Tactical De-marketing: Is GTBank Riding On The Crest Of KYC?
In the face of increasing competition among banks, several banks are coming up with innovations, some good, some not so good to market and retain market share. Thus leading to frustrations faced by the banking public in the hands of banks in service delivery. Guaranty Trust Bank is being fingered as having a penchant for de-marketing competitors by using the instrument of non-confirmation of referee requests, Kenneth O Eze writes.
Nigerians are agonising over their experiences in the hands of banks that appear to be resorting to delay tactics in frustrating their effort to open checking accounts with other banks of their choice. Banks’ requirement of referee reports on checking accounts means that intending customers have to get other reputable citizens that run checking accounts to complete two referee forms as pre-condition for opening new accounts.
Several people who desire to open new checking accounts run into a stumbling block at some banks’ non release or confirmation of duly completed referee letters. They allege that banks deliberately withhold the referees’ letters, in most cases refusing to confirm it on flimsy reasons, all in a bid to check the customer base of competitors in a manner that observers dub ‘tactical de-marketing’.
Guaranty Trust Bank is alleged to be at the forefront of this unhealthy development. A young banker in the employ of one of Nigeria’s banks with controlling shares in the hands of South Africans decried the manner in which GTBank had been frustrating his bank’s marketing efforts. He pondered why GTBank would confirm only one of two referee forms for accounting opening applications completed by the same account holder for two account opening applications.
He claimed not to understand the motive behind what he called selective referee confirmation. He retorted: “does it not indicate ulterior motives that a bank would confirm referee form for one and decline another, when both forms were signed by the same customer and mailed together to the bank?”
Ngozi Ogudoro (not real names), a general manager with a frontline hotel in Ikeja, lamented that her efforts at opening a checking account with a bank of her choice was being threatened by non-confirmation of referee by GTBank. She could not understand why GTBank would embark on what she called dirty de-marketing tactics to frustrate perceived customer migration.
These allegations have been stoutly denied by GTBank. In an emailed response to M2, the bank’s corporate affairs department declared: “In response to the allegation of tactical de-marketing, we would like to state categorically that our bank, being a responsible corporate entity, will not in any way engage in any act that is contrary to the ethics and guidelines of banking and thus can never be involved in any act of sabotage against its peers in the industry or any other organization whatsoever.”
A public relations consultant in the Ikeja area, Matthew Tunde, bemoaned frustrations experienced in opening a checking account occasioned by GTBank’s seeming reluctance to confirm the referee forms his friends filled for him. Tunde would not single out any particular bank as culprits in what he called failure of customer service in the banking industry in Nigeria.
Recounting his experience with GTBank, he said that after waiting endlessly for the bank to confirm his referee request, he went to the bank himself, after confirming that the reason advanced for non-confirmation was inability to reach his friend that refereed for him. According to him, he was irked by that flimsy excuse and wished that banking rules permitted him confronting GTBank with their endorsement on the referee letter. He was restrained by his bank manager, who would not release the letter with a banks stamps for ethical reasons.
Tunde would not let himself be frustrated by de-marketing efforts of any bank. He got his friend to complete another referee form and followed it up personally to the branch of GTBank where his friend’s account was domiciled. According to him, the customer service desk told him that his friend could not be reached on phone to enable them confirm the request. He persisted and found out that his friend’s phone on the account was not different from what he had.
The alarming thing was that the officer would not call his friend in his presence until he made for the manager’s office. Tunde does not think it is GTBank’s standard practice, but went that extra mile because he wanted to use it as a test case for customer service delivery in Nigeria. He could recall so many other cases of service failure in the banking industry.
GTBank’s position on this is caught in these words: “We would like to reiterate that confirmation requests are treated with utmost importance and urgency as soon as they are received from the requesting banks.” The bank fingered the possibility of the account holder not picking his calls because the bank’s phone number was strange. In the words of Lola Odedina, who responded for the bank, “you will agree with me that at times people do not pick calls most especially if it is from numbers that are strange to them.”
The bank’s position was that this challenge does not only occur on referee confirmation, it also rears its ugly head in confirmation of other instruments. She averred that the difficulty is not peculiar to her bank alone, but affects the industry as a whole. Her words, “this is one of the major constraints faced by most banks (not GTB alone) when it comes to reference and cheque confirmation.”
It will be recalled that it is a standard, in the banking industry, that wealth or cash is not sufficient to engineer a relationship. The regulator, the Central Bank of Nigeria (CBN), insists that the source or sources of wealth must be ascertained to be sure it does not stream from illegalities; hence the requirement of ‘Know Your Customer’ (KYC) for the banks operating in the country. Two referees are required for a checking account in Nigeria.
In banking parlance, a referee is a third-party endorsement of the character of the person approaching the bank for a banking relationship. In all cases, the bank warns that it is dangerous to recommend a person that is not well known to you. The absence of a good referee report negates banking relationship on checking account basis.
M2’s findings reveal that it is a regulatory requirement that banks know their customers. Banks must furnish the CBN with a report on their customers, with evidence that each institution takes care to sufficiently know the customer she is into a business relationship with. This has led to the ‘Know Your Customer’s Customers (KYCC)’, considered necessary to strengthen the regulatory system, enhance transparency, lend credence to the financial system and the national economy.
Some bankers, who spoke to M2, agree that the requirement of referees for checking accounts is a standard CBN requirement that no operator can flout or employ gimmicks to frustrate. According to Kayode O Fasae, a Banker with one of the international banking groups operating in Nigeria, “referees are required for checking accounts by CBN policy as a part of Know Your Customer (KYC).”
In the opinion of a Relationship Officer of a bank with head-office in Victoria Island, whose name cannot come in print because she is not the spokesperson for her bank, “referees give the bank an insight into the true character of the person approaching it for a banking relationship.” She explained that banks apply the adage that birds of the same feather flock together. The history of the referee’s account could count in the relationship with the new account holder.
Bankers generally do not think that banks would de-market one another through non confirmation of referee requests. Their opinion is that it would be rare to find such practice in the industry, as referees requests are normally confirmed pronto.
It will be recalled that the CBN had threatened to impose a fine of N10 million on any bank found to have engaged in de-marketing fellow banks. In a circular titled “De-marketing of Banks by Other Banks”, the CBN recalled an earlier circular reference BSD/08/2006 on the subject, dated April 12, 2006.
The circular signed by Ignatius Imala, the CBN’s director of banking supervision, stated that “it has again noted with serious concern the recent practice whereby some officers of deposit money banks engage in the de-marketing of other banks through disparaging comments and the use of negative text messages.”
The CBN remarked that the development is a threat to “the safety and soundness of the banking system, unprofessional, unethical and unacceptable.” The apex bank warned banks “that the responsibility for ensuring the safety and soundness of the banking system is a collective one for all stakeholders.”
The CBN also warned banks to play by the rules, as any staff caught in shoddy practices would be “dismissed and blacklisted.” The bank in whose employ the person is will “face severe sanctions including, but not limited to, a monetary fine of N10 million (Ten Million Naira only), in addition to being reported to “the general public”.
The directive from the CBN said nothing on this form of tactical de-marketing. But people like Tunde think that this aspect is only a minute part of customer service begging for attention in the industry.
Odedina sums up the position of her bank thus: “For us at Guaranty Trust Bank “service” and “responsibility’ are covenants we hold very highly.” It is hoped that the bank’s officers will abide by the statement in service delivery.
