Rwanda has done a lot to upgrade its banking sector as well as the service sector in general but we still lack that final something for making us world class. We have tried to seek foreign buyouts of our banks such as BK and BCR but the solution lies within us.
I bank with BK simply because they are the only bank that does the foreign transfers that I need; however if I had the choice I’d go elsewhere.
The staff are lovely, and the service has gotten better the longer they have known me. I have got to know them well and count some as friends; they too have numerous ideas on how to implement new changes to improve service but are often ignored.
I could write a catalogue of complaints about BK but that would be pointless; I will instead focus on the positives: they have a good reach nationally, their brand is slightly up market compared to Bank Populaire, well capitalised, their staff is experienced and well trained.
So what is BK missing and why would it want to get a foreign investor when it has all the trump cards? It is impossible for a public sector civil servant to deliver private sector services; the two mindsets are completely different.
In order to deliver banking of a world class standard BK will have to privatise; just simply in order to compete with the likes of KCB.
BK would be the perfect pathfinder into the East African economy much like KCB is doing for Kenya; banking is always the first pioneer business into an emerging economy because it attaches to every form of business possible.
The very fact that it is state-owned creates a comfort margin that other banks do not have; this comfort margin is cancerous to a company trying to compete in the regional market.
Any successful bank has a foreign dimension to it; by setting up foreign branches a bank is sensitised to the needs of various clients in differing markets.
KCB stole a march on BK by setting up a branch in Kigali before BK did the same in Nairobi; but time is on our side because the time it takes for KCB to penetrate the Rwanda market BK will have had time to respond in kind.
Simple things would help like: copying the queue management system at BCR, having withdrawal slips so you don’t have to carry a chequebook, more computerisation, less paperwork that creates mounds of data that hide fraud.
What BK fundamentally needs is new financial products to sell to clients; it needs to expand its revenue flows away from account subscriptions and interest. Above all BK needs a killer instinct; it’s a big bad market out there, they need that ruthless streak that less parochial banks have.
BK could be Rwanda’s pathfinder into EAC, so could BCR, or BP; what we need is public floatation and state divestment from the banking sector. Can one play striker as well as referee? What if you’re offside?
Even if we keep a state-owned share in the banks we have to defer to those who are in the private sector. We need a review of our banking sector as a whole; they need new business models, new strategies, new investment, new ethos, and a new outlook.
That can only come with change; a man cannot change unless his circumstances change. In order for BK to change its mindset, its circumstances have to change; so please give me a chance to buy BK shares and I will do it.
Every free-trade bloc grapples with the dilemma of state ownership; it is sometimes necessary to have state investment therefore ownership but less is better. In all East African countries we have this phenomenon but it will have to end in order to introduce true competition.
We had a vacuum; we created state companies to fill that vacuum and now they are an obstacle to competition.
Liberalising our banking sector should generate inbound investment as we as consolidate local capital; but this has to be done in conjunction with social security funds and insurance companies.
BK, BP and BCR are ready to take on the region they just need to be weaned off government funds and learn to stand for themselves because that is the only way they can change their mindset and get that “killer instinct” to compete out there. It’s a dog eat dog world out there and we need to sharpen our teeth.