Nigeria’s banking sector is undergoing significant changes, with major players adapting to shifting landscapes. While Zenith Bank and Union Bank reportedly discuss a merger and First Bank considers acquiring smaller banks, the most noteworthy transformation comes from Guarantee Trust Bank (GTBank).
GTBank is set to restructure into a holding company, as announced by its CEO, Segun Agbaje, during the bank’s Q4 2019 earnings call. A holding company oversees multiple subsidiaries, allowing the parent organization to diversify its operations. This strategic move will enable GTBank to expand beyond traditional banking services.
Historically, GTBank managed non-banking subsidiaries such as GTB Asset Management and GT Assurance. However, regulatory changes in 2010 required banks to either divest from such subsidiaries or reorganize as holding companies. GTBank opted to divest, selling off its assets, which now operate independently as Investment One and AXA Mansard Insurance, respectively.
The bank’s shift to a holding structure mirrors the path taken by First Bank, Stanbic IBTC, and FCMB, but GTBank’s goal isn’t merely to enhance banking operations. Instead, the focus is on fintech innovation and payment services.
A New Vision for Growth
Despite achieving a 6.6% profit increase in 2019 and gaining over 7 million customers within two years, Agbaje remains dissatisfied with the current pace of growth in traditional banking. He expressed concerns over stagnant growth rates in the sector, which he believes are unsustainable, and pointed to fintech valuations that far outpace those of banks.
By transitioning to a holding company, GTBank aims to unlock new growth opportunities, particularly in the payments sector. Agbaje highlighted the rapid expansion of their payment business, which has grown by 60%, underscoring its potential as a key area for future development.
Competing with Fintechs
GTBank has been proactive in competing with fintech firms by offering digital solutions such as QuickCredit for lending, GTPay for payments, and its all-encompassing superapp, Habari. QuickCredit, for example, has grown significantly, partly due to reduced interest rates that make it more competitive than offerings from fintech companies like Carbon and Migo.
Payments remain central to GTBank’s strategy, with the bank’s leadership emphasizing the importance of capturing a larger share of this fast-growing market. Industry projections suggest that Nigerian fintech revenues could rise from $153.1 million in 2017 to over $500 million by 2022, presenting both an opportunity and a challenge for traditional banks.
Habari, launched in 2018, integrates payments, entertainment, and news services, serving as a complement to GTBank’s other digital offerings like its popular *737# USSD service. While it has faced criticism, Agbaje remains confident in its potential and views it as a key tool in the bank’s fintech arsenal.
A Bold Leap Forward
GTBank’s restructuring underscores its commitment to staying ahead in a competitive financial landscape increasingly dominated by fintech innovations. By adopting a holding structure, the bank is positioning itself to not just compete but lead the charge among traditional banks venturing into the fintech domain.
The race between legacy banks and fintech startups continues, and GTBank is determined to emerge as a frontrunner.
