Rebranding an entire commercial bank is more than just knocking a name off a building, setting up brand colors and altering letterheads.
Kenya has witnessed several banks change brands and the litmus test of their success has been in their financial results during the same year they make the switch.
In 2016, K-Rep Bank finally switched to Sidian Bank, during that year the lender’s profitability declined from Sh372.3 million to just Sh28 million.
During that same year, Equatorial Commercial Bank changed into Spire Bank and extended a loss of Sh486 million almost twice to a loss of Sh751 million.
Last year, when Barclays Kenya’s transition to Absa was fully on course, we tried to track the lender’s performance and whether the bank would suffer this unique curse.
Surprisingly, Absa’s net profit rose by 15 percent to Sh 8.5 billion before factoring in the one-off rebranding costs.
The name change from Barclays Bank to Absa Kenya in February gobbled up Sh1.5 billion which meant that profits grew by 0.53 percent; from Sh7.4 billion to Sh7.45 billion.
The money went into face-lifting 85 branches, upgrading 209 ATMs and 2 headquarters, rebranding 78 internal and external applications used by customers and colleagues, investing in new enhanced digital applications, marketing, and advertising.
Absa managed its ship through the turbulence without rocking its management and at the same time carrying its customers along and explaining the value proposition in the brand change.
While Sidian bank’s customer deposits increased from Sh13.3 billion to Sh13.6 billion and then fell to Sh12.7 billion and Spire bank lost close to Sh2 billion in transition costs, Absa bank has had a 15 percent increase in customer deposits from Sh207.4 billion to Sh237.7 billion signifying the importance of not only bringing your customers along but opening doors to new possibilities.
Its Timiza virtual banking platform now boasts of nearly 4 Million customers, having lent out 3.2 million loans valued at Sh 20 billion. The lender is now offering interest rates of up to 5% on savings made through Timiza.
The bank has essentially transitioned to become a gigantic powerhouse built of technology and is now leveraging large-scale robotics and data analytics to separate good borrowers from bad borrowers like wheat from chaff.
Absa’s boss Mr. Jeremy Awori says that going forward, the lender is pursuing a far-reaching transformation agenda that will be underpinned by its thriving digital and virtual banking ecosystem and an obsession for its customers wellbeing.
In the wake of the raging COVID-19 pandemic that will likely drive small businesses into a financial wilderness, Absa says it will endeavor to pay all its SME customers in no more than 14 days.
Mr. Awori said that this year, Absa will be looking do diversify its income streams through alternative investments which will include gold exchange-traded funds (ETFs) and to expand market share through services such as wealth management and targeted acquisitions.
“We have a duty of care to our shareholders so we will embark on identifying potential acquisitions that make sense,” he said.