Can we say that the New Category-King is now evident? I think in the FUGAZ world, Zenith Bank has clearly overtaken GTBank as Nigeria’s leading financial institution. The impressive ascension of Zenith Bank is a case study for everyone: service excellence will win trophies in banking. Zenith’s technology leapfrogged and the balance sheet responded.
And there is a historical perspective to that: the best of Nigerian banking began when the new generation banks imposed new or higher fees – commission on turnover (COT) – and accelerated service in early 1990s. They reduced what used to be three hours of wasted time, in bank halls, to fifteen minutes – and Nigerians responded. Yes, Nigerians paid the fees but got out of the bank halls faster!
From that experience, it is evident that the most profitable bank customers want service, not just low costs. In other words, if your fees increase marginally and you deliver value, good moments will come.
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Zenith Bank’s FY 2020 results broke records: the Profit After Tax (PAT) of N230.6 billion, a 10.4% increase compared to 2019’s N208.8 billion, made it the first Nigerian bank to cross N200 billion on PAT. Hail the new king!
Now, everyone wants to be at the zenith now that Zenith is there; expect new playbooks from other members of FUGAZ.
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GTbank rose to the top for being a good storyteller and doing things differently, from its colour to ‘no gate’ style, so that the space can serve as parks for cars. GTbank was great at deploying technology, with innovative mindset, and it roared!
And then the hangover began. If you have been observant for couple of years now, where can you say that GTbank had/has led its peers in the banking sector? Its share price remained at the top not because it kept performing at a very high level, but because of the inefficiencies in our capital market, that’s why it’s still valued ahead of Zenith, the valuation has no basis in reality anymore.
Zenith Bank has grown over the years and continues to do so, Access Bank is acquiring everything in its front in order to play with the big boys, FirstBank is pushing but still struggling with marrying old and new generations; UBA is always distracted but refused to give up, but what can we say that the GTbank has done in the last few years, with respect to getting better? When you enjoy massive goodwill, you need to also work hard to retain it, never take anything for granted.
We have to congratulate Zenith Bank, for coming up with such numbers in the year of Covid, something to think about.
GTbank has the industry-leading cost-to-income ratio which does imply that it is the best managed bank out there
COT wasn’t introduced by the new generation banks. It has always been charged by banks on current accounts as far back as I can remember. I started operating a bank account in 1965.
They increased the amount to the point where it became significant. I knew in 2000s that for every N5 charged by Diamond, Union Bank fee was well smaller. So, the new gen bank charged more and used that to invest in better technologies.