New opportunities in Nigeria’s retail banking

In an exclusive interview with CNBC Africa, Robert Aderinmola, Consumer Insight and Analytics Partner at Diamond Bank, delved into the promising opportunities emerging in Nigeria's retail banking sector. As the Nigerian economy experienced a notable growth of 1.92% in the fourth quarter of 2017 and a 0.78% growth for the financial year, Aderinmola highlighted the significant sectors driving this expansion. Key sectors such as industrial, agricultural, and services showed simultaneous growth for the first time since Q4 2014, signaling positive prospects for the banking industry. Despite a decline in credit to the private sector in 2017, banks are projected to witness a growth of close to 0.6 trillion to 1 trillion in 2018. Aderinmola outlined four key takeaways from the current economic landscape that will influence the strategies of retail banks. Firstly, the economic outlook is increasingly optimistic. Secondly, there is a boost in customer confidence. Thirdly, the contraction in inflation is favorable for retail customers. Finally, the decreasing yields in fixed income securities present a favorable environment for banks to increase lending. Aderinmola highlighted that retail banks are likely to explore opportunities in sectors such as trade, commerce, education, and health. By leveraging innovation and technology, banks aim to facilitate economic activities and drive inclusive growth. Notably, the trade and commerce sector presents significant potential for banks as consumer confidence and demand aggregates continue to rise. Aderinmola emphasized the importance of investing in technology to capture economic activities that are currently unaccounted for. Furthermore, he pointed out the promising outlook for the education and health sectors due to their lower dependence on external factors and improving economic conditions. Aderinmola expressed confidence in Diamond Bank's credit risk strategy, which aligns with sectors exhibiting low external dependencies and promising economic forecasts. Despite the celebrated growth in the agricultural sector, Aderinmola acknowledged that there is room for improvement, as Nigeria's crop production levels still fall below the African and global averages. He emphasized the need for continued investment and support in the agriculture sector to maximize its potential and drive sustainable growth in the economy.