ALAT by Wema: The Other Side of the Story (Part 1)

Full Disclosure: I’m on the team behind ALAT. This is my personal recollection (a memoir of sorts)and not an official narration of events. It’s a pretty long read.

Wema Bank was on life support 10 years ago. The bank had negative capital, most of the staff where lethargic and belonged to the old guard, the customer base was almost non-existent compared to most banks, operations were severely and acutely archaic and people went home not knowing if they would have a job the next day.

We can try to talk about how the bank got into this position but that’s not the purpose of this post.

9 years ago, a new management came on-board, led by Mr. Segun Oloketuyi. The first point of call, resurrect the bank. That was priority number one. This meant doing a few things, most notably, shrinking the bank’s scope of operations from National to Regional. Next, selling the vision of the future Wema Bank to investors, to raise funds to reverse the negative capital position, among other things. The team was successful on both fronts.

One thing that was clear back in those early days of the new Wema was that we could never win in brick and mortar banking. You probably know more about why this is/was the case than I do. So, a lot of effort went into building strong competence in technology. It wasn’t long before we launched our Mobile, Web and USSD apps (pretty much like every other bank).

The bank forged ahead, growing steadily, fully repaying its CBN loan, gaining more market share and eventually regaining its National Banking License. But…

The damage done to the Wema brand in the previous decade was proving tough to repair. Wema had (and still has) one of the best electronic banking platforms in the country. But not enough people cared to try it because they couldn’t see themselves banking with Wema in any version of reality. This was especially tough for our sales teams because they had to work extra hard to bring in new business. The domino effect of this was that, the top and bottom lines were not growing fast enough.

Enter 2 years ago.

Paraphrasing Mr. Oloketuyi’s plan, the strategy was: Resurrect, Stabilize and Grow. We were now in the growth phase but something different had to be done if we were to get different results. Around this time, the bank’s most senior executives began to conceptualize digital banking within the Wema and Nigerian context. To them, given our market position at the time, there was no scenario in which we would organically become one of the Top 3 Banks within a reasonable timeframe, operating a brick and mortar strategy. M&A was an option but for our unique situation, the acquisition and integration costs would wipe out any gains we would look to make in the short to medium term, with long term gains being debatable. The only field that seemed blue ocean, with the only limit being the human mind and not necessarily “cost of materials” and which no bank had been able to stake any meaningful claim to, was digital banking.

What is digital banking within the Nigerian context? (50 Marks)

This was the question these executives grappled with. It is easy to be tempted to assume a blind copy and paste of the strategy and operations of the popular digital banks you know of around the world would work in Nigeria. Your assumption would be wrong. To answer this question, the bank’s most senior executives engaged the brightest minds within the bank, within Nigeria (inside and outside of Banking) and outside the country. In addition to this, the bank set up an Innovation Lab (which I was privileged to run for a while) to start to experiment with some ideas and concepts around financial technology and digital banking (the most public of these experiments being the now retired BuxMe).

It took time, a few successful and failed experiments and a significant amount of resources but answers started to trickle in. The answers were in 3 broad categories: The anatomy of the Nigerian Consumer; Digital Financial Services that Nigerians would actually pay to use; The opportunity for Wema Bank.

We learnt obvious things like the acute skepticism of the Nigerian consumer and less obvious things like people not minding who offered a service as long as it met a genuine need and as long as they could figure out the service without stress and/or human intervention. I think the recent MMM saga helps reinforce the second point. There were other more concrete things too that I’ll skip for now.

So, armed with a few pieces of the puzzle, the bank setup a new structure (completely void of typical big corporate bureaucracy), put together a “Special Forces” team, got an experienced leader, Dele Adeyinka, who had led the bank’s electronic banking transformation, to run it and ALAT was born. The story behind the name ALAT is for another day but just know that we reviewed over 100 Names from various sources including some of the brand experts you know and respect and ALAT just struck a particular Nigerian chord in most people who heard it (who were also in our target audience). But I digress…

With a team of dedicated individuals set up, the next task was to solve for delivering some of the “banking” table-stakes “branchlessly”. When you strip away all things fancy, a financial services provider focusing on banking must first enable potential customers do the following:

  1. Open an account
  2. Provide means for an account to be funded and withdrawn from

….while complying with the laws of the land, in our context, the CBN. As we say in product management, the 2 items mentioned are Epics that can decompose into multiple features. Without them, you can’t even compete. Its like saying you’ve built a car but there is no engine or power system. Every other idea or initiative, rides on these 2 things.

After much toiling, we landed on the solution (first, for the banked):

  1. Open your account using just your BVN and phone number
  2. We’ll verify your documents (which you upload in-app) and address using our own fully automated, in-house built, Back Office System (BTW, i’ll drop this free-of-charge: the mobile/web app is NOT the digital bank. Its just a channel for the digital bank)
  3. We’ll enable you fund your account using any local or international bank’s card (cue in the lesson’s learnt from BuxMe) or via standard inter-bank transfer.
  4. We’ll enable you choose from 3 card designs and deliver it to you anywhere in the country for free (the card is also free).
  5. We’ll enable you activate your new card and set/change your card PIN in-app. We’ll also enable you choose what channels your card can be used on (ATM, POS and/or Web) and what country it can be used in, over a specified time duration, in-app.

As interesting as these things sound, they are still table-stakes. They are addressing the 2 Epics I mentioned earlier. If we didn’t have them, you would have to go to a physical branch and we would only be deceiving ourselves. Other bank’s (including Wema) have some of these things is one shape or form but no one has all. We achieved a few “firsts” in designing some of these table-stake solutions…and made new friends as we had to partner on many fronts.

Now that we had table-stakes on lock-down, we had to solve for enablers (ensuring that people can do everything they want by themselves on our app, beyond account opening and funding), delighters (to make it easier to answer the question “why should I bank with you?”) and disruptors (to do old things in new ways or discover completely new things to do).

Delighters

Some of the data from our customer research showed that Nigerians struggled with Saving. Now, Saving within the Nigerian context has 3 broad categories. We’ve built a product for one category (Targeted Saving, which in itself has 2 sub-categories), with the other 2 on the road-map. It turns out that Targeted Saving was an easy delighter. Interestingly, most banks (including Wema) have some type of targeted savings product. The reason for their poor performance, compared to what we’ve seen on ALAT, I’ll share in another story. We solved the problem of Targeted Saving and added something extra….10% interest per annum. A lot of concerned folks have questioned the logic of this high interest rate on savings. Well, the 10% interest p.a. is here to stay. It is not promotional neither does it have any minimum amount restrictions (1 Naira or 1 Trillion Naira both get 10%).

One of my “small” goals

When compared to the 3.6–4.2% other banks pay, it’s easy to see how this is a delighter. The only question to ask is “Why am I not saving my money with ALAT?”

To be continued…