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How strategic focus on SMEs stood out Fidelity Bank in sector development—Okonkwo

The Managing Director/Chief Executive of Fidelity Bank Plc, Mr. Nnamdi John Okonkwo has given insights on the innovative strategies that grossed the bank’s growth and development activities in the Small and Medium Enterprises (SMEs) sector of the economy.

Explaining more in an interactive media chat with select editors in Lagos, he said ever since he was appointed on January 2, 2014, from his former role as the Executive Director of South Directorate of the bank, he has in the last three years moved the bank higher on profitability, going by its 2017 audited financials recently made public by the board recently.

He said the core mandates of the bank including SMEs, Consumer Finance and Infrastructure financing have received unprecedented attention and strong capital inputs under his watch.

According to him, “The Non Performing Loans (NPLs) you see in the banking industry are not even predominantly from SMEs. Fidelity approaches SMEs lending from a different strategy completely. When we started supporting SMEs, we did not want to use risk asset penetration strategy. Businesses fail either because owners borrow for the wrong reasons or they don’t know proper book keeping and there is nothing tying them together and preventing them from behaving otherwise. When a significant percentage of businesses go bad, there will be a spike in bad loans”.

Continuing, he averred that “Because of this, about eight years ago Fidelity Bank set up a division to understand SMEs and train people in that area. The division was headed by a General Manager. We divided SMEs into general SMES and managed SMEs. We use the cluster approach to manage people that have similar needs.  You can have 500 people who have similar needs and talk to them as an association. Those that do not have proper book keeping, you make it clear to them that we need to see your business through your record keeping and we train them to imbibe and inculcate these habits.

“Recently, our people spent two weeks in Aba, in the shoe and leather segment of the market. Today, we have a thriving branch there, with the Bank of Industry (BoI) approaching us to do a collaboration. What they want from us is to use our office to provide money to support people in that market because our model is working. Now, if any member of the cluster defaults, the other members will come against him or her in mutually re-enforcing manner. Our products are specifically designed and if everybody in a particular cluster is facing bad time, we will know but in a situation where only one person is not repaying, we know that person is doing something wrong. So that’s the way we approach the cluster SMEs.

Okonkwo revealed further that “For the stand alone SMEs, we have developed templates. For instance, if we check transactions across industry over a period of time, we can tell what kind of SME a business is, using account statements. That way, we can query inflows and outflows and ask questions where there are gaps – we will ask why you are not selling or are you deliberately stocking up, where we see stocks growing higher than demand. Yes, we are that detailed! So the awards we keep winning on SME banking is an outcome of a deliberate strategy”.