Generally, financial institutions rely heavily on fees and commissions to prop up their operating profits and also to meet their day to day operations.

These charges which range from fees for administrative, verification, Automated Teller Machine (ATM), Commission on Turnover (COT), among others, are commonly seen as being burdensome by customers.

However, the COT charges which is mostly charged on current accounts transaction is a veritable source of income to banks.

But in order to enhance its financial inclusion drive, the Central Bank of Nigeria (CBN) recently outlined plans to gradually phase-out the  COT charged current account holders by 2016.

Specifically, the central bank directed all banks to reduce COT from its current rate of N3 to N2 by 2014, N1 by 2015 and   banks are not expected to charge for COT on current account transactions by 2016. The policy became effective since April 1.

It explained that COT applies to customer-induced debit transactions on current account, even as it warned commercial banks not to charge COT on “returned outward clearing cheques, reversal on transactions and all bank-induced debits.” The CBN however pointed out that for loan repayment from current or savings account, COT is free.

But while other commercial banks in the country are still working out modalities on how to adjust to the central bank’s directive, the recently licensed Heritage Bank Limited has announced zero COT services to all its customers.

The offer which commenced on April 15, the bank also assured would not be accompanied with hidden charges.

Heritage Bank explained: “Our legacy remains to be at the forefront of events. We have done it in the past by introducing ATM to the country. We are at it again and have achieved this feat by taking the lead once again.

“Effective April 15th, 2013, Heritage Banking Company offers zero COT services. There shall be no hidden charges.”

According to the commercial bank, the move is to boost its deposit base, even as it assured of customer satisfaction.

“We must all be ready to serve customers as they come in their numbers. Customers can also enjoy interest on their accounts with certain maintained balance,” the bank assured.

The Business Plan

Heritage Bank which was created from the defunct Society Generale Bank (SGBN), opened its doors for business at the beginning of this quarter. The shareholding structure of the new bank showed that 80 per cent is owned by a core investor, nine per cent by Saraki family (owners of SGBN) and the remaining g 11 per cent by depositors of the bank.

The bank recently concluded a customer revalidation account exercise so as to carry customers of the defunct institution along. Heritage Bank had provided 13 designated centres across the country for customers of former SGBN to revalidate their accounts and collect instant cheques of the value outstanding in their accounts if desired.

The centres were in Lagos, Oyo, Kwara, Rivers, Delta, Akwa Ibom, Bayelsa, Adamawa, Zamfara, Kaduna and FCT. The aim of the exercise according to the bank was to possibly pay all customers of the then SGBN.

Managing Director/Chief Executive Officer, Heritage Bank, Mr. Ifie Sekibo disclosed that the bank has so far opened three branches - two in Lagos and one at Ibadan.

Also, the Chairman, Heritage Bank, Mr. Akinsola Akinfemiwa, said, “We are going to be focusing majorly on Small and medium businesses to ensure that we boost their operation. We are not there to compete with the so called big banks; our services are going to be quite different from what other banks do. We will work closely with the small and medium businesses to nurture them to greater height. We will be enlightening them on her to keep proper books of accounting, how to manage their businesses and make them grow.

Continuing, he said, “Our services are going to be technology driven. We may not have many branches, but we are going to deploy technology to reach our customers. It should be noted that SGBN pioneered ATM which many thought will never work. But today it is working and making withdrawal easier for people. We are going to do same as we resume operation, our employees have been trained, we attach importance to technology, excellence, professionalism, innovation, dynamism, tenacity and solutions.”

Operating Structure

Heritage Bank which operates as a regional bank started operations with a capital base of N10 billion.
Sekibo explained: “We recapitalised to the tune of N12 billion, took up all liabilities and assets of the bank and found some form of accommodation for depositors whose money has been trapped for 10 years. Our vision is simple and clear. Today, we might look quite new in the market, but our idea of what this bank should be is clear from day one.

“We want to be a bank that people will believe and know that generation banking is the way to go. When we say generation  banking, we are basically saying it is not enough to amass wealth and when you die, you write a Will and somebody carries the Will and walk away. They fight over your Will or whatever, lawyer spends some part of the Will money and we don’t know what is up.

“We want a situation where your life is a continuum of what legacy you left behind. At the end of the day, the true wealth we have is our name. So, we are trying to see if we can re-focus our clients to begin to think of it in that line; to say if I have to leave a name, what kind of name will I leave behind? That name should be the legacy.”

Rendering Support to Customers

Despite the stiff competition in the Nigerian banking industry, the Heritage Bank boss believes that the bank would break even.

Sekibo explained: “We have to get a customer to begin to believe in themselves; that if you say you can make water, then we as a bank will want to know whether you will be able to do it. If you have what it takes to do that, then we as a bank will help you with other things that would assist you make the water.

“Some time people think money is the main thing to get business right; money is not the main thing to get business right. The partners have to put other things right. Most banks would be ready to help you if you are prepaid to do things right. If you tell a bank that you have partners that have enough skills to do the business, then better.

“You need people that will help you market the product, accountant or cashier, engineers etc. Another thing is ownership structure; you should not allow your relation to do everything in the business. What is lacking in the Nigeria banking state seems to be that we are not willing to own up.”

He maintained that the bank would strive to satisfy operators in every sectors of the economy.

“We want to be everything such as managing director, chairman, accountant and so on. The Dangote that we are seeing today did not start big, but started somewhere because he disciplined himself. It will pay us if we do business by sharing responsibility. Our children will enjoy, our grandchildren will enjoy and the entire country will enjoy if the business grows,” he added.

Continuing, he added: “There are a lot of value and opportunities in the Small and Medium Scale Enterprises (SMEs). Most banks don’t have the skill to mentor this scale of business. Money is not the first thing to get business right; there are things that must be put in place first before money. So, we intend to work with the SMEs and nurture them so that as they grow, we also grow with them.

“When we created International Energy Insurance (IEI) Company, there was no known energy insurance company in this country. People thought it won’t be possible. We took engineers who are petroleum engineers and taught them insurance and grew that market size .It looked impossible, but it worked out. There are ordinary people like us who can strive to be better off tomorrow; that is one niche.

“We might be small today, but if we have 20 people like us growing gradually, then tomorrow, we will grow to become big companies and that is what we are saying, that we are ready to work with enterprises that are ready to grow with us.”