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Polaris Bank’s VULTe, Wema’s ALAT and the future of Digital Banking in Nigeria

Ikem Okuhu, a brand analyst reviews the emerging digital banking ecosystem in Nigeria and suggests a revolution akin to the emergence of “new generation banks” of the late 80s and early 90s

When on May 19, 2021, the VULTe digital banking application vaulted from the purple hues of Polaris Bank, most watchers of developments in the Nigerian banking landscape, especially how the players react to the increasingly pervasive influence of technology would be forgiven if they conclude it was a “VULTe from the blues.”

Staid and apparently intimidated by the impact of a cycle of regulatory hammers, it was easy for observers to perceive the bank as one preoccupied with routine survival business practices rather than one to be involved in revolutionary industry innovation. When you come to industries in any economy, there are always two categories of players that spearhead the revolutions that alter the course of change. The first includes the big payers. This is in view of the fact that with their size and financial advantage, they often attract the skills (inhouse or from vendors) needed to drive increased industry dominance. The second category is made up of total outsiders who, from years of observing trends and noticing service gaps, create disruptive solutions that draw customers through superior value propositions.

Mid-table and bottom-rung players rarely lead industry revolutions. They have their struggles to contend with and when those struggles include unflattering perception, rising from this to think outside the box is usually difficult.

Innocent Ike, CEO Polaris Bank

But the case in Nigeria is looking like a reverse expectation. While the threat of outsiders such as the telecom giants is clear and present, it looks like it is the players at the bottom-to-the-middle of the food chain that will be at the forefront of the next generation of financial services in Nigeria. There are outsiders such as Kuda, Rubies, Eyowo, Sparkle and a few others, but it would seem the bigger wave-maker has been ALAT, a digital banking app belonging to Wema Bank that has been making the biggest waves, until the recent arrival of VULTe, that is.

What is happening in regard to the developments in the country’s emerging digital banking revolution is taking the shape and form of what happened from the middle 1980s all through the 90s when the then famed “big four” banks, namely; First Bank, Union Bank, United Bank for Africa and Afribank slept in size-induced complacency, allowing the then smaller banks to adopt the integrated banking model to rise to prominence and eventually, dominance. Some of those banks were either startups or taken over by a new breed of revolutionaries that latched on the need by customers to transact their businesses at any branch closest to them as against the inconveniences of locating the particular branches where they opened their accounts.

History appears to be repeating itself if one considers that so far, the present-day big banks have all been slow to embrace digital banking. The illusion appears to be on the general mistake most are making in either confusing digital banking or neobanking, with online or internet banking. While it is still true that the Central Bank of Nigeria is still protecting the traditional banks from a decisively revolutionary blow by the big telecom companies by slowing their full entry into the financial services business, the future of the Nigerian banking pecking order may eventually be determined by the speed with which traditional banks take early position in the neobanking space.

This is where the early moves of the duo of Wema Bank and Polaris Bank become of great, and for those still sitting in comfort zones of size and spread, grave significance.

Polaris Bank and Wema Bank have one thing in common and that is the colour of their livery which is purple. For those in the business of studying brand differentiation, this might be cited as a challenge to the memory and recall and the winner of the war of competition might just be the one who succeeds in investing in growing the romance between the public and the brand.

What is in a name?

The old casual debate on the relevance of the names we give to people and brands returns with the entry of these two brands in the digital banking ecosystem. The answer lies in the huge investments that businesses make in brand development. If names are not important, then, then the whole business of branding and differentiation would have been totally unnecessary.

Oloketuyi: Wema Bank former CEO who pioneered ALAT

Besides its role in providing identity, names are also important in defining the functional DNA of products and services. When Steve Jobs and his team were creating the Apple brand, the idea was to have a name that will be easy to recall, not sound too techy, and have an evocative sex appeal. So, a combination of the one eaten by Adam and Eve in the Garden of Eden and the apple Isaac Newton was eating when he discovered gravity plus the fact that he was Apple is found early when searching through the phonebook were strong considerations.

But Jobs later said he wanted a name that was “fun, spirited and not intimidating” for the technology brand he was building. Giving this background, it would be in order to conclude that Wema bank, in naming its digital banking solution, ALAT, was informed by the need to connect to the everyday language of sending and receiving money, emblematized by the debit and credit ALERT messages on mobile phones.

This has very obvious advantages as it lends to easy recall and association. But that might serve well in an industry that is not crowded. When competition begins to drown the environment, ALAT might begin to narrow in its mental evocation to suggest only payments, which is a very narrow aspect of the universe of digital banking.

The first enemy ALAT might have might emerge from a competition that shares the same purple livery with it and that is in Polaris Bank’s VULTe. VULTe, in sound and phonetic onomatopoeia, carries two other strong imageries; volt, which suggests electric speed, and vault, which might mean between a safe lock-room (for money as found in banks) or, as in sports, to jump over a high fence (as in Pole Vault) and break barriers.

These are not functional differences. They may exist in the mind only. But in the emotional world of marketing, perception is often everything.

The wider digital banking industry is growing and in a community with the likes of Sparkle, owned by former Diamond Bank CEO Uzoma Dozie; V by VFD Microfinance Bank; Rubies, promoted by a fintech company called QuCoon, Eyowo, and Kuda, both of which were online savings and lending platforms, the power to differentiate, even if by sound and eponymous name choices might prove to announce who wins in the end.

But it seems VULTe may become the minimum standard for the future development of neobanking in Nigeria. At launch its architecture has been designed to accommodate customers and non-customers of Polaris Bank. This might be a winning edge this solution has for now. Enjoying such an advantage at launch confers immense growth opportunities. What is not clear is if Polaris’ VULTe is compliant with standards that will facilitate payments under the International Bank Account Number (IBAN). If this answer is yes, then this will offer a strong edge in the consummation of transactions.

Apart from Eyowo, it appears VULTe is the only other digital banking solution in town that supports Quick Response (or QR) transaction processing. QR Codes are capable of storing loads of data while also lending to instant access to the stored information by the reader. All mobile phones these days come with QR Code readers and this may be a major edge in an age in which speed and safety of online information have become critical.

It might yet be early days to pass enduring judgments on service ecosystem that is still evolving but it is safe to note that Polaris Bank, against expectations, has shaken off its debilitating legacy challenges to take front-row seat in a space the sector’s leading institution (in terms of profits and balance sheet size) had been expected to be the leading lights. And just as Wema Bank arrived early to shine the light, one might make safe conjectures about a future recalibration of the banking sector pecking order.

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