KCB chief executive Joshua Oigara bets on ICT to leverage earnings

Kenya Commercial Bank (KCB) Chief Executive Officer Joshua Oigara. [PHOTO: MOSES OMUSULA/STANDARD].

By EMMANUEL WERE

Kenya Commercial Bank (KCB) Chief Executive Officer Joshua Oigara is a shrewd manager. During a media interview in December last year, after being appointed KCB’s group chief executive, he demonstrated his embracing of technology as the modern way of doing business.

Mr Oigara’s desk was clear of paper; only a laptop and a smartphone lay on its surface.

Maybe it was a public relations stunt created by Mr Oigara’s handlers to showcase him as a CEO who understands technology and its importance in the financial services sector.

But nine months later, that impression seems to hold. Experts in the information technology sector and colleagues close to Mr Oigara, 38, say he is leading a quiet revolution in adopting technology and innovation to drive KCB’s growth.

Most profitable bank

KCB reported an 18 per cent increase in net profit to Sh7.2 billion in the six months to June 30, 2013, helped by cheap deposits and increased earnings from its subsidiaries.

 This ranked KCB as the most profitable listed bank on the Nairobi Securities Exchange. As KCB seeks to consolidate its position, it is focused on adopting five key pillars in its strategic focus. These pillars include technology and innovation, cost transformation, talent maximisation, consolidation of regional businesses and customer leadership.

The first two pillars — technology and innovation and cost transformation — are related. Technology, especially mobile and agency banking, are to be used as channels to deliver services to customers.

But on technology and innovation, Mr Oigara’s tenure got off on the wrong foot. In February this year, KCB hired George Makiya as its chief information technology officer. His brief was to ensure the bank fully maximised its information technology platforms across the region. Mr Makiya would be Mr Oigara’s first executive hire and also a “very trusted” right hand man. Adopting technology and innovation is important to KCB because it will help lower the cost of doing business.

For every Sh100 KCB earns, either as interest income or fees and commissions from ATM transactions, Sh51 is goes to operational costs, according to its half-year results for the period ended June 30, 2013. 

In banking jargon, this is a cost to income ratio of 51 per cent. The bank is aiming for a 50 per cent cost to income ratio by the end of 2013.

IT savvy

 This will be through encouraging more customers to use mobile and Internet banking. Equity Bank has a lower cost to income ratio of 49 per cent.

The need to fully embrace technology is why Oigara was personally involved in the head-hunting and recruitment of Makiya, according to sources who spoke to Business Beat.

 The two were said to have had a long-standing friendship going back many years, according to sources. But barley five months into the job, Mr Makiya left.

 Unconfirmed reports said the banking regulator, Central Bank of Kenya, had an issue with Makiya. However, Mr Oigara denied this in a response to Business Beat. “He left to pursue personal interests. He is in town and if you want to reach him for a comment you can do so,” Mr Oigara said during the press briefing of the bank’s half-year results last week.

Business Beat was, however, unable to reach Makiya.

This incident did not stop Oigara’s quest of forging ahead in driving innovation.

“He is always asking what technology can do for them and how they can get ahead of the rest with the technology,” said an industry insider who requested anonymity.

“He also has his eye on what other banks, like Equity, are doing and is keen on being competitive in this field.

“Equity Bank has in the last couple of months been rolling out technological innovations such as BebaPay, a partnership with Google that allows matatu commuters to pay their fare using a card.

John Staley, Equity Bank’s Chief Officer in charge of Finance, Innovation and Technology, has been plotting ways to leverage technology to stay ahead of the market. 

Card transactions

During Equity Bank’s half-year presentation in July, Staley said the bank is targeting an increase in the number of card transactions by clients.

The bank is also building a technology platform, which would not be rivalled by any other bank across sub-Saharan Africa, according to Mr Staley.

But even as KCB and Equity run neck and neck in the race to win over clients, KCB has managed to attract some top talent from its competitor.

As one analyst put it, “Now KCB has the human software to deliver.”  This follows a restructuring programme by the bank in 2011, when up to 15 senior managers left the bank. KCB hired Collins Otiwu as its Chief Finance Officer in July this year. Mr Otiwu, 39, was previously a finance director at Equity Bank.

Samuel Makome was appointed the KCB Kenya managing director. Mr Makome was previously Equity Bank’s managing director in Tanzania. 

Other executive appointments in July this year were John Kania as company secretary; he moved from Housing Finance, and Charles Langat to head its audit functions. Langat was recruited from an investment fund, Sovereign Group.

These were the first major changes in the executive management, which also signified Mr Oigara’s intention to surround himself with his peers.

“If you look at most of the senior management, we are around the same age of 39 and 40,” said Otiwu.