By John Manning – john.manning@internationalbanker.com
The Tanzanian economy has historically been, and continues to be, dominated by the agricultural sector. However, with the development of infrastructure as well as legal, financial and political systems, other sectors are recording a good growth rate and claiming larger shares of GDP. Output from the construction sector grew by 15 percent in the third quarter of 2014, in addition to the transport sector, which grew by 13.9 percent. A wider range of sectors are being supported and given the tools to expand and succeed. At the centre of this economic progress is a strengthening banking and financial-services sector. Individuals and businesses of all sizes are being presented with an increasing number of options when it comes to their banking and financial needs, and these options are at the very heart of economic and social development across the nation. The banking sector across East Africa has achieved significant growth and development over the past 10 years. Tanzania’s banking sector has been no exception to this upward trend and has established itself as a core component within the East African banking industry. The banking sector in Tanzania is becoming increasingly effective and competitive through the development of local infrastructure and technological advances combined with increased regulatory structures within the nation. In particular, the financial regulator in Tanzania has been actively engaged in deepening financial- market activity in the country.
Jacqueline Woiso, Senior Vice President & Deputy Chief Executive Officer at Bank M Tanzania plc
A growing player in this burgeoning and vital industry is Bank M—a successful and well-recognised commercial Tanzanian bank. The Bank of Tanzania, the central bank and financial regulator of the nation, issued Bank M the license required to operate as a commercial bank in the United Republic of Tanzania in February 2007, and soon after, Bank M began business operations— launching in July of the same year. Bank M operates as a public company and has expanded over its almost eight years of existence and now has five branches in operation across the nation—with the head office on Ocean Road in Dar es Salaam, three additional branches across Dar es Salaam and the remaining two in Arusha and Mwanza. Since its launch, the bank has vastly expanded its range of services and products. This has come to include wholesale banking, corporate banking, sovereign banking, as well as institutional and private-banking services. Based on its effective and innovative corporate-banking focussed strategy, Bank M is now amongst the top eight banks in the country. Bank M has a five-year business plan in place designed to deliver organic growth. The bank has outlined plans to carry out a number of acquisitions, capturing the market opportunities available in neighbouring countries such as Uganda, Zambia and Rwanda through acquisitions in these areas. Bank M has a clear goal to eventually become a, if not the, leading regional bank in sub-Saharan Africa. Management of the bank’s business is led by Ms Jacqueline Woiso, who has identified the bank’s three-pronged strategy for geographic expansion: firstly, to open four new branches within Tanzania; secondly, to launch the first mortgage-finance company in Tanzania in partnership with world-renowned international financial institutions and two reputed local partners; and thirdly, to expand Bank M’s footprint in the region through a non-operating holding company set up in Kenya, which is regulated by the Central Bank of Kenya. This holding company has already concluded a deal for acquiring a majority stake and the management control of a Kenyan bank. Bank M will also look to expand in Malawi, Zambia, Mozambique and Democratic Republic of Congo over the next five years.
As a public company, Bank M has a keen focus for efficiency and delivering results in every area in which it functions in order to deliver returns to its shareholders. Bank M has an authorized share capital of TZS 100 billion and currently has a paid-up capital (PUC) of TZS 54.711 billion, which at a level of 265 percent is significantly higher than the minimum mandated core capital stipulated by the Bank of Tanzania. Bank M has three leading business groups based in Tanzania as major investors, with wide-ranging trading, manufacturing and real estate business interests in the East African region. In addition, Bank M has as an investor the principal partner and founder of the largest law firm in the country as well as PRIDE, the largest micro-finance institution in East Africa as a shareholder. With these types of investors backing the business, Bank M is able to keep in tune with the financial and banking needs of the wider economy.
Bank M’s operations focus on corporate and investment banking. The primary focus of the bank is to target upper-end mid-market and corporate enterprises in Tanzania, both in the manufacturing and trading sectors. As part of this work Bank M concentrates on developing a niche in corporate banking and market-activity business, with particular emphasis on debt and forex (foreign exchange) markets. Additionally, Bank M has investment-banking capabilities designed to handle advisory services on raising debt and equity capital. It also excels in the area of working on debt-syndication and M&A (mergers and acquisitions) deals. Bank M plans to open a subsidiary, Private Banking Business Group, specifically set up to cater to the needs of high-net-worth clients through advice and wealth-management services. The cornerstone of the corporate and investment-banking business plan of Bank M is to address liquidity needs of local manufacturing and trading businesses. The bank helps to supply innovative delivery channels and products through highly skilled teams of customer-care and relationship managers. In addition, Bank M has a well-researched yet aggressive business-acquisition strategy that balances growth needs with judgements of credit quality.
Bank M is an innovator when it comes to financial and banking services—identifying liquidity needs as the primary concern for business in Tanzania. Bank M, therefore, focuses on creating delivery channels and bespoke products to meet business needs head-on. This is achieved through the application of a highly skilled workforce. Employees at the bank are trained to offer a high calibre of customer care and apply first-rate relationship-management skills. Bank M is known for its commitment to superior service—focussing on targeted and customised solutions to meet the needs of each business to the most efficient and effective extent possible. The bank is also known for providing excellent corporate advice—offering better solutions than competitors—that is backed by research and a holistic approach, based on high-quality products and services. All staff are trained and supported with a culture that develops skills in line with the bank’s excellence at all levels. The Board of Directors and executive management of Bank M strongly believe in and are committed to the recruitment, empowerment and the resultant development of Tanzanians into the dedicated management workforce of the bank. To this end, the bank believes in recruiting and promoting Tanzanian citizens to all levels of the bank. In line with this commitment, the bank commenced operations in July 2007 with all management and supervisory positions in the bank, barring one specialist senior-management position, manned by qualified and trained Tanzanians recruited from local financial-services businesses. The bank’s management applies a leadership style that combines the values of the “coach” and “pacesetter” as well as being ”definitive” and “affiliative”. Bank M encourages big thinking and aims to create leaders capable of achieving lofty goals while applying fairness in dealings and leading by example.
The key to the standout success of Bank M is an understanding of the constantly evolving commercial-banking needs within Tanzania. Renowned as an innovative leader in the Tanzanian banking market and with a keen appreciation for liquidity needs, Bank M has launched a range of products and services designed to give improved access to funds—offering flexibility and convenience to customers. In particular, it has the Money Round the Clock service. This service provides a packaged delivery channel, which ensures that Bank M can offer customers an unparalleled 24/7 banking experience. Bank M is open from 8 AM to 8 PM every day—a standout level of service in the banking marketplace, even when looked at from a global perspective. Bank M understands that clients need access to their cash to function and removes friction from business productivity. Recognizing that cash is an important component of payments processing, it offers corporate and institutional clients flexibility through being able to process cash transactions during the 12 hours that the bank is open each and every day. This facility, in addition to reducing the risk of carrying cash, provides clients with better treasury-management capabilities and further allows for better management of capital and lower interest costs to clients. Another revolutionary innovation from Bank M is its Money Safe service. This service is applied in case of any emergency-cash banking requirement that a client experiences after 8 PM—the service provides customers with a well-secured Night Safe facility. When a customer subscribes to this service, Bank M provides them with secure cash boxes with specially prepared bank seals, which are tamper-proof and also come with a combination key allowing safe and secure access to the Night Safe facility. Money Mann is another service unique to Bank M, in which the bank will pick up and deliver cash to or from client offices in Dar es Salaam using armoured vehicles, which are on long-term lease arrangements with Ultimate Security Limited (Ultimate), the largest security-service provider in Tanzania, and G4S, a renowned global brand in security services. Money Mail adds even more convenience to customers’ financial-transaction needs. The Money Mail service allows for all non-cash banking documents (such as cheques for deposit, applications for letters of credit and telegraphic transfers, etc.) to be picked up and/or delivered to or from client offices. For pick-up and delivery, Bank M uses the services of both in-house and outsourced couriers from companies of impeccable reputation. In order to ensure security and confidentiality, the couriers are specially trained to use specifically designed Bank M Money Mail bags, which are secured with specially prepared bank seals. All of these products and services mark Bank M as a standout competitor in the commercial-banking marketplace.
Bank M aims to be an effective and excellent corporate bank with superior processing skills and bespoke customer-focused products. The bank has set in place the right people, products and delivery channels to provide customer banking with precision and comfort at a time and place of its choice. Bank M is so confident in its delivery skills that it is the first bank on the African continent to offer customers a Service Standard Guarantee (SSG)—the Bank M money-back guarantee. This first-of-its-kind offer means that Bank M ensures it meets its promises and commitments in full and on time to clients. If the standard is not met, clients are compensated at a pre-agreed rate in a transparent process—again marking out Bank M as a bank that seeks excellence at all levels of operations. The management of Bank M dedicates a significant amount of effort towards conceptualizing products and designing them with twin objectives of meeting customer’s expectations and controlling the operational risk attached to a product. The bank strives to simplify business processes and to develop a stable portfolio of core products. Additionally the bank is particularly adept at managing complexity through systems, structures, procedures combined with a lean organizational matrix, technology and group decision-making. Products are put through a rigorous internal testing and approval matrix at Bank M, whilst applying the key guiding principle of providing customers with “innovative and premium products”.
Technology has accelerated growth across the East African financial-services and banking sectors. Technology also helps businesses grow and develop and individuals progress in life through improved skills and communication channels. Bank M recognizes the power of technological development both for Bank M’s business as well as in its clients’ businesses. Bank M prides itself on keeping pace with technological developments—creating and providing technological solutions in its service and product offerings to clients. Bank M actively works to develop innovative products, services and delivery channels and invests substantially in acquiring the latest in banking technology hardware and software. The bank had acquired and implemented in 2007 as its core banking solution the latest version of FLEXCUBE from Oracle Financial Services Software Limited (OFSSL)—currently the largest-selling banking-software application in the world. In addition to this, the Interbank cheque-clearing system of Bank M is driven by the latest Cheque Truncation System from NCR—the first of its kind to be installed by any bank in the Eastern Africa region. Bank M also became one of the first in the region to launch straight-through processing for its funds-transfer business by acquiring the Electronic Messaging Service (EMS) from OFSSL. Bank M implemented a state-of-the art Internet-banking solution, created by OFSSL—which also developed the bank’s website. Bank M recently became the first bank in the country to migrate its email platform to the Cloud, utilising the backbone structure provided by Google Apps. And as part of its innovative technological work, Bank M has been striving to increase the number of automated processes involved in providing banking products and services—to enhance service efficiency to the best possible extent. Bank M is usually the first-to-market with updated products that address changes in market conditions—offering customers advanced solutions and modern banking options as much as possible. Bank M also understands the important role that security plays side-by-side with technology. Overall, the bank has invested a considerable amount of capital, time and human resources into acquiring and utilizing the latest in banking technology hardware and software. The bank also understands the importance of balancing technological solutions whilst continuing to provide face-to-face services to meet customer needs most effectively. The bank’s business model is client-centric and along with automation, maintains a client coverage ratio of 1:3 to provide a personal touch in its client dealings through a high-calibre, customer-friendly frontline of staff and a large relationship team. This exceptional framework has the potential to launch Bank M to the position of market leader in the business—the bank’s core strategic goal.
Bank M is poised for further growth as Tanzania’s economy progresses. The banking sector, with Bank M as part of it, will play a central role to this progress, working hand-in-hand with businesses and individuals to meet their financial needs. The Tanzanian economy is expected to grow by more than 7 percent through 2015. The East African region is forecast for continued economic growth due to the discovery of significant deposits of oil and gas in almost all of the countries in the region. Economic expansion will most likely attract significant FDI (foreign direct investment) into the region, which will result in growth of infrastructure, manufacturing and service sectors—thereby creating significant employment opportunities. Inflation will also need to be managed carefully—most recently inflation was recorded as edging higher to 4.2 percent in February 2015 from 4 percent in January 2015. The IMF (International Monetary Fund) has also voiced concerns that the budget implementation for the current fiscal year would be challenging for the Tanzanian central bank. This is due to missed revenue targets combined with delays in budget financing from international donor agencies. The IMF has also noted that despite a strong growth outlook for 2015, Tanzanian officials need to keep a firm grip on public spending. Bank M is always ahead of the curve when it comes to identifying business needs and restrictions. However, risks to the economy still remain a worthy concern. To date, Bank M has focused on large business families and successfully brought to its books the top 300 family businesses in Tanzania by pioneering the cash-management, funds-transfer and Internet-banking service areas of business. While this segment will continue to retain the bank’s focus, Bank M is also poised to focus on institutional banking as a key driver of growth over the ensuing five years. The bank and its management have established strong relationships with institutional-banking clients and will have the ability to leverage these relationships into lucrative business opportunities. Institutions involved in social and infrastructure-based projects will have access to vast resources over the next few years. They, therefore, offer excellent potential for growing the bank’s deposit base and facilitating balance-sheet growth. These institutions require banking services with efficient transaction-processing capabilities to seamlessly transfer funds to beneficiaries across the country—services that Bank M can provide effectively. The ability to serve clients efficiently in the constantly evolving and developing market conditions of Tanzania is one of the many productive attributes that has led to Bank M’s success over the past eight years. If this approach continues in equal, if not better, measure then Bank M looks set to reach its target goal of becoming the market leader in its sector and beyond.