Jamaica’s largest banking group has grown its loan portfolio sevenfold since the start of its journey towards digital transformation in 2015.
Additionally, the loans written through digital channels now account for 20 per cent of total loan volume, says NCB Financial Group President & CEO Patrick Hylton.
NCB Financial’s digital initiatives through its member companies includes Lynk, the digital money platform which now has over 200,000 subscribers, and recently added remittances to its services; GoIPO, the first platform on which investors could trade stocks and, now, bonds; and ‘Bank on the Go’ halls for electronic banking at NCB branches.
NCB Financial has never given a full accounting of its investments in its digital programme, but a review of its accounts shows that in the past five years, its expenditure on computer software alone amounted to $32 billion.
The group holds $2.1 trillion in assets, with its primary business, National Commercial Bank Jamaica, representing around half of that total, making NCB Financial the largest banking conglomerate in Jamaica. Amid its assets, the group’s loan portfolio, which is mostly attributable to the bank, is a hefty $593 billion.
On Wednesday, Hylton, who was one of the presenters at the CEO Seminar on Utilising Capital to Drive Digital Transformation, hosted by the Jamaica Stock Exchange, said digital transformation in any company must be driven by its chief executive.
“You have to engage the entire organisation, and the only person who can do that in a meaningful way is the CEO,” he said.
“When we (NCB Financial) decided to go agile it was a significant risk. As it is said: 70 per cent of such projects fail. I said to myself that, as fearful as I am, there is a greater risk if we don’t transform,” Hylton noted.
“One of the biggest challenges was Lynk. It took a lot of courage … . What could happen if it could not scale?” he added, regarding the considerations that weighed on him.
Those considerations weren’t spurious. At the time, other mobile money or e-payment products that had come on the market in previous years had been withdrawn due to limited take-up.
Lynk is held under a company called TFOB 2021 Limited. The digital wallet was created to facilitate the unbanked, said Lynk CEO Vernon James.
“Jamaica is very big cash economy with an estimated $10 trillion in transactions, 80 per cent of which is in cash,” said James.
“Lynk was launched to reduce and capture the unbanked, being a product which does not require going into a bank. We did not expect it would go viral, but in short time there were 60,000 people using it,” he said.
Lynk continues to add new features in order to drive interest in the service, and now has 20,000 persons utilising the app every day and 207,000 customers in total, James said.
Its offerings include bill payment, mobile top-up, and remittances, which was added earlier this month.
“Lynk is a journey of customer engagement,” said James. “Our aim is to reduce the use of cash in the formal economy … . In the top 10 economies, all of them are over 90 per cent digital. Jamaica has to get there,” he asserted.
IPO nightmare
Meanwhile, the idea for GoIPO, which is operated by brokerage NCB Capital Markets Limited, emerged after one of the most sought-after IPOs hit the market in December 2017.
The Wisynco IPO generated 8,000 applications, leading to “an administrative nightmare, which took us 30 days after closing for reconciliation,” said NCB Capital CEO Steven Gooden.
In the wake of that big business problem, as Gooden described it, NCB Capital gave itself a challenge in January 2018: to create a platform that would allow for 80,000 applications and to close an IPO and allocate the shares to subscribers within three days.
“We came up with a solution, and the JSE was game,” said Gooden.
“We piloted GoIPO early in 2019 when Wigton went public. It worked, but there was another problem we needed to solve.”
The second problem was in relation to the opening of an equity account.
“That process required a lot of paperwork,” said the NCB Capital CEO.
The following year, with another large IPO on the horizon, toll road operator TransJamaican Highway, Gooden said, NCB Capital addressed the issue of account opening in discussions with the stock exchange and regulators.
Consequently, when the TransJamaican IPO launched in 2020, just ahead of the pandemic: “Simultaneously, users were opening accounts with the JCSD (Jamaica Central Securities Depository) as well,” he said.
In the end, Wigton Windfarm and TransJamaican, both of which were state-owned businesses being privatised through the stock market, ended up setting new records for IPO subscriptions. The Wigton transaction was brokered by Mayberry Investments Limited in 2019, while NCB Capital arranged the TransJamaican offer. Both received more than 30,000 applications.
Earlier this year, NCB Capital also announced a new enhancement to the platform, which allows investors in bonds to avoid the usual paperwork.
“It is now as seamless as an equity offering,” Gooden said.
Now NCB Capital plans to launch GoIPO in other markets. But the brokerage also has a new aspiration: to facilitate “eight million applications and close an IPO, allocate and refund in minutes”.
Over time: “The platform could very well become the Amazon of the capital markets,” Gooden asserted.
Hylton says a big part of going digital is transforming cultures and mindsets.
“I don’t use the words ‘digital transformation’ any more. I simply say ‘transformation’. Transformation is a journey, ensuring sustainable growth on a performance trajectory. The challenge today is to get more with less and to get continuous transformation,” said the banker.
“From a human resource perspective, it is disruptive. But it involves new opportunities, giving people new skill sets to pursue,” he said.
avia.collinder@gleanerjm.com