Mauritius Commercial Bank’s new CEO speaks to African Business about the bank’s key areas for medium-term growth and its vision for the longer term.
How is Mauritius Commercial Bank (MCB) leveraging tech to drive innovation in the banking sector?
MCB has been investing in tech since the early 80s. In those days the initial focus was on operational efficiency but since then we have been leveraging on tech to enhance customers’ interaction with the bank and to improve the customer’s experiences.
We now offer a multi-channel experience with ATMs, branches, bank kiosks, mobile app, SMS banking, customer contact centre and internet banking. In fact, we’ve had internet banking now for the past 15 to 20 years and a customer base of 130,000 corporates and individuals.
Recently we introduced our mobile banking app called Juice which has had a phenomenal uptake of more than 100,000 users. It introduces a number of interesting features like cardless ATM withdrawal, connecting with Visa Direct worldwide and the latest feature – the first of its kind in Africa – is to link the account with PayPal.
We’ve also worked a lot on workflow systems to ensure that we improve on operational efficiency so that customers get a more rapid service. We introduced Instakit which enables someone to open an account with us and instantly be equipped with a debit card, SMS banking, e-statement and mobile app Juice.
So you can walk out of the bank and have a fully functioning bank account within half an hour. All these services are enabling us to improve customer experience. We have a regional network around the Indian Ocean islands and Africa and so we are able to leverage on our capabilities in Mauritius to expand into other countries like Madagascar, Seychelles, Maldives and Mozambique.
What are the main impediments to unlocking the full potential of fintech in Africa and how can they be overcome?
In fact Mauritius is already quite advanced – we are among the top performers in Africa, together with South Africa, in terms of Network Readiness Index (NRI). We have over 1m internet subscribers for a population of 1.3m, which ranks us among the top 15 countries in terms of internet connectivity.
Mauritius also fares quite well in terms of electricity access, which is not the case in many parts of Africa. It’s basically having reliable access to electricity to even charge your phone, let alone internet access. This will be a challenge in other parts of Africa.
But at the same time we see a high willingness of governments and regulators in some countries to create the right environment and infrastructure in order to improve their financial capabilities and technology. Kenya, Uganda and DRC have gone out of their way to promote mobile banking and payments. So I think we will see a lot of leapfrogging in other countries on the assumption that the governments, regulators and the private sector, work hand in hand trying to promote fintech and digital payments as a means to making banking more accessible.
What are some of the key African markets the bank is hoping to expand into in the coming years?
If you look at our journey from the early 80s we’ve been extending our reach outside Mauritius so as to achieve an effective diversification of our revenue base. MCB Group has, in addition to Mauritius, established physical presence in nine countries overseas, via its banking subsidiaries and associates in Madagascar, Mozambique, Seychelles, Maldives, Reunion Island, Mayotte and Paris and via its representative offices in Johannesburg and Nairobi.
As such we have accompanied many of our customers who had projects in Africa and around the Indian Ocean region. Today, foreign sourced income accounts for more than 40% of MCB Group’s net profits.
We also have a very flexible business model of serving customers in Africa from Mauritius. With our representative offices in Johannesburg and Nairobi, we are constantly on the look out for opportunities in other countries, without necessarily setting up shop.
We find other ways of collaborating with banks in areas where we have expertise. Obviously if there are opportunities of partnering with banks then we will look into it on a case by case basis, but there is no rush. We are not into an acquisition mindset.
What are the key elements of MCB’s strategy beyond Mauritius?
We have identified four key areas to our medium-term growth strategy, leveraging on our expertise, to extend to new markets in the region and Africa. First in terms of commodities we do quite a lot of structured trade finance for oil and gas, in and round the African continent.
Second is project finance and we are looking to expand further into the areas of tourism, infrastructure and agriculture within the African continent. Third, we run a successful private banking and wealth management activity which is an expertise we are developing. Africa has the highest growth in number of high-net-worth individuals (HNWIs), albeit from a low base and we believe the number of customers seeking investment products or financial centres for wealth management, will rise steadily.
Finally we have our “Bank of Banks” programme where we leverage on our expertise to service other banks. We have a number of initiatives: a consultancy unit that advises on strategy, process and technology implementation, a training unit, a card processing and outsourcing unit, and the capital markets advisory unit that does private equity and corporate finance.
Thanks to these competences we are able to tap into opportunities and offer those services to financial institutions and corporates. In fact we have to date serviced over 120 financial institutions in 41 countries.
In this case, does Mauritius see itself as Africa’s future financial centre?
We have to take a long-term view of the development of Africa. If you look at some of the statistics by 2050 Africa’s population will double from 1bn to 2.5bn, representing 20% of the world’s population.
At the same time we know that China and India as the manufacturing centres of the world are finding it more and more expensive to manufacture at home. There are a lot of products that will seek cheaper and available labour force and they will eventually move into Africa, bringing with them investment flows. This is a great opportunity for Africa.
That’s where Mauritius as an international financial centre is well positioned and has the credibility and standing to become a regional financial hub for Africa. It is an attractive and compliant jurisdiction with political stability, a bilingual workforce, strong capabilities and competencies in legal, accountancy, capital market and wealth management services.
Of course, it is still challenging to do business in some parts of Africa but over time with better governance and stability, investors will be attracted to Africa in a way which enables the continent to move up from where it is today.
How have Mauritius and MCB managed to so effectively weather the financial crisis?
In my opinion we are lucky to have a diversified economy that includes tourism, agriculture, services, ICT and manufacturing, so we do not depend solely on one source of revenue. Each of the sectors has had their own challenges since the financial crisis, having to adapt to the evolving operating environment of reduced growth in key markets and drop in commodity prices.
On the other hand, the financial services sector has been performing quite well, with growth rates of 6% over the last five years. Globally, Mauritius has had an average GDP growth of 3–4%. Obviously, we would like to have higher growth but 3–4% in this climate is quite good.
With a change of management, what do you think your personal impact on MCB will be?
Execution will be my key priority. Together with the board, we have already defined our key strategic focus areas for the short, medium and long term. To make sure we execute better, I want to put everyone to task in terms of making sure we are all aligned with the Bank’s vision and we collaborate to achieve our key objectives.
This will mean that we invest in terms of talent and training, and we bring everyone together to deliver on our strategies. We have a very strong franchise and brand sustained by our core values and I believe that we are very well positioned in terms of where we are today and what we want to do to achieve growth, for the benefit of our customers and all our stakeholders.