It is exactly a year since Marc Holtzman was unveiled as Board Chairman of Bank of Kigali. In an exclusive interview with The New Times’ Peterson Tumwebaze last week, Holtzman discussed the bank’s up-coming 50th anniversary this December and gave an insight into the future of banking and what Bank of Kigali will be doing to ensure it retains its market leadership and relevance to customers.
Below are the excerpts...
First things first; how would you evaluate your efforts over the last twelve months as Board Chairman of Bank of Kigali, any quick wins?
Among the notable quick wins, we have successfully done the ground work for the bank’s digital transformation; our mobile banking business will be launched in the 1st half of 2017. Under Diane Karusisi’s incredibly effective leadership, we are also getting ready to launch BK-General Insurance which will provide great products for consumers in Rwanda and substantially help increase the national insurance penetration. The ultimate goal is to see total transformation to a truly 21st century bank catering for the financial and non-financial needs of Rwandans and East Africans at large. Looking ahead, 2016 has been a transformational year in which we think we have laid a firm foundation to support tremendous growth for the Bank in coming years.
A transformational year indeed, also considering that in January, you oversaw a major change of guard in the bank’s executive management when Dr Karusisi replaced Dr James Gatera, how would you assess the effect of the transition on the business performance?
Gatera did a fantastic job during his ten-year tenure. He provided exemplary leadership and Dr Karusisi, without a doubt, came in knowing she had some big shoes to fill. Fortunately for us, Karusisi has not only performed incredibly well in her new role but has also exceeded the Board’s high expectations. She has built very strong bonds with customers and has motivated our staff to serve with the highest level of professional integrity for which our institution strongly stands. She has also been omnipresent in the operations of the bank and her strong belief in technology espouses the true vision of where Bank of Kigali’s growth should focus not only over the next year but the next five decades, in order to better serve the people of this great country.
Since going public, on September 1, 2011 at Rwf 125 per share, how would you assess the Bank of Kigali share price performance over the period; what would be your advice to investors?
Our shares have done quite well. The share price has since doubled and when you consider the dividends that we have paid even in dollar terms, the picture is an impressive one. But we can do better and I am very confident that with more effective communication of our vision to the market and to our international investors as well as domestic shareholders, we shall see an even stronger performance in coming years.
It is already the 4th quarter of 2016, how has the performance of the Rwandan economy impacted on your business, do you see the Bank meeting its financial KPIs?
I am very happy with the performance of the economy and that of the bank. There is always room for improvement and we are always looking for ways to do better but we have done very well, so far; we should be proud of our achievements and accomplishments while we have plans to do even better next year.
Bank of Kigali has recently expanded its interests to insurance and financial technology businesses, in BK-Insurance and BK-Telecom, respectively, what informs this diversification?
It is a fact that today a Bank is an aggregator of financial services; a bank should provide services to facilitate every type of imaginable transaction service for the customer. Today a bank is not just a place where you keep money, it is a place where you pay bills, facilitate securities’ transactions, transfer money, or be able to, with total ease, organize a loan digitally or over a telephone. We are building that type of bank, which will be a one stop centre for our customers’ financial and non-financial needs--- everything under one roof.
While access to credit has improved in recent years, the big elephant in the room is cost of credit mainly affecting retail customers; recently Kenya passed a cap law on interest rates; is this an approach you would favour, if not, what remedy would you prescribe?
First, let me mention that we are fully committed to expanding our retail foot print and to making a major effort to serve the population of Rwanda and the region. Number two; interest rates are a function of risk and risk considerations in the market. But as this market becomes more developed, with a more predictable environment for investment, I believe interest rates will decline organically. That is because the competitive forces in the market will demand that interest rates become more competitive especially considering that inflation is relatively modest in this market. The Kenya approach is very dangerous because the minute you start imposing government mandated regulations it has the opposite of its intended effect. In Kenya, basically almost all retail and corporate lending is frozen because the banks can’t afford to lend at artificially low rates that do not compensate for the risks that the institutions have to take. It would, therefore, be highly dangerous to repeat such policies here in Rwanda or elsewhere. I am convinced that over the short or midterm period, interest rates will decline to more manageable levels and that market forces will drive rates down.
It will be fifty years this December since Bank of Kigali’s incorporation, in 1966; how do you see the bank evolving while ensuring it provides competitive services in all major aspects, over the five decades?
It is a great consideration because surely at 56-years old, today, I will not be here in five decades; it is the work that we do today, the steps that we take, the things that we do and the energy that we invest which will determine that outcome. Miklos Dietz, Global Head of Banking Strategy for McKinsey, has said that banks will change more in the next ten years than in the previous three hundred years. It means that today we can have an impact that is truly transformational more so than at any other time in the history of Banking and Finance. But it also means that we have to get it right because the price for getting it wrong is unthinkable. So a great deal of responsibility rests on our shoulders. For me, it is very exciting. I know we are going to get it right, it is absolutely thrilling and at the core of it is serving our customers and making sure that we provide the best service at the best price at the best value in the most efficient way possible. If we do that and if we continue to do that in 50, 150 or even 250 years from now, I believe that we will be a very dominant player in this market and beyond. It is also extremely fulfilling to know that we can have such a positive impact on the lives of our customers.
Yet there are terrifying headlines about banking, almost daily, in the region and beyond. Lately, seemingly robust banks have been in trouble, Chase Bank in Kenya, Crane Bank in Uganda, the scum at Fargo, all these incidents obviously hurt the banking industry whose business is founded on absolute confidence; so how do you keep customers trust in spite of the negative headlines about the sector?
It is simple.We must keep doing the things that made us great, that is, we serve our customers with respect, with integrity and we keep true to our values and we never forget from where we came and where we want to go; it is about character, integrity and ethics.
Your last remarks?
It is been a great fifty years for this bank and I am honoured and proud to make my small contribution and to be part of this wonderful team. Much of our growth has been realised in the last two decades thanks to the unity and stability under President Paul Kagame’s inspirational and amazing leadership. The President’s vision for the East African Community to promote a free trade zone that will ultimately one day even share a common currency is a great aspirational goal.