collection services to other financial institution [banks and MFIs] that do not have a wide-spread branch network to reach all their customers and also disburse Government pensions. Finally, Postbank has just entered into a partnership with an Investment bank as an agent in selling and buying of shares of listed companies through the Nairobi Stock Exchange. Postbank also offers safe custody services.
We do this guided by our corporate values of quality service, professionalism, integrity, teamwork and respect to customers. We are also socially and environmentally responsible.
Q: Which institutions (group of institutions) do you consider as your biggest competitors?
A: Well, I must say that more and more institutions now target the low end of the market, which used to be the traditional domain of Postbank. Key competitors include micro finance institutions and credit cooperative societies (SACCOS). Others include merry-go round (ROSCAs) at community levels and pyramid schemes. It is also interesting to note that main stream banks – there are 44 commercial banks active in Kenya – have gone down stream and are now targeting the bank’s traditional customers at the low end of the market. In this competitive environment, Postbank’s strong points are the wide branch network, our quality customer service, affordable products and proximity to clients.
Postbank is the bank for all Kenyans, that has been present for almost one century and therefore has a track record of stability. Postbank served Kenyans yesterday, it serves them today and will be there for them tomorrow, it is indeed a truly Kenyan bank of choice to over 1.1 million savers
Q: Kenya is a big country, with 34 million inhabitants. What branch network can you rely on to serve this population?
A: To serve the Kenyan population, Postbank has 1,247 employees and a branch network of 83 own branches and over 380 agent outlets. Seven more branches are scheduled to open by the end of this year. We do branch based marketing whereby staff from the branch go to the clients in the market places and in their businesses. We do not wait for the customers to come to us all the time, sometimes we go to the customers. We regularly visit institutions of higher learning, corporate organizations and government departments and our teams even pitch tents in high traffic sections of urban areas to give savings education and more so to open accounts.
Postbank also invests a lot of time, money and efforts in the development of automated banking solutions. Electronic debit cards are already available. We currently have 4 Automated Teller Machines and will install 16 more by the end of the year. Postbank is also member of Kenswitch (a consortium of banks), which enables customers from the member banks to access their funds through a network of over 83 Kenswitch ATMs. Plans are at advanced stage to join another switch[PesaPoint] which has a network of over 100 ATMs by the 3rd Quarter of this year and we will plan to launch POS terminals by year end. With this diverse service delivery channels, we are able to reach our customers and be truly a proximity bank.
Q: What do you expect from your WSBI membership?
A: We want to share experiences, best practices and research findings on all the current issues in banking and specifically in savings banks. This is taking cognizance of the fact that WSBI members have varied experiences and offer different products and services.
Q: Do you have a message you would like to share with the other WSBI members?
A: The banking industry is a highly competitive sector and we absolutely need to adopt relevant technologies in order to enhance efficiency and effectiveness and to remain profitable and sustainable. It is important for us to remember that among all the different banking institutions, savings banks stand out thanks to their familiarity and their financial solidity. These qualities and our close relationship, our proximity with our clients are an enormous competitive advantage that we need to leverage on and develop products and services that meets the financial needs of savings banks clients in 89 countries.
Q: As Chairperson of the Africa region what do you want to say to colleagues about the future challenges of savings banks in the region?
A: There is great need to concentrate and build our business around the areas of competitive advantage i.e. the mass customers who are loyal to savings banks. We need to improve service quality, we need to adopt appropriate technologies that will improve service delivery systems and bring operational costs down. This way, we will become more profitable and sustainable. I strongly believe we need to develop a home grown payment system to tap on the remittances by Africans in the Diaspora. We need also to form strategic alliances and collaborate among ourselves and with others for mutual benefits.
We have a huge un tapped potential which we can leverage on and serve our customers better.
