As the current quarter (Q3 2022) comes to an end, the next 30 days will see financial institutions (banks and non-banks) aggregate their financial results as per requirement from the central bank. The public will then be given a glimpse of who was “hot” and who was “not” in topping the earnings charts.
It has become an unwritten tradition, especially for the banker’s side, to dissect the financial statements of contemporaries. The ‘Covid era’ amplified this as Zambia’s banking space created the most value in many a year for incumbent players.
Comparisons of number of deposits, customer density growth, value of deposits, net earnings, and the banker relevant ratios are often discussed over drinks, coffee and several other pondering venues. But whilst the discussion is centered around who created the most value for shareholders, is it possible that the most quintessential questions is completely missed? Are we creating value for our customers? Is the customer experience more improved in this quarter compared to the previous quarter? How better off are our customers now than they were in the previous quarter?
You don’t get to see abridged results of the aforementioned questions. Nor are there financial ratios in the quarterly results that are customer centric. But why is that one may ask. Does the euphoria of ensuring capital requirements are meet with the central bank outweigh the significance of whether or not customers are getting the best customer experience ever with the bank?
At face value, quarterly results only give us the performance of the bank from the periscope of profitability, liquidity, efficiency and risk. They are a great measure, from a shareholder perspective, of whether the institution is on course to meet its annual target(s).
When this author spoke to one CEO of one of the banks in Zambia, the leader indicated that quarterly rankings and the obsession around them could actually be potentially toxic hence they elected not to be drawn into them. The leader further argued that it is often more probable that staff get derailed from the prime objective of strategy implementation to focusing on this once a quarter spotlight moment without seeing the bigger picture.
What would be great though is if quarterly results also included a measure of how well the banks are doing in executing their respective strategies. A monitoring and evaluation framework being put in place that ticks the boxes from service deliver to customer experience. That would be nice, wouldn’t it? But then again, it’s a Bankers Royal Rumble….Profit over Everything.