Wema Bank is having a great New Year. A LinkedIn user shared some nice stats which the bank posted on Twitter.

I remember Prof Ndubuisi Ekekwe‘s post 2 months ago about Wema Bank Alat. It’s apparent that Alat by wema bank will grow bigger than Wema Bank or most banks in Nigeria in few years. According to Philip Ese via his twitter handle shared that, they now have almost 200k accounts since Alat was launched 8 months ago, ?1.1 Billion saved and ?20 billion in transaction volume across 1 Million transactions and that only 10% of the users are existing wema bank Customers. 

In that post, the user linked to my piece on Wema Bank’s ALAT where I made bold predictions that in future, Wema Bank could either be folded into ALAT or ALAT be divested as a separate entity.

ALAT is the first step for Wema Bank. In the next few years, depending on its progress, ALAT can be divested from Wema Bank, to allow it to compete more aggressively in the African market without being tethered to a bank and the associated regulation. The regulation is important and there is nothing wrong with that: banks like Wema Bank take customer deposits, unlike most fintechs, and should be regulated. So, ALAT can become an operational arm of Wema Bank while the bank remains a dumb pipeline, typical of most traditional banks today (i.e. not much intelligence due to lack of deep insights), to support what that modern banking named ALAT does. Perhaps in 10 years, Wema Bank may even simply change its name to ALAT if this new modern banking solution evolves into its future.

The original tweets are reproduced below

The Implications

These numbers are significant because the implication is that ALAT is driving growth in Wema Bank. Wema Bank has about 1.5 million customers and hopes to push the number to 3 million through ALAT by 2020. Within 8 months, they have 200,000 on-boarded. My focus is not really the 200,000 customers in ALAT but the fact that Wema is attracting new people into Wema: “with just 10% of our users being existing @wemabank customers”. This is significant for the relatively small bank. Getting 90% of new customers through ALAT is very great. It would have been bad if it was only moving current customers to ALAT. So, ALAT offers growth to the bank.

ALAT is a bank, and it can become a truly African banking institution, if it pursues new opportunities in Africa, with growth typical in most highly scalable businesses. I am expecting the management to make ALAT a pan-African “bank”, and use it to redesign the banking experience for young people which it continues to pursue. Wema Bank is working. It is on ALAT now and that is a good thing.

There are many strategic things which the bank can do to scale ALAT across the ECOWAS region. The product has demonstrated that it can offer value to non-Wema customers since 90% of users are new to the bank. This is a fintech within a bank and the bank must take it and run with it. The bank needs to drive it with the fierce urgency typical in a high growth scalable business with a low marginal cost and a high scalable advantage. There is nothing that can stop this product from scaling when you look at the product design.

ALAT is digital which means that its marginal cost of adding a new user is close to zero, and with that capability it is not bounded by geography within Nigeria where the bank has license to operate. I expect ALAT 2.0 to anchor a redesign in Wema Bank where most of its branches would be closed even while making it easier for customers to do business. That will improve its cost-to-income ratio even when growing its customer base. Most Nigerian banks saw their digital products as extensions of their traditional products; Wema Bank’s ALAT was the only one that built something sequestered from the current for an opportunity into the future. From the naming and marketing, they diminished the bank to allow ALAT to glow. In other words, ALAT does not need Wema Bank and that removed any potential innovation hangover in the product design.

ALAT has sent an alert to the Nigerian banks. Wema Bank needs to sustain this product because it is one of the finest fintech products in the nation. It needs to use this product to drive its agency banking by linking it to voice banking. Also, that location-agnostic intra-African remittance should not be far away. ALAT is sending alerts and that is a good thing.

Here, I explain my reason for liking the ALAT Strategy

A man opened his door in Kansas, USA and was shot by police. There had been a swatting call which triggered military-kind response to the private home.  Unfortunately, video game players instead of killing virtual avatars played a heinous game that took a man’s physical life. Our prayers go to the families of the victim.

A feud between two Call of Duty players led to the death of a 28-year-old Kansas man, who was shot and killed by police after a fraudulent 911 call sent a SWAT team to the man’s private home.

[…]

In this case, Wichita local Andrew Finch, whose family members say did not play video games and was a father of two young boys, answered his door only to face down a SWAT team-level response. Allegedly, one officer immediately fired upon Finch, who later died at a hospital. It’s unclear why Finch, who is said not to have had a weapon on him, was fired upon. The Wichita Eagle reports that the police department is investigating the issue, which occurred late Thursday night.

In this piece, I am focusing on the trigger-happy American police force which is trained to KILL as they always shoot to the head or heart. In Nigeria, the police force is largely trained to shoot at the legs (unless there is an active criminal battle) with the main motive being to maim or stop motion. Yet, in the U.S, the problem is not with the men and women serving their counties and cities as police officers; the issue has to do with the laws, constitution and the environments the police officers operate.

In Nigeria, the police assume that the subject is not armed most of the time. In short, policemen go to arrest people in their homes (for domestic issues) unarmed. The power is in the uniform as they arrest people to settle disputes with neighbors. But in U.S., the policeman assumes the citizen to be 100% armed, always. The implication is that the policeman is coming with the assumption that he can be attacked or killed. And that is why bad things happen: a man calls the police, sees the police outside his house, comes out to meet the police, and ends up dead. Everyone is at risk: the caller, the suspect and the police.

Few weeks ago, a woman called the police in U.S. informing the force that she could not recognize people in her neighborhood. The police responded. The woman then walked to meet the police and the police shot her dead. Reason? The police did not see her hands as she was coming!

The Power of Policy

What is happening in U.S is largely driven by the U.S. Constitution and all the subsequent amendments which empower ordinary citizens to own and carry ammunition. The implication is that anyone of legal age with clean criminal record could acquire a gun. So, people can pack guns as though they are packing biscuits (cookies) and candies (sweets). And with that, the police assumes that every home is armed thereby going with all precaution biased to the safety of police officers. With that, any tolerance of error is practically eliminated because thinking too much could be tragic to the officers.

While it is easy to criticize cops for being too quick to reach for the gun—and more often than not, in the case of police brutality, it is correct to do so—we must understand that policemen, being humans, experience fear as well. There is sufficient evidence that explains why police officers fear for their lives when going out on patrol in bad neighborhoods. Keep in mind that officers are three times more likely to be murdered in high gun ownership states. It is therefore far more understandable and, more importantly, acceptable, for a police officer to draw his weapon in America than it is in any other country.

Contrast that with Nigeria where ordinary citizens are outlawed to own and carry guns. And because many people do not own guns, the police officers work on the assumption that they can go and arrest those two men that fought and broke glasses in the bar, last night, in their different houses, with no fear of being shot.

All Together

The deaths from police mistakes are unfortunate. But they will not stop in America because the root cause is not within the power of the police to fix. Since the American Congress cannot do anything about gun control under a Republican Congress and Presidency, we would continue to see the police training to follow the unique pattern of shooting as a core element of defense.

An ordinary Kansas citizen, Andrew Finch, is dead because of the fake police calls. But it is fair to extrapolate that in some places the police would have held fire despite the information they were fed. At least, someone could have waited to see him draw a gun before firing. But that was not the police training. Mr. Finch is dead. And you wonder how opening a family door, unarmed, could result to a loss of life.

America needs to fix its trigger-happy policing. But that will not happen because it is the tenet of the American constitution that is driving how the police force is trained, and subsequently act in the field. The point I am drawing here is that policies have impacts, and most times unless you can piece them together well, you run the risk of stimulating regrettable consequences. The gun rights in America could be the reason why the police force is always shooting even when police in other nations could have held fire.

Update: added a quote which I have in the comment section in the piece.

The year 2017 is about gone, and I know that someone is thinking how he/she could start a new business in 2018. Sure, running a business is not for everyone. It is tough because the attributes that make good entrepreneurs in Nigeria (and Africa) are not in typical business school playbooks. By the time you wait for a bank CEO for six hours, and when he emerges, you smile and thank him for the opportunity to be waiting. Repeat similar episodes in government offices and you will know that nothing could have prepared you for that patience.

You crossed the gate at 9am for a meeting scheduled at 9.30am and by 4pm you are still waiting. But you are lucky as you have not been informed to go, and that is huge as “hope dey”. It is irrelevant what degrees you have, and what you think you are.  That element of humility with high morals opens opportunities.

Yes, being an entrepreneur is not a vacation job: get into it; you lose the construct of time because it is a constant contact sports that demands 24/7 attention. But where you think you are open for business, I have some ideas for you on how to start in the new year. You can make it happen through any of the following new business/market entering models:

Representative: You can become a manufacturer representative in Nigeria for a foreign brand. You use your local knowledge and contacts to find business opportunities for that foreign company. They pay you commission. It could be lucrative if you have great contacts locally. Companies like Dell, HP and IBM have representatives in Nigeria who help to deliver sales and support to clients that want their solutions. Chinese firms are also opening opportunities looking for local representatives. There are many of them on LinkedIn looking for people to anchor their businesses locally in Nigeria. One of the best examples of a representative in Nigeria is MBM (Modern Business Machine), a technology integrator, which worked as an IBM representative for years.

Licensing:  Licensing requires a heavy dose of technological capability from you to make it work. It means you are able to license a technology from another entity and then use it locally to address a market need. Licensing is not very common in the Nigerian digital tech space but it happens in other sectors. Some of the pharmaceutical companies in Nigeria are on licensing agreements with foreign partners. They are allowed the rights to use the core technology to make products in their own brands or labels. In the technology space, white labeling is also possible. There are many American companies that license payment infrastructure to help startups run payment fintech as though those startups developed the technologies.  Customers see your brand and identity. But behind that your product is a full technology core provided by another company. No other person will know but you and the supplier. For the privileges to use these technologies, you pay fees. Coca Cola (yes Nigeria Bottling Co) is on license with the global Coca Cola brand to use the secret sauce of coke.

Franchising: There is a big franchising opportunity which is available right now in Nigeria: we do not have McDonald’s, the iconic American fast food burger chain. KFC is here already in Lagos; KFC Nigeria is a franchise. Companies allow you to buy rights to run a business using their business processes and intellectual properties to create products in your local market. Most times, you are tapping into the brand equity of the franchisor which controls the trademark and all copyrights associated with the brand. As noted, KFC Nigeria is a franchise of the Yum! Brands which owns KFC in U.S.

Partnership: In partnership, you find someone you can work with. You bring something and that company brings something also. That fusion makes both better. It is the typical business maths that 1 + 1 must be greater than 2 to make sense. In the renewal energy, security, education, and across industrial sectors, there are opportunities for partnerships not with international brands but also local players. For example, in my company, we partner with local companies in Northern Nigeria with staff that speak Hausa on Zenvus. We provide the technology; they work with farmers because they understand the culture and the language. That improves our speed and allows us to focus on things we know best: technology. Partnership can be loosely connected with representative when done across national or regional boundaries.

Joint Ventures: Partnerships can morph into joint ventures where two or more entities decide to bring resources together to create a new entity. And everyone works through that new entity. This is very common in Nigeria during major contracting tenders where consortiums emerge to meet stringent tender requirements. For example, in a major construction project, you may need financiers, construction companies, etc as a team. No single company may meet all the requirements and one has to be created to meet whatever the tender requires. That is where you need a Joint Venture: the JV relying on the individual firms will magically meet the requirements. You can also use JV for research & development where companies co-invest money to develop new technologies and innovations. Julius Berger uses JV in some projects; it works with foreign financing partners as it did on Second Niger Bridge where a South African financier was in the fray.

Acquisition: If you have the money, you can buy another company and then become the owner of that company. It comes via different forms like buy-out and acqui-hire. The latter is a method where you buy a new company purely for the talent and not the company itself. I have used acqui-hire in Nigeria where I buy local companies mainly for the team and not necessarily for their products and companies. The advantage here is that you have seen what the team did and you can channel them to use the experiences to build your business. Buy-out happens all the time in Nigeria: MTN bought Visafone and Visafone itself bought Bourdex Telecoms Aba.

Greenfield Investments/Startup: This is starting from scratch and the typical model for startups to enter new markets. You start from $0 revenue and climb up. You add customers one by one. Unless you have change from daddy, mommy or uncle, this is the typical way it happens: you need to cut your teeth and build things from ground to up with savings, selling of equity or taking debts. I have shared many ideas on how you can make this happen in my new book. This chapter is a most-read if you have to play in the digital space. You can also see greenfield investments as moving into a new location to start something, even if you are operating somewhere else. Yet, even with that, you have to start from scratch in that new location. Of course, you enjoy some advantages over real startup that will have to build teams, technologies, business models, etc from real scratch.