When you first meet Sanjeev Kumar, you do not expect the kind demeanor from his serious stature. The Founder of Bank M stands tall in blue jeans, a black Lacoste dress shirt and a black jacket. He breaks into a small smile as we exchange greetings and lets me know that he is ready for anything I may throw at him.
Although he is behind one of Tanzania’s most successful banking institutions, Kumar’s background is very far from finance. Born and raised in India, he graduated with a degree in law, specializing in taxation law, and was selected to join the management-training program at State Bank of India, the biggest bank in India about 35 years ago. It is here that his love for banking was born; Kumar says it grew on him and he wouldn’t go back to law today if given a chance.
So how does a man of Indian descent end up in the coastal city of Dar es Salaam? Call it perfect timing. Kumar built his banking experience with State Bank of India and soon after moved to the French bank BNP Paribas before making the calculated move to Tanzania in 2001 to become the Chief Executive Officer of Diamond Trust Bank (DTB). His time here showed him the challenges his corporate customers had with managing large cash collections that would not get delivered to the bank in time due to the early closing times most institutions enforced.
“When I came to East Africa, banks here were fat cats and customers didn’t have a choice and had to take what was given. Banks used to open whenever they liked and closed promptly at 2PM,” says Kumar.
This gave him the idea to provide customers with better service by extending operating hours during the day and keeping the bank open over the weekend.
“There are banks in Asia who have done the longer working hours strategy and it has worked for them, but they couldn’t incorporate the service standard guarantee so when I saw that, I knew this new model would work very well in Tanzania and Kenya as well.”
Bank M was an idea formulated by Kumar, and five other investors, after he left DTB in 2004. Kumar had a desire to do his own thing and create an institution that provided the type of service customers were looking for.
“We started with focus. I believe focus is the key for good customer care, so right from the word go, we were focused on wholesale banking and within wholesale banking we concentrated on large business families. We don’t do anything else. We don’t do savings accounts, no ATMs – nothing except wholesale banking,” says Kumar.
Since opening in July 2007, Bank M has grown steadily with paid-up capital now reaching TZS73.06 billion (around $33 million) and balance sheet and profitability growing at a compound annual growth rate of 45% over the past decade. The company has since won the heart of the Tanzanian corporate sector with its longer working hours and customer service guarantee. It is the only financial institution in Africa that is open 12 hours a day, from 8Am to 8PM, seven days a week. It also won the Best Commercial Bank Tanzania 2015 award and is the sixth largest bank in the country in terms of profitability.
Kumar claims that this new style of banking has helped Tanzania’s economy in various ways. Many of Bank M’s customers are supermarkets and restaurants that deposit their earnings for the day in the late evening hours. The bank also does cash collections and deliveries from their customers’ offices.
Bank M started at the right time in Tanzania. The country’s GDP has consistently grown since then, at an average of 7 to 8%, but there is uncertainty for the private sector, according to a Stanbic Bank report on African markets.
“Prospects are looking good for Tanzania’s economy as it grows closer to the 7% mark, making it stronger than both the Kenyan and Ugandan economies. The jury is still out though on the various reforms mandated to enhance productivity in the region,” says Jibran Qureishi, Regional Economist for East Africa at Stanbic Bank.
Jesse James A’ruwa, Co-Founder and Senior Investment Advisor at SMA Capital Limited, however, says banks can still do more.
“There still remains a huge gap to fill in the financial sector to ensure that the public has access to the full array of financial services, including access to money markets and investment funds etc. I believe that for the financial sector to really take strides towards advancing the economy, the stakeholders within the financial sub-sectors need to adapt their products to the reality of the Tanzanian people and their mindsets,” he says.
Kumar has since opened a variant of Bank M in Nairobi, Kenya. The majority shareholders of Bank M have set up a Bank Holding Company, M Holdings Limited, which has been licensed by the Central Bank of Kenya as a non-operating bank holding company. M Holdings has been licensed by CBK to acquire a minimum 51% stake in local Nairobi bank, Oriental Commercial Bank – now rebranded to M-Oriental Bank. With this new acquisition, the bank will focus on large family businesses in Kenya. Kumar says there is a big difference in finance management between Kenya and Tanzania.
“In Kenya, $1 is just KSH102 while in Tanzania it is TZS2,235, so the circulation is much less in Kenya. In Tanzania, if you change $100,000 you’ll need a suitcase to carry it, but in Nairobi that is still manageable cash. So Kenyans don’t need as elaborate a structure but we will definitely still offer cash pick-up and delivery.”
Bank M plans to expand in eastern and southern Africa, to countries such as Mozambique, the Democratic Republic of Congo, Zambia and Malawi.
Kumar is an avid runner but finding time for this can be difficult. He spends about 14 hours a day in his office in either Tanzania or Kenya, but says it does not feel like work as he enjoys his job immensely. He credits the company’s success on its customer service.
“Our focus on clients is the main factor that determined our success. Giving them the kind of service they wanted, delivering what they need to them at the time and place of their choice,” he says.
Kumar left India to advance in his career as a banker and ended up doing a lot more than that. He has found a new home in East Africa and is playing an important role in developing the constantly growing financial sector here. Fat cats beware.