The year is 2020. A Barclays Bank of Kenya (BBK) customer walks past Moi Avenue to Mama Ngina Street into the flagship Queensway Branch.
Everything seems the same - soothing music at a distance, customers queuing and tellers serving them. But the blue eagle emblem will be missing.
The colour on the walls has changed and the name ‘Barclays’ is missing too. That is what awaits Barclays Bank’s Kenyan unit in the next three years. But its Managing Director Jeremy Awori says the financial institution is ready to let go off this 100-year old brand.
“We recognise the emotional and historical attachment that almost everyone with BBK account feels. We will have to build another brand that can mark another 100 years in Kenya,” said Awori.
Because of de-consolidation, and the transaction of Barclays Plc reducing its shareholding in BBK to a much smaller size (16.4 per cent), Mr Awori says that regulators told Barclays Plc that BBK will have to change its name.
And that will take a transitional process between now and 2020. Last year, Barclays Plc sold off its 12 per cent shareholding followed by another 23 per cent.
When their stake eventually drops below 20 per cent, the name Barclays must be dropped and the blue eagle on the BBK emblem must fly away and perch elsewhere.
It is a date Mr Awori acknowledges that it is drawing near with mixed reactions. “It is not that new brands cannot be built. We have the confidence that we will manage. Some 20 years ago, Google wasn’t there and today it is one of the strongest brands,” he told Financial Standard.
The good thing, he explains, is that the buildings, employees and the business strategy will not hung on the wings of the Barclays’ eagle and disappear with it miles away. “Essentially, a new brand will come in and phase out Barclays brand over time and in the right way. We will manage that transaction and bring everybody to speed,” Awori believes.
However, he acknowledges that building a new brand will not be an overnight task. BBK and the eagle had become synonymous and loyal customers have sold it to new generations as a strong, stable and predictable brand.
The good thing, Awori says, is that the core business will remain what it is under BBK. But a sizeable budget will be needed to rebrand. “We have to invest heavily to get the people know the brand, familiarise with it and start associating it with certain good things,” says Mr Awori, who at one point in his younger life was considered among the best swimmers in the country.
He is optimistic that the bank will still be able to swim to safer waters backed by Barclays Africa, whose asset base of is almost the size of Kenya’s Gross Domestic Product.
Initially, it was believed that one key investor will come and sweep all the shareholding of Barclays Plc in Barclays Africa and effectively in BBK.
However, the drop of shareholding from about 62.3 per cent to 23 per cent attracted a series of investors, typically pension funds and investment funds, who have took a long term view.
“There is not going to be a single big bank taking up the shares,” says Awori adding that this will therefore not cause much disruption to business strategy.
Barclays Plc decided to cut stake in a number of markets in Asia, Europe, Middle East because when it was taking dividends from African markets to UK, the investors’ return was below cost of capital.
For BBK, Barclays Africa will remain among the largest shareholders as so will be Public Investment Corporation, a South African-based pension fund with asset base of $137 billion (Sh13.7 trillion), while the rest hold a stake below 5 per cent.
According to Awori, the changes in shareholding gives BBK an opportunity to control its own destiny based on the needs of the local market. “We will see Barclays Plc being far away. It may not need to be involved in key decision and that is a positive thing on us here and head office in South Africa,” he told Financial Standard.
Previously, the London office had much bigger role. In fact, when BBK saw business case for agency banking and informed London office, approval process lagged until competitors gained a first mover advantage.
In the entire Barclays Africa Group, BBK was the first to launch agency banking but that came last year, long after local banks like Equity, Cooperative and KCB had already made strides. With two major things - interest rate cap and digital banking shaping the sector, the bank will leverage on partnership and increased investments to survive.
Last week, it joined the growing list of finacial institutions such as Bank of Africa, National Bank of Kenya, Sidian Bank, Family Bank, First Community Bank, Standard Chartered Bank and Ecobank in announcing staff cuts and trimming of branch size.
This, Mr Awori believes will increase efficiency in the competitive sector. Over the last four years, he says the bank has invested heavily in automation of services to match changing needs of consumers. From about 20 per cent of transactions happening at alternative channels, Awori says that this has now moved to almost 70 per cent.
Therefore, the bank is shifting seven branches to merge them with others. “The significant saving is expected around our auxiliary costs such as cash in transit, utilities, insurance and rent.
Merging branches will see the cost-saving reflect in our bottom line,” Mr Awori said.
On agency banking, mobile and internet banking products that are shaping the sector, Awori is eager to deepen investments to reach more customers easily.
The bank runs digital products such as Hello Money, Barclays Integrator and online forex trading service but has to been keen to brand them like many other players. “That may change as we move forward so that people relate to our alternative channel products easily,” Awori told Financial Standard, adding that the it wants to enrich the products to offer unique services. Last year, BBK partnered with Postal Corporation of Kenya to roll out 400 agency banking services.
The chief executive is targeting a massive expansion of about 6,000 outlets across the country in the coming days. Despite many banks slowing their loan book, the bank grew its loan book by 16 per cent in 2016, being the fastest among its tier I peers.
Mr Awori believes he can balance prudence lending and reduced margins and be successful at a time lending to private sector has sun to 10-year low.
With companies cutting on jobs, he says banks have been forced to be cautious to strike a manageable balance between lending with rates within the law and not attracting high risks.
“The market is full of many employees who have perfect repayment history but all that is ruined overnight when the lose jobs abruptly or their employees delay on payments, he explains.