Banks have been custodians of value from time immemorial— trusted by business owners and individual customers to store, manage and perhaps grow funds using the various instruments at their disposal.
The kind of visibility that financial institutions get on their customers is second only to that which mobile network operators acquire. As a consequence I have a default expectation of innovation especially in light of recent caps put in place to temper the upward movement of interest rates.
Last week, a cursory glance at the classified pages of two local dailies cemented my belief that banks are not doing enough where it matters to build services that would truly and deeply drive impact for their customers. The classifieds run list upon list of commercial vehicles that were up for auction by a number of financial institutions following the obvious default of the asset co-owners on their obligations.
This is where I have an axe to grind with the banking fraternity. A seized commercial asset especially one that earns its keep from being in motion – think bus, truck, van, tractor— stops generating revenue the moment it is immobilised. If you ask any of the affected entrepreneurs, no one sets out to acquire an asset with the aim of not fulfilling their obligation, but they make call based on various opportunities that present themselves, such as the Access to Government Procurement Opportunities programme.
On further investigation, you realise that the cause of default, for the majority, has not been the entrepreneurs’ inability to service their contracts, but rather inconsistent, delayed or even absconded payments due from their customers, even with signed contracts in place.
Here is the thing, the very same entities and institutions that delay or even abscond payments hold accounts with the banks.
The move to have auctioneers descend upon the very entrepreneurs they enticed to take facilities with them is zero sum, especially so where they have up-line visibility. Banks need to re-imagine their role and place in the facilitation of business in a way that will resonate with the huge constituency of small and medium enterprises that are truly the back bone of the Kenyan economy across various sectors.
Public key infrastructure and smart contracts riding off the blockchain are cornerstones of this metamorphosis.