HOW ACCESS BANK PROVES PESSIMISTS WRONG ,OUTPERFORMS RIVALS
Despite the belief and the fear that Access Bank Holdings is treading where the devil fears most by its spate acquisitions, it has proved the pessimists wrong and sent jitters down the spine of its rivals with biggest assets, revenues and deposits in the industry.
However , the story of the bank’s leadership in the above critical areas is not accidental .To achieve this feat ,the management of bank , no doubt, tapped into one of the biggest lessons taught by Gary Hamel and C.K Prahalad , authors of “Competing for the Future: the power of foresight . The duo reputed for their managerial wizzardry explained that , “if any corporate entity must attain the status of industry leadership one of the critical success factors is the power of foresight “.
These authors noted further that ”competition for industry foresight, essentially a competition to establish one’s company as the intellectual leader in terms of influence over the direction and shape of industry transformation is one of the critical stages where the industry leadership battle is fought and won”
Access Bank is particularly motivated by the power of industry foresight .This motivation may not be farfetched. The power of foresight helps managers answer three critical questions: first, what new types of stakeholders’ values should we seek to provide ? Second, what new competencies will we need to build or acquire to offer those values to stakeholders ? And third, how will we need to reconfigure the stakeholders’ interface over the next several years? No doubt , it gives a company the potential to get to the future first and stake out a leadership position.
Undoubtedly , with the above hindsight s Access Bank Holdings Plc , one of the tier 1 lenders in Nigeria is in the battle for its industry leadership and the bank has proved beyond any doubt it possesses the prescience needed to proactively re-shape the Nigerian banking industry evolution and occupy that industry leadership in the real sense of it .
This ambition is conspicuously driven by its relentless moves for acquisition both at domestic and international fronts ;it has unequivocally embarked on this mission for some years now with a deep sense of purpose and destiny , conviction and passion. And this has continued to generate deep inspiration from its workforce and other stakeholders.
Earlier, it acquired both the rested Intercontinental Bank and Diamond Bank and others outside the country . The bank’s acquisition move is yet to come to an end. The bank is planning on entering 26 markets by 2027 compared to the 17 countries it operated in as of January 2023 .Recently, in order to translate this dream to reality , it has entered into various pacts with Standard Chartered Bank to acquire the British Bank’s subsidiaries in four African markets. This is as Standard Chartered’s banking operations in Angola, Cameroon, The Gambia and Sierra Leone are up for sale .
This current move signals Access Holdings’ most aggressive push for expansion beyond its home market , Nigeria, since it commenced operation in the country in 1989 as Access Bank.
An acquisition drive is ,indeed , a critical weapon in the hands of every strategic leader ; it is a means of growing a corporate entity and pursuing certain strategic choices, or options, that are potentially available to it in responding to certain positioning issues in the operating environment as well as in the industry . Such strategic choices include its competitive business strategies or how it competes in a market ,how broad and diverse it is in terms of its corporate portfolios, how the organization is created and how innovative it is and how far it extends itself internationally ;these options are expected to help to alter each player’s strategic position from time to time by gaining some competitive advantages over its rivals .
Notwithstanding , acquisition is not the only means of pursuing strategies . Other methods include by organic or strategic alliance .Though , mergers, acquisitions and alliances are key methods for pursuing strategic options which include diversification, internationalization and innovation and are the principal alternatives of ‘organic’ development which is the pursuit of a strategy by relying on a company’s own resource for growth, all are targeting the same goals . In other words , the main strategic options – diversification, internationalisation and innovation – can all be achieved through mergers and acquisitions, alliances or organic development. Of course, these three methods can also be used for many other strategies as well, for example consolidating markets or building scale advantages.
However ,while Access Bank embarks aggressively on a chain of acquisitions, taking control of another company through share purchase, by purchasing a majority of shares in a target company, some of its close rivals largely depend organic approach, relying on internal resources for growth. Guaranty Trust Bank ,First Bank and Zenith Bank appear to be applying a great deal of moderation to acquisition ; at least in the recent time, they are not known to be fleet footed or passionate about acquisition. Access Bank is not the only one too ,using acquisition to drive its growth . UBA is another bank with the same drive ,positioning itself African global bank. However ,some critics of Access Bank believed the bank is overusing this weapon considered to be extremely risky .
THE FEAR ,THE HOPE BEHIND ACCESS BANK’S ACQUISITIVE DRIVE
The obsession of Access Bank with acquisition as a driver of its growth has triggered a maelstrom of public commentaries ranging from tepid to outlandish and brilliant ;the whole spectrum of thoughts has been that the choice and its obsession is considered to be more risky ; in fact , the belief is that such a corporate entity is treading where the devil fears most.
The reason behind the fear over Access Bank’s acquisitive drive may not be far to seek . Most importantly , some banks in the past had hands burnt for taking similar initiative . For this reason , Access Bank’s preference for and obsession with acquisition, no doubt , has continued to raise several questions from its critics .Why is Access Bank Holdings endlessly pursuing its strategic choices by acquisition rather than by organic means? Has Access Bank been better off with this approach ? Why has the bank not employed the organic approach to pursue the above strategic options ?
A comparative analysis of both approaches definitely shed more light on the fear of Access Bank critics on its preference for endless acquisition . To these pessimists, the belief is that acquisition is fraught with more limitations that may frustrate any corporate entity’s dream of industry leadership relative to organic approach
First , mergers and acquisition are usually avoided by many organizations because they often lead to spectacular failures.This is simply because the acquirer is likely to be forced to withdraw at great financial and strategic expense or due to post-acquisition integration difficulties. According to some analysts’ very many, perhaps as much as half of M&A , fail .
Moreover , acquisitions can go wrong because of excessive initial valuations, exaggerated expectations of strategic fit or underestimated problems of organizational fit .
Also , some analysts believed while the approach is potentially useful , it is not believed to be a good substitute for organic approach .The suspicion is that top management often sees a major acquisition as the only escape route from a business that has become hopelessly mature.
Moreover ,they believe that , often, few acquisitions actually benefit the shareholders of the acquiring company, yet acquisitions are in many cases, according to some analysts ,an easy way out for senior executives that too intellectually lazy to think through the future of the firm’s “core” business and too unimaginative to discover new ways of deploying existing capabilities.
Although mergers and acquisitions (M&A) frequently grab the headlines, as they involve large sums of money and can affect a wide range of stakeholders, yet acquisitions typically require an immediate upfront payment for the target company.
With the above defects , then , what has Access Bank seen in its spate of acquisitions ? One answer to this question is that .acquisitions can also provide a speedy means of achieving major strategic objectives.
In spite of this beauty of acquisitions, however , many corporate organizations prefer the organic method considered as the default method for pursuing a strategy by relying on internal capabilities to acquisition . Indeed, the organic method is typically regarded as the most effective with sensitive soft capabilities such as people.
Using the organization’s existing capabilities to pursue a new strategy enhances organizational knowledge and learning , has the advantage of not being dependent on the availability of suitable acquisition targets or potential alliance partners ;it provides independence as the organization does not need to make the same compromises as might be necessary if it made an alliance with a partner organization , allows the spreading of investment over the whole time span of the strategy’s development with the reduction of upfront commitment that may make it easier to reverse or adjust a strategy if conditions change ; it also allows new activities to be created in the existing cultural environment, which reduces the risk of culture clash that could occur with external growth options.
But the organic strategic method too has its own defects . The reliance of organic development on internal capabilities can be slow, expensive and risky, as shown by the lengthy gestation period and earlier failures. Moreover , it is not easy to use existing capabilities as the platform for major leaps in terms of innovation, diversification or internationalization,
Since every method used in pursing strategies has its own pluses and minuses what matters most is moderation ; some analysts believed it is not really the option chosen by any corporate organization but having one’s own view of what each wants and the capabilities to deliver .values for money for their stakeholders .
This is exactly what Access Bank has demonstrated . Despite the above challenges or against all odds the bank has continued to proved itself to be equal to the challenges from its acquisition agenda as well as others from the forces in the macro and industry hostile operating environment ; its move to the position of the industry leadership has been supersonic in the last few years .
HOW ACCESS BANK IS PROVING PESSIMISTS WRONG ,OUTPERFORMING RIVALS
No doubt , Access Bank’s acquisition drive is speedily enhancing its chances of achieving its leadership dream . In scope and breath ,the bank has changed dramatically .With its spate acquisitions Access Bank is becoming well diversified as it is speedily operating in different markets with multiple SBUs with their own strategies for their specific markets
Consequently , it has continued to exploit the advantages of certain potentially value-creating drivers for diversification including exploiting economies of scope by extending the scope of the organisation’s activities and gaining efficiency by applying the organisation’s existing resources or capabilities to new markets or services; it is equally stretching corporate management capabilities by applying the skills of talented corporate-level managers or ‘corporate parenting skills to new businesses and increasing market power since diversifications in many markets increase the market power vis-à-vis competitors.
This is more so as having a diversified range of businesses increases the power to cross-subsidize one business from the profits of the others .
Figures from its financial books confirm the above view as much .Going by its 2022 full year results declared by the bank, its total assets hit approximately N15trilion , making it the biggest bank in Nigeria .Also ,its deposits from both the financial institutions and customers inched up above N11trilions to give it a lead in the industry and to confirm high confidence reposed on it by customers while its total revenue within the same period was N1.4 trillion ranking it above its peers in 2022 and confirms the capability of its money making machine
Gaining the above strategic position is a function of its corporate strengths in terms resources and competences available to deploy such resources and exploit both the potential opportunities and minimize the threats in the operating environment at both macro and industry levels as well as leveraging the influence of its stakeholders to deliver their expectations . .
The bank has already built strong reputation, technological richness and deep pockets, the prerequisites for getting the industry leadership. Access Bank is, indeed , an example of a company that overcame seemingly insuperable resource handicaps and built positions of global leadership .
The above stellar performance of the bank could specifically be pinned down to the capabilities of the management at the corporate level’ ,in addition to the business level competitive strategies . Its ability to select an appropriate portfolio of individual SBUs and manage them by establishing their boundaries by market, geography or capability and to add value to the group; this effectively has continued to give it a competitive advantage over other corporate parents in acquiring and managing different businesses.
Despite the inclement macroeconomic environment and intense competitive rivalry in the industry, Access Bank’s unflinching commitment to acquisition both financially and emotionally , its ability to acquire the competencies necessary to shape and profit from the future , to discover an appropriate configuration of price, features, size, and t echnology necessary to unlock the future market are all the driving forces behind its competitive position in the industry . Others include its ability to establish the appropriate and superior the industry standard and to keep up in the battle for market share with fast-paced improvement in service delivery and cost reduction . .
By the above achievements ,Access Bank has demonstrated it has the capacity for global preemption and what is helping its global preemption also are its capability to build banner a brand that predispose customers to patronize its services in markets, secure access to critical channels in Africa and develop an internal capacity to quickly propagate new service innovations among other things considered as prerequisites to that preemption.
Access Bank has proved itself capable of serving and satisfying the most sophisticated customers and it is confident that it is well-prepared for a global roll-out; it is gradually capturing strategic markets with sizes and the opportunities that have the capability for amortizing development costs, markets that are strategic because of their rates of growth and the prospect of future growth and more so because such markets are outside its competitors’“profit sanctuary.”
