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NCB Financial sets big target for growth in payment services

Published:Sunday | January 17, 2021 | 12:05 AM

Banking conglomerate NCB Financial Group wants to expand its digital offerings fivefold within its Payment Services segment in three years.

“By 2024, this segment aims to shift its end-to-end digital capabilities from 15 per cent to at least 80 per cent,” NCB Financial said in its annual report released on Thursday.

The top banking group with assets of $1.8 trillion says the shift to online channels will eliminate manual processes for customers, and more features at ABM machines and kiosks, in what NCB called the expansion of digital ‘onboarding’ at each customer touchpoint. It will also see the removal of the manual verification process of customer authentication.

“The Payment Services segment continues to pursue a trajectory of maximum digitisation, with key focus on optimising current solutions and delivering fully digital onboarding of merchants and cardholders,” the report said.

NCB didn’t specify precisely how it would measure the rise in its payment services to the 80 per cent target – that is, whether it would be in terms of transaction volumes or dollar value or by reach.

NCB Financial Group operates seven business segments, with payment services earning the second lowest operating profit among the seven, but its return on assets was the best in the group at 8.8 per cent in 2020. That worked out to $2.4 billion in operating profit in 2020 on $27.3 billion in segment assets, most of which are digital. NCB Financial Group’s top profit-maker was ‘life & health insurance & pension fund management’, which earned $23.7 billion in operating profit in 2020, with segment assets of $564 billion, with a return on assets of 4.2 per cent.

As for its other businesses, the banking group said to expect the roll-out of enhanced features to facilitate e-commerce services and increased processing of its digital mobile money Quisk service. In the 2020 financial year, Quisk customer transactions increased 69 per cent compared with year earlier levels, added NCB Financial.

Last April, NCB moved to lessen face-to-face transactions, as part of efforts to reduce physical contact to stem the spread of COVID-19, while ramping up promotion of its intelligent ABMs, the NCB mobile app, online banking, and drop boxes, as alternative ways of doing business with the bank.

“Amid a series of unprecedented challenges, including considerably reduced consumer spending, declining international trade, and physical lockdowns, the Payment Services operations had to be agile and responsive in providing a number of innovative solutions for both merchants and customers to navigate the new commercial environment,” the report noted. “While exploring ways of mitigating significant reductions in net profit due to the decline in spending volumes, NCBFG’s Payment Services operations responded by launching an enhanced suite of e-commerce solutions and digital capabilities into the market,” it said.

NCB Financial Group earned $26.8 billion in net profit for its full year ending September 2020, down from $31.2 billion in 2019. But its total group equity, or book value, grew in the year to $200 billion from $184 billion, mainly because of a rise in its total assets that closed the year at $1.8 trillion, up from $1.6 trillion.

The seven segments and their operating results are: consumer and SME banking, loss of $1 billion; payment services, profit of $2.4 billion; corporate & commercial banking, profit of $2.7 billion; treasury and correspondent banking, profit of $6.9 billion; wealth, asset management and investment banking, profit of $6.1 billion; life and health insurance and pension fund management, profit of $23.7 billion; and general insurance, which made a profit of $6.2 billion.