BUILDING POSTBANK FROM THE GROUND UP

Numbers like hips, do not lie.

Post Bank, hived off from the Uganda Posts & Telecommunications Corporation (UPTC) has struggled to shake off its dusty, sleepy reputation.  But in the last five years, the company seems to have caught a second wind and if its CEO Julius Kakeeto has anything to do with it, will be challenging for industry leadership in a decade.

In the last five years that Kakeeto has been at the helm, the Bank has seen revenues nearly double to sh207.6b last year compared to sh110.6b in 2019; profits have outperformed this, more than trebling to sh27.5b from sh8.4b in the same period suggesting the achievement of greater efficiencies. The cost to income ration plummeting to 65 percent in 2023 from 85 percent five years ago. The industry average in 2023 was 73.5 percent last year.

Subsequently  the general health of the bank has dramatically improved with the asset base more than doubling to sh1.11trillion from sh490.6b in 2019.

So what accounts for this turn around, which is nothing to thumb our noses at. 

Clearly it was not a case of economic momentum because the stage was set for takeoff during the covid lockdown, a time of historical economic constriction...

A major cultural shift was required.

“When we started talking about performance, most of my colleagues were in shock. They were just not used to being held accountable, being held to deliver results,” said Kakeeto.

“I kept on reminding everyone here that, yes, we maybe government owned, but we are competing with private sector owned institutions. The entire industry is private sector led. So they are competitive. They are very aggressive. And for us, we cannot sit back and we think we shall survive operating in that kind of environment.”

 Kakeeto, who had previously worked with CitiBank, Equity bank and Orient Bank knew what he was talking about.

 A reorientation of the workforce’s mentality had to go hand in hand with other more tangible changes.

 “We had a lot of obsolete technology in the organization,” he remembered, shuddering at the memory.

 “We had long queues. People would line up on the street in many of our branches. … Your ATM card would take six months to receive, once you open an account. So you would have an account, but you could not even access your money. If you have a lunch hour from work to go to the bank, there is a long queue up to the streets, you couldn’t get your money in time. You have to go back. But then the other platforms were not working. You can't access it on the phone, you can't access it in the banking hall.”

 Their 20th century technology was further exposed during the Covid lockdown. Bank operations remained manual with no capacity for the staff to work online and their clients suffering consequently.

 Kakeeto’s career at PostBank was almost done before it begun, as the lock down happened five months into his tenure.

 

"They turned lemons into lemonade however, using the lock down to upgrade their systems with the results beginning to show in 2021 onwards. Currently 80 percent of their transactions are off their online platforms with over the counter transactions accounting for the rest. The clear opposite from five years ago...

 

Interestingly the huge investments in revamping their systems they were able to achieve under their own steam.

 The kneejerk reaction for many government companies is to look to government for funding.

 “We shifted the conversation to let's stabilize it. Let us make it perform. Let's reorganize, restructure it. Let's convince the regulator that we're in shape for a commercial banking license after that you can grow and scale . If more funds become available, well and good. They come as a bonus, but they should not be the primary driver of our journey. So yes, we've we've achieved that,” he said.

 The quiet of the Covid lockdown also allowed Kakeeto and his team to think harder about strategy and how they were going to win market share.

 “At the time our discussion was always around, how can we sustainably drive financial inclusion and not just look at opening branches. Opening branches is not a solution, because how many branches are you going to open? Opening a branch is very expensive.… that same investment can reach out to more people if you find a better solution,” he explained.

 “That's how we came up with the with the wallet, Wendi. And the whole idea was, with the wallet, you can bank everyone, not just your customers.”

 

"This along with other digital initiatives means they are firmly on the way to doubling their client numbers from 700,000 at the beginning of the Bank’s restructuring. It helps too that you can now open a post bank account in under ten minutes and have your ATM card, compared to waiting six months for your ATM card previously, for which Kakeeto is justifiably proud.

 

Their new strategic objective “Fostering Prosperity for Ugandans” is hinged on increasing financial inclusion on one hand and relatedly, supporting entrepreneurship and services.

 This has taken them into rethinking how they support rural Uganda, where they have learnt to support whole ecosystems rather than cherry picking the more lucrative parts of the agriculture value chain.

 “The moment you say, I'm going to foster prosperity, you cannot do it partially. I cannot for example, you process beans to sell to World Food Program (WFP). And I come and I tell you, I finance your contract for buying beans and processing them. And you have 100 workers. Your workers need salary loans. And I said, No, those ones I don’t want, I only want you. It doesn't work like that;” he explained.

 Driven by their new strategic imperative, Kakeeto is not ashamed to raise the bar of his ambition for the bank.

While aware that the dramatic success of the last years were coming off a relatively low base,  Kakeeto is confident for the future of the bank.

  “I remember at the beginning of my time I mentioned that we were going to become a tier one bank.  

We are now. I kept talking about, we want to become a top half bank, like top 12 and we are there. So I won't be shy to talk about being a top six bank in four years.” Kakeeto said.