One of Nigeria’s biggest players in the financial sector, GTBank has acknowledged the disruptive capacity of fintech to the industry and as a result is already restructuring its operations to be ready to accommodate whatever comes with it. The Bank with operations in other countries in West Africa made this know even as news filters from the sector of the birth of a mega banks through the likely merger of some of the big players in the sector. To be full ready for the likely tsunami that is coming, a source at GTBank says that the Bank is planning to restructure its holding company to give it enough elbow room to maneuver in the market. This said restructuring will allow the Bank to venture into and grow other businesses beyond pure banking, the source said.

GTBank has been operating a number of non-banking services such as GTB Asset Management for capital market services and GT Assurance, its insurance arm among others, but the 2010 regulation by the Central Bank of Nigeria (CBN) which forced banks to stop operating their non-banking subsidiaries put a stop to that project forcing them to either divest from non-core lending service or restructure as a holdings company. While other chose to divest, GTBank sold GTB Asset Management to another company which today operates it as Investment One while a consortium of investors acquired GT Assurance and renamed it Mansard Insurance, it is presently as AXA Mansard Insurance with investment from global assurance firm AXA.

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Speaking on the emerging development, the Group Managing Director of the Bank Segun Agbaje said that GTBank is not restructuring to offer more banking services that the main aim is to develop fintech products and build out its payments and fintech arms. Agbaje further highlights that “about 10 years ago, we made a decision then looking at the operating environment, that we were going to shed all our subsidiaries and become completely bank-focused.”

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He added that “everything we have seen over the last two to three years, has told us that it’s time to have a bit of a rethink.” Despite recording a 6.6% profit increase to ₦231.7 billion ($640.4 million) in 2019 and adding over 7 million new customers within two years, Agbaje isn’t satisfied. Sounding like a startup founder hungry for growth, he explained that pure banking isn’t growing fast enough. “Most banks are growing 5% to 7%. We don’t think that’s sustainable,” he added.

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“When you take GTBank, which has one of the best valuations in the banking industry, it is valued at a one time book,” he said at a recent social media event in Lagos. “Then you come to the payment space where fintechs and payment companies are being valued at 30x earnings. What is there not to like about this space?” he asked. Agbaje believes that by restructuring into a holdings company, the restructured entity will be able to pursue new growth prospects beyond pure banking. And he has his sights squared at the fintech services.

“There are other lines of businesses that are doing very well,” he was quoted as saying. “If you look at our financial statement, you will see that our payment business is growing by about 60%. So, that is an area we like.” GTBank’s lending service, QuickCredit, is an interesting example of how the bank is competing with fintechs. Last October, a financial consultant who has knowledge of the product told me the service is growing at an impressive rate. When the CBN pressured banks to increase their lending ratios, GTBank crashed interest rate on QuickCredit, making its loans cheaper than loans from startups like Carbon and Migo.

However, it is the payment business that Agbaje is most focused on. “About 30% of banking revenue comes from the payment space,” he told the crowd at the Lagos SMW. It is estimated that the payment market [paywall] could grow between $20 billion and $40 billion in the next few years. But fintechs are eating into this revenue.

Consulting firm, Frost & Sullivan predicts that Nigerian fintech revenues will grow from $153.1 million in 2017 to $543.3 million by 2022. “What this means is that 30% of banking income is easily at risk,” he explained. GTBank is trying to avoid the inevitable for banks. And in addition to building rival payment services, the Bank is scaling up its own superapp called Habari. Launched in 2018, it supports payments, music and video streaming, news content, the whole shebang. Habari is supposed to compliment GTBank’s digital banking app and the hugely popular USSD service, *737#. But so far, the app has garnered mostly negative reviews. Agbaje thinks they’re wrong.

“No matter what anybody says, it [Habari] is the most successful, integrated [and] interactive platform in Nigeria today,” he was quoted as saying. Regardless, GTBank is making a strong push into the fintech world. Its planned holding structure will support this drive. The competition between banks and fintechs continues, and GT Bank is leading the traditional players. Credit cards, debits cards, the emergence of card payments spurred commerce and made it easier for bank customers to access their funds.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry