Banks Target Retail Segment with ‘Esusu’ Savings Scheme | Independent Newspapers Limited
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Banks Target Retail Segment with ‘Esusu’ Savings Scheme

Posted: Mar 9, 2016 at 11:24 pm   /   by   /   comments (1)

Bamidele Ogunwusi Lagos

Like an old wine in a new bottle, ‘Esusu’, the age-long savings scheme that had helped millions of people in several localities in the country, is staging a comeback as some commercial banks in the country have now come out with the scheme in order to target opportunities in the retail segment of their businesses.

Following the liquidity strain occasioned by the implementation of the Federal Government’s treasury single account (TSA), zero COT, and falling crude oil prices, banks have now started aggressive mopping up of deposits.

Independent checks have shown that in order to expand their retail banking portfolio various forms of deposit mobilisation scheme have been introduced though without specific product nomenclature in line with ‘Esusu’ model.

Specifically, Diamond Bank is in the forefront of this development with its ‘Diamond ‘eSUSU’ scheme, a form of digitised version of Nigeria’s traditional savings system.

The eSUSU scheme, according to the bank, is expected to revolutionise the saving habit of Nigerians by encouraging and helping participating accountholder groups to meet their savings target timely and efficiently.

The Diamond eSUSU is a contributory saving scheme that offers a group of customers with common interest, an opportunity to collectively save toward targeted goals of each group member on a rotational basis.

According to Uzoma Dozie, Diamond Bank’s CEO, the Diamond eSUSU is in line with the bank’s strategic objective to grow a savings culture among Nigeria’s banking public.

“eSUSU brings bottom of the pyramid marketing to the mainstream of banking, this is a great feat to us,” he stated.

Also, the bank’s Head, Transaction and Electronic Banking, Rob Giles, stated that the interest of the customers led to the creation of this innovative product.

“We listened to customer feedback and realised that the eSUSU system is not only widespread in all sections of society, but that it is also one of the preferred ways of mixing saving and borrowing.

“By creating a digital platform, we removed the administration burden for the eSUSU organisers and also provide enhanced visibility of their programme online for the group,” he said.

The Esusu scheme, according to Segun Ajibola, a financial expert, is in line with the Central Bank of Nigeria’s (CBN) financial inclusion initiative to bring banking millions of unbanked Nigerians.

The initiative was meant to make 80 percent of Nigerians financially included but it has been realized that only 60 percent of Nigerians were financially included, as the 80 percent target was yet to be realized.

Speaking on a new research initiative on financial inclusion at the Lagos Business School (LBS), supported by the Bill & Melinda Gates Foundation, Dr. Enase Okonedo, Dean, LBS, said: “In 2011, Nigeria set an ambitious target of having 80 percent of all Nigerians financially served by 2020. We currently stand at around 60 percent, which means four out of every 10 adult Nigerians do not have access to any form of financial services.”

Investigation by Independent revealed that the new scheme by banks is gaining popularity among traders in major markets in Lagos and environs as they believe that the scheme will assist them financially.

Madam Tomisin Johnson, a fish trader at Ogba, Ikeja, Lagos, who claimed to have started the Esusu scheme with a commercial bank, said she was happy that the scheme has been modernized to remove errors noticed by operators in the past.

For Anor Anyanwu, former Deputy Managing Director, Mainstreet Bank, the move is gradually contributing to the improvements some banks are seeing in their earnings capacity.

“I think banks are now doing what they are meant to do and that is bring more people who are unbanked to their fold. Gone are the days when free money strayed into banks from MDAs. My joy is that some banks are doing well in this regard and I hope that this will continue because results are beginning to manifest.”

Anyanwu reckoned that “banks are refocusing their energies in finding creative ways of remaining profitable. They are seeking new ways of making money while they are also significantly cutting costs.”

Some of the new initiatives, according to him, include focus on retail segment of the market where margins are higher, encouraging customers to use alternative channels for transactions where the banks earn commission (ATM, Online Transfers etc.), SMS alerts charges; value added services as well as partnerships and profit sharing arrangements.

Despite being the most populous African nation, Nigeria is a mid-level player in the sub-Saharan banking sector and lags behind some of its peers in Africa with respect to financial inclusion. With the lenders now having recourse to retail banking they are now keying into CBN’s policy on financial inclusion which is meant to cater for the unbanked.