When Wema Bank launched ALAT, I was among those who praised the regional bank for the call. But I quickly posited that ALAT would not live its full potential under the Wema brand. Yes, I personally do think that Wema made a mistake by keeping ALAT inside the bank. In 2018, I wrote, “Wema Bank was established in 1945. It has about 1.5 million customers in Nigeria. ALAT was established in 2017 and has brought NEW 180k customers to the bank” within 8 months. But that momentum could not continue at scale as new species of competitors emerged, stopping the alert! Provided Wema Bank has not changed its name to ALAT, by now, as I had postulated, I will say the bank lost a huge opportunity on ALAT, and if they do not change strategy, ALAT will not alert that future. It is nearly hopeless to run “two banks” under one building.
ALAT is not necessarily a bank product because the creators took the bank out of it. That means it is a startup which is not designed to make money immediately for the bank. Just like startups can operate for years at losses provided they are adding customers, ALAT wants to do just that. So, because it was not structured to bring immediate revenue, it is not relevant looking for one. What you look for is the capacity to bring new customers to the bank: 90% of its users are new to the bank. That is significant.
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
So, there is no issue of helping Wema Bank improve revenue immediately. They did not call it Wema Bank App; they called it ALAT. That strategy is very significant: they want to create a new business possibly from the bank which can appeal to the youth. And they are succeeding: they moved from 16th position to 7th in youth attractiveness within a year.
See the numbers: Wema Bank was established in 1945. It has about 1.5 million customers in Nigeria. ALAT was established in 2017 and has brought NEW 180k customers to the bank, about 12% of the total bank customer base. Wema Bank is a relative small bank but if ALAT can add 180k NEW customers within 8 months it is a home run. For 72 years, the bank got 1.5 million customers; about 21k per year on average. If it can get something that gives it 180k in 8 months, it can party.
Many banks continue to spin out some fintech ventures. Santander, the Spanish banking giant, has announced that its fintech venture unit is to be spun out and will be managed more autonomously going forward, Techcrunch reports. That is a very good call.
Santander, the Spanish multinational banking giant, is announcing that its fintech venture arm is to be spun out and will be managed more autonomously going forward.
Previously known as Santander InnoVentures and established in 2014, the VC is being re-branded to Mouro Capital. It will continue to be headed up by general partner Manuel Silva Marti?nez, who joined InnoVentures five years ago and has led the fund since 2018, and senior advisor Chris Gottschalk, who joined from Blumberg Capital last year.
The “Missed Opportunity”
I wrote this in the comment section below…but reposting here.
Dare, there is no intention to make ALAT look bad. I think I write in an unbiased neutral way in a professional academic mindset. The missed opportunity here remains that Wema Bank Plc is worth about N20 billion which is roughly $52 million – https://www.bloomberg.com/quote/WEMABANK:NL . The top leading fintechs in Nigeria are all above that. So, if ALAT + Wema give you $52M, it means ALAT is not even worth up to $52M. Possibly, a separate ALAT could be worth $100M if it executed, giving investors better returns. I do not care what KPMG wrote, I am focusing on what matters: returns to investors. ALAT has not changed that for WEMA and that is a missed opportunity.