Global Courant 2023-05-02 16:17:10
In July 2021, Guaranty Trust Bank Plc, one of Nigeria’s major lenders, implemented a corporate reorganization into GTCO, a holding company. This reorganization meant that the company would start offering services beyond banking, such as solutions for payment services.
Now GTCO has released its full year annual accounts for 2022, on the occasion of its first anniversary as a holding company. The report showed that the focus on expanding this non-bank offering has not changed. And in line with this strategy, it acquired Investment One Funds Management Limited and Investment One Pension Managers Limited.
Investment One, a financial and capital management company, was originally founded as part of Guaranty Trust Bank.
Prior to 2012, Guaranty Trust Bank provided various non-banking services, including GTB Asset Management for capital market services and GT Assurance for insurance. However, a 2010 regulation by the Central Bank of Nigeria (CBN) forced banks to divest or restructure non-core loans as a holding company, preventing them from operating non-bank subsidiaries.
So Guaranty Trust Bank opted to comply by selling its subsidiary, GTB Asset Management, which currently trades as Investment One. But now that it has a holding company structure, Investment One returns to the GTB family. Investment One will operate under the new name Guaranty Trust Fund Managers Limited (GTFM), while Guaranty Trust Pension Managers Limited (GTPM) will serve the retirement needs of Nigerians.
tackling fintechs
A notable detail about GTCO’s return to the wealth management world is its digital-first approach. It will compete directly with fintech startups such as Trove, Chaka, Bamboo and Risevest. But it’s not the company’s first step into the water. On June 1 last year, GTCO launched Squad, a payment platform, through HabariPay – its fintech arm – to take on fintech companies such as Flutterwave and Paystack.
But before the launch of Squad or even HabariPay, GTCO’s ambition to delve into fintech was no secret. Segun Agbaje, the CEO of the company, talked about this dream for four years before launching Squad. “About 10 years ago, we made a decision when we looked at the operating environment, that we were going to divest all of our subsidiaries and become fully bank-focused,” he told analysts at a press conference. call income in 2020. “Everything we’ve seen over the past 2.3 years has told us it’s time to rethink.”
GTCO’s desire to move to fintech is driven in part by the apparent steady growth of traditional banks. “Most banks grow by 5% to 7%. We don’t think that’s sustainable,” Agbaje told analysts. The company’s financials prove his point. GTCO’s profit after tax (PAT) fell to a four-year low last year and has struggled to maintain an upward earnings trajectory in recent years.
Meanwhile, it has consistently posted impressive numbers among payment services. HabariPay included for example N689 million profit before tax within six months in 2022, a margin of 75%.
The Achilles heel
From April 29 to May 1, GTCO held its annual Food and Drink Festival, welcoming thousands of Nigerians to exhibit and explore different angles of the food industry. However, this event set the stage for an irony: GTCO’s payment services did not work properly during the event.
gtbank takes shape at its own festival by opay and co. doesn’t look good
— dámiláre dòsùnmú (@tarykuh) April 30, 2023
GTB card does not work on a GTB POS, GTB app also does not load to transfer to a GTB account number
…at a GTB SME event
But hey Habari processed xyz billions in just 2 months
— Philanthropist in Chief (@bigbrutha_) April 30, 2023
At GTBank’s annual food festival, most transfers were made using Opay.
Can it be attributed to Brand Love, or does that just show the average consumer’s distrust in the bank(s), or does it just mean that Opay has properly connected and owned that space?
— Uncle Evan (@promevance) May 1, 2023
This event highlights one thing: GTCO has an Achilles heel. Although it has been the most aggressive traditional institution to compete with fintechs in Nigeria for the past decade, reliable payments are still an issue. And that’s where fintechs and neobanks are taking the lead.
Opay and PalmPay, two Chinese-owned fintechs, have become the most downloaded financial apps on the Play Store. As of May 2, none of GTCO’s apps were in the top 20. The reason is obvious: fintechs like Opay and PalmPay have become more reliable and the market is embracing them.
So, while GTCO once predicted with an “easy win” in the payments space, it won’t be a walk in the park. It has the legacy advantage, but fintechs can level the playing field simply by being more functional.
