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Dwindling profit: How banks woo depositors through incentives

 

In an effort to mitigate the continuing decline in profitability, some proactive Deposit Money Banks (DMBs), are now increasingly relying on various forms of incentives, including cash incentives to woo new customers, investigations by the Daily Times of Nigeria (DTN) has revealed.

Our findings revealed that at various banking halls across the nation, customers now meet more relaxed smiling Tellers ready to attend to their needs with patience, unlike before, where some bank officials would behave as if they are doing customers a favour.

But more than that, banks now connect with customers in various other ways including offering free packages to entice them into saving, so as to shore up their deposit base, especially in this season of high competition; drop in profit; challenging operating environment, coupled with different regulatory policies, among many other factors.

We, however, gathered that banks that were not very much visible in the retail segment have now shifted focus, indicating that banks are now seriously looking for how to boost their customer base and increase deposits.

Our findings reveal that incentives given by some of the banks are part of strategies that are significantly related to target market and the design of those tools is actually determined by the target market.

For instance, 36 customers of Skye Bank Plc recently won one million Naira each in its nationwide ‘Reach for the Skye’ Millionaire promo, ending the first phase of the millionaire promo.

Speaking on the initiative, the Head, Retail Banking at Skye Bank Plc, Nkolika Okoli disclosed that the scheme was established to increase the flow of funds to support SMEs, accelerate employment generation and development of indigenous entrepreneurship as well as encourage saving culture among Nigerians.

Similarly, First City Monument Bank (FCMB) Limited has been continuously rolling out series of Reward promos, such as ‘’Millionaire Promo Season 1 and2’’, Save and win Big Promo, which has seen different customers of the Bank being rewarded with the cash prizes.

The bank said its Millionaire Promo Season 1 and 2 are targeted at all segments of the society and for existing as well as potential savings account customers. The eligible products/accounts for the promo include FCMB basic savings, kids account, Nairawise, e-savings, premium savings and third party accounts.

In the same direction, Sterling Bank Plc has introduced ‘Sterling Plus Cash Reward Scheme’ to reward customer loyalty, encourage savings culture among Nigerians and promote financial inclusion. Winners of the various prize money emerged across the country at the weekly, monthly, quarterly draws. Grand prizes were also given on national holidays declared by the Federal Government.

A tier 1 lender, Access Bank Plc, has also toe in the same line but in a different strategy to deepen financial access in Nigeria. The bank has partnered with Airtel Nigeria to introduced Smart Savers initiative.

The initiative would enable Airtel customers to open bank accounts directly from their mobile phones without the bureaucracy and complexities of traditional banking.

The campaign, which kicked off recently, will provide all Airtel subscribers the opportunity to open a savings account for customers who sign up.

First Bank of Nigeria Limited has reiterated its commitment to drive financial literacy among the youth and unbanked segment of the economy, through empowerment of the financial education, while establishing the ‘FutureFirst initiative’ aimed at empowering secondary school students between the ages of 12 and 17years old with the tools and knowledge for long-term financial independence.

To this end, the bank support schools and educational institutions with their educational requirements to enhance their studies.

Also, Guaranty Trust Bank (GTBank), has launched the #GTBankMobileWin100k competition to reward its mobile banking customers by availing them a chance to win N100, 000 weekly from the bank.

GTBank, also held the third edition of the GTCrea8 Mini Cooper giveaway with Hassan Jamiu Olawale from Kwara State University emerging as the proud owner of a Mini Cooper Car.

However, financial stakeholders have urged the management of banks to often make use of these tools for more patronage, but advised that the design of sales promo tool should be based on customer’s needs.

Speaking exclusively with our correspondent on telephone chat, Managing Director/CEO, Easypath investment company, Mr. Adesola Olaleken, noted that banks should embark on customer survey research to discover more varieties of gifts that will enable them to accomplish their objectives at a specific sales promotion period.

According to him, the management of banks should create more awareness on the use of raffle draw to enhance greater patronage, because Nigerian banks needs such strategically implementation of the aforementioned tools, with determination to draw greater customers to their businesses.

“It is an integral part of promotional mix used by financial institutions to stimulate customer deposit and to make the customer remain loyal to the financial institution”, he said.

 

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