Banking Boom As Jinja Starts a Slow Bounce Back to Industry

Sep 21, 2009 (The Monitor/All Africa Global Media via COMTEX) -- DIA | Quote | Chart | News | PowerRating -- The banking boom has reached Jinja, Uganda's former bastion of industry, which has seen at least five banks open branches here in the last couple of months.

Within the last six months, Diamond Trust Bank, dfcu, UBA, Equity Bank and now Kenya Commercial Bank have either competed setting base here, or are in advanced stages of opening.

Unlike in the past when banking was built around paper-based payments, information and communication technologies have created new strategic possibilities for retail banking, a development already being enjoyed in Kampala and other parts of the country.

Commercial banks have no doubt aggressively repositioned themselves to compete in the new conditions. As banking diversifies due to these new possibilities, most of them only branching out from the centre, Kampala, for the first time are now testing out in Jinja.

A survey done by Sunday Monitor recently shows that the new banks are registering an average of ten new clients daily. On good days, however, some banks enroll as many as 20 new clients. But even as they try to play catch up with market old timers an obvious trick has been for the new entrants to get as far away from traditional banks as possible and most importantly position themselves as close to the customer as can be.

The older banks are located at the extreme end of Jinja's Main Street, the newcomers have all set up base near the taxi park and around the central market.

Just two weeks ago, Uganda Finance Trust did a re-launch after they moved their Jinja branch from a less prominent area (on Iganga Road) to Main Street. Reason: "Our clients used to have a rough time getting to us so we have decided to move to a more strategic location where everybody can see us," said Finance Trust CEO Mathias Katamba.

And the itchy-feet-feeling is not limited to Finance Trust alone; now Bank of Africa and Orient Bank have also acquired new downtown premises to which they will be moving in less than a month's time.

Bank of Africa has opened a second branch at the junction of Alcidine-Clive Road while Orient moved to former Scindia Road right next to dfcu bank from their previously secluded location on at the end of Main Street.

Potential waits

The marketing manager at dfcu, Susan Nsibirwa, told this newspaper that Jinja, despite its recent history of dwindled economic activity, "still has a lot of potential for growth". As Jinja vies for a city status and as it starts gaining prominence with a number of industries returning, Jinja's recovery could yet be in the works.

Equally, DTB's branch manager, Anees Ahmed whose branch opened in December 2008 says: "We are expanding our network ...but all the same we realise Jinja is an industrial town and it is starting to lift itself up again and we want to be part of this new growth," he says of the sixth branch of the company- the first to be launched out of Kampala. The seventh is in Arua. But with more than 10 older banks having established themselves in the local market over the years, the new entrants have quite an uphill task capturing an already crowded market.

Suddenly there are tens of places for investors to put their money. So you've got to have a really good story to tell -- something like a growth record or a promising model that differentiates you -- to even hope to get people to take notice your brand. DTB has managed to open more than 2,700 accounts in the six months they have been in business in Jinja, thanks to their aggressive marketing tactics.

Mr Ahmed says they are favoured mostly by business and working people because they open earliest and close last. "People can come and do their banking after they come from work up to 6 p.m," he says.

However, according to UBA Branch Manager, Ezekiel Kate, residents are still trying to figure out which financial institution will best meet their needs. He says when half a dozen financial institutions are vying for the same business from most probably the same people, for those who are still early in the journey, attitude and energy are among the most important attributes. He says as they become more customer-focused, banks are now scrambling to streamline their efficiency to the benefit of the residents.

In fact, as UBA's Kate puts it, the problem is that "everyone is serving the urban industries. Nobody is going to where the market is in the rural areas. We are all clamouring for the same urban clientele."

UBA which only opened for business in Uganda in August started out with free banking, a promotion in which clients could open their accounts with no minimum deposits and make deposits within 30-days. The question is; how to get the ball rolling? There are no set rules or magic formulas.

While they all talk about fine tuning their customer care, what is certain is that reaching a clientele mass, with all the ostensible benefits that it carries, can be a long, slow, chicken-and-egg process, where it's seemingly impossible to land big investors particularly because they are already taken care of by the old timers. With such stiff competition, any institution that offers uncompetitive rates could find themselves swept aside.

Industry watchers say a successful bank-recruitment effort must be rooted in empathy for what the banking community particularly the Jinja small and medium enterprise clientele need. The commercial banking business is cutthroat.

In the quest for recognition, door to door campaigns and other marketing tactics have become routine not only in town but also in rural areas. As DTB's Ahmed said, his team of six marketers disperse to their catchment areas every morning to try and woo as many customers as possible to their bank. And as new as they are, they have already started supporting community causes including sponsoring events like motor rallies and an upcoming local wrestling and marathon sport.

In an industry where almost every product is a duplicate with all the institutions and the banking rates uniform, to break into such a market as tight as Jinja would largely depend on the strong points of the bank.

"It's tough to stand out from the crowd. Money is just money after all; it's not a work of art." Jinja Chief Administrative officer Okiror Iporotum says."I have already had an experience with them. I have a bank coming here every other day trying to win me over to allow the district employees to get loans with them," the Cao says. With more coming for them, the Jinja community is now enjoying the comfort of being treated like kings. But what do banks that have been here for long feel about the competition.

Jinja has more than 10 banks already fighting for the market share. These include: Tropical Bank, Stanbic Bank, Bank of Africa, Standard Chartered, Crane Bank, Post Bank, Bank of Baroda, Barclays and Orient Bank. Other financial players here are: Uganda Finance Trust, Finca and Pride Uganda.

The branch manager, Tropical Bank Jinja, Michael Christopher Waako says the branch has grown in earnest due to its quiet support to farmers. "While most banks shied away from lending to farmers, we worked out a systematic way to handle mostly the sugarcane farmers [through which] they access advances from us. We embraced them and they are happy," the manager whose branch has been able to clinch a client base of about 10,000 people says.

The manager of the branch with a presence here since 1972 says they are not scared of the competition. "Having 30 years of uninterrupted service that is reliable and dependable here has proved to the people of Jinja that we are ready to stay and serve them. "It only offers a new challenge; to improve our services and innovations. To invent unmatchable products in order to stay above the fray," he says adding that "by the time other banks imitate our new innovations, we will be way ahead of them".

Designing market materials and conducting research on what the customer wants depending on their geographical conditions and financial needs is the key to winning the game, he reveals.

Similarly, Stanbic Bank Jinja branch manager, Felix Oematum feels loyal customers will seldom abandon their banks. "Maybe what is going to happen is that we are going to have multi-banked [clients]."

But this could mean some banks lose out as clients split their deposits.

This is put into context by a survey done by the Sunday Monitor which discovered that in one of the older banks, a huge percentage of accounts are dormant. In this bank (name withheld), out of the tens of thousands of registered clients, only 10 percent of the accounts are active.

Nonetheless the older banks are getting jittery and they can no longer afford to be complacent. Stanbic's Oematum recognises the threats posed by the new competition."When competition comes in anxiety is the natural reaction. You see, when you feel there is no challenge you tend to become complacent. We recognise their coming around and we are going to adjust accordingly," he says adding that "we are going to tighten our bolts where they have been loose."

"If you check around the banking hall now, customers are being served much faster," he notes. Stanbic with about 20,000 customers some of whom it automatically acquired when it took over Uganda Commercial Bank in 2003 has a reputation of accommodating all classes of customers. Mr Oematum says they still have an edge over other banks because of their nationwide presence which makes it easy for people to access their services from around the country.

Jinja's Bank of Africa manager Abubekar Mutebi said; "the scare is there. Everybody has got weaknesses and now is the time to improve on our services. The days when a client used to look for us are over," he says as he explains their reason for opening another branch in downtown Jinja.

Spoilt for choice, the larger Busoga population now more than ever before has a lot to gain from this scramble for attention as they gain free education on banking from the many outreaches by the various competitors.

Also, in a market fatally weakened by money swindling scams that saw the depletion in cash flow amongst the residents who were conned of over Shs2 billion in September last year and with a clientele that is likely not to change their banker, the task ahead is not simple for both the old and the new players.

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