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Stanbic’s Mweheire no longer worried about fintechs ‘taking our lunch’

Patrick Mweheire
Stanbic Bank Uganda CEO Patrick Mweheire. Image credit: SoftPower News
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The Chief Executive Officer (CEO) of Stanbic Bank Uganda, Patrick Mweheire says banks are no longer worried about fintechs eating into their market.

Why? Because, according to him, there are so many things that traditional financial institutions can do for a customer that fintechs are yet to achieve.

The most important aspect Mweheire highlighted while talking to Cedric Babu is that banks have mastered the art of building trust and relationships with customers, a major aspect of financial transactions that fintechs are still grappling with.

“At the end of the day, I think banks have one competitive advantage… we own the customer. So, we have a customer relationship… even though there might be some other functionality that might come from a third-party provider, that might enable a payment or just make something simpler for you… but the core of your relationship belongs to Stanbic,” he said to Babu who was interviewing him for UBC TV.

“And I think if banks can remain core to managing just a relationship, they will continue to win.”

A 2018 global report on fintechs showed that though they were revitalizing the customer financial journey by providing a convenient system and offering a client more authority on their transactions, fintechs were still grappling with winning trust.

“… financial services customers have greater trust in the brands of traditional firms versus those of FinTechs,” said the report.

Concurring with the report, the Stanbic Bank CEO said that fintechs have yet to find means to penetrate their customer.

“I think if you had asked me five years ago, I would have argued that we were under major disruption by the fintechs and they were going to take our lunch. I’ve completely changed my view now because I think many of those fintechs can never really penetrate the customer,” he said.

“… fintechs which start in a garage with a few guys have found it very difficult to go backwards. So, in a way, we found that we are in a very friendly ecosystem where we are complementary to each other. Each one is gonna be good at what they are. We are good at managing money, risk and having the capital. They are good at moving quickly and creating some really nice functional and customer experience things. And then we all find a happy medium.”

According to Patrick Mweheire, financial technology startups also face challenges of regulation and finding enough financial backing.

“They’ve failed to backward integrate and own the customer because there are two barriers entry: one, in order to be a bank you have to have capital and there are minimum capital requirements and there are also minimum compliance requirements and then it is a heavily regulated industry,” he said.

“… but I think the argument that they are gonna come and become banks is probably behind us now.”

In the 2018 report on fintechs, LinkedIn Vice President of Global Marketing Solutions Penry Price noted that fintechs that have succeeded are those that are identifying “a customer-centric focus that fills in gaps left by traditional firms.”

“These gaps opened the doors to FinTechs, but trust in traditional firms remains important to customers,” Price said.

See: What investors are looking for in Africa’s fintech sector

The report observed that both traditional and FinTech firms stood to gain from a symbiotic, collaborative relationship.

“With more than 75 percent of FinTech firms identifying their primary business objective as collaborating with traditional firms, it is essential that both FinTechs and traditional firms transform their business models by collaborating to drive innovation while retaining customer trust,” the report said. “Without an agile and committed collaboration partner, both traditional and FinTech firms risk failure.”

Locally, aside from collaborating with fintechs and telcos, banks have developed their own digital banking systems and embraced agent banking to easily scale customer-bank interactions.

For instance, Mweheire said that while Stanbic Bank has “about 80 branches”, they have more than 2000 banking agents.

“But banks have stopped, really, being a measure of distribution because we recently launched agency banking. So, in addition to the 80 branches that we have, we have almost 2000 agents…,” he said

“So, branches have moved from being just the only way you deal with your customers. In fact, as I speak now almost 85% of all our transactions go through either digital. Only 15% only come through a physical branch.”

Related:

Kenya’s Cellulant to create single API payments platform for African Fintechs

How Africa is embracing WhatsApp banking

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