Reflection is powerful. They say hindsight is 80:20. We tend to see clearly in hindsight. The world is more beautiful looking back. Its on this note that I will beg for your forgiveness to say that Chase Bank was a beautiful bank.
Out of this world in this particular part of Africa. It would be difficult to match the chase experience especially for the few people who benefited from their generosity or now, in hindsight, stupidity. Yours truly was a beneficiary and this was my Chase Bank experience.
Clarity in target.
At Chase bank, the target market was never in doubt. It was the young trendy professional who lives on the fast lane. The sharply dressed gentleman or lady who has little time to waste on long bank queues and is equally tech savvy. The guy who drives a turbo charged vehicle and lives a turbo charged life too. The diva who balances her figure on delicate heels. The age bracket was 20s to 40s. Never before has a bank captured the needs and aspirations of a target market like Chase did.
Brand aligned with target market.
Chase was a pleasant site. The ambience, the interior décor reflected the brand personality. The staff dressed equally sharp and needless to say, matched their clients in dress and lifestyle. They too lived on that adored fast lane. Little wonder that when the books were finally balanced, the auditors had issues with the staff loan portfolio.
Loud and visible brand.
These guys had a visible brand. The sponsored loud CSR activities. I still have their branded water bottles a gift from one of their many events. At petrol stations, ATMS, branches and billboards, their brand stood out. Their logo –the sails captured the speed of a wind propelled ambition. It was different.
Service per excellence
Chase had innovative products delivered through a superb channel with a robust IT platform. You could get a loan on the go. The staff were well trained and had a close grasp of their duties. You could do and complete a lot of banking on your phone and at the reception. Unlike the traditional banks, their managers were empowered to meet your banking needs. A few people may not agree that banking experience at Chase Bank was awesome. There are always exceptions.
In my opinion, Chase was a marketing jewel. A case study of well executed marketing plan. Their rapid growth from a single branch in 1995 to over 50 branches is a testimony to the fact that there was something right they were doing. And to confirm this, International investors were lining at their doorstep to buy their shares.
How the Cookie crumbled.
Chase banks growth was phenomenal. In a span of ten years, it had curved out a niche and was sprinting to join the big boys. With this growth, more funds was required. They initially went to the bond market where their request was overwhelming endorsed. They got more than they asked for.
The runaway success obviously invited hyenas to the party. Not many people were happy with Chase Bank growth. Private investors were angling for the pie too. Unconfirmed rumours has it that a private investor even tried to force them to stop issuance of the bond so that he gives them the funds for a stake. We can never dismiss the hands of hyenas from the Chase bank debacle. Never before in the history of this country has a bank collapsed and in two weeks, bids for take over are pouring in. Who is that foolish investor who wants to take over a dead bank!
Unlike Equity Bank, Chase bank targeted young professionals and formal startups. They insisted on those businesses with proper books of accounts. Now, a majority of Kenyans startups are the jua kali types that rarely keep proper books. This niche was invariably small and unstable. Chase therefore had a very small target group from the word go. To expand therefore, they had to lower their requirements and take on board more risky ventures. Naturally therefore, the more they grew, the more risk they had to take.
Text Book Thinking
We are told that the auditors failed to agree with the management on how to account for some monies lent to the notorious Kenyan real estate. There is also a mention of insider and staff loans with staggering amounts well beyond regulatory limits.
Accounting records are basically historical. What they tell you may be absolutely true and completely useless. Regulators too must never be obsessed with simple accounting figures. Kenya Airways for example had a book loss of Kshs.26 billion and is still flying. Uchumi’s loses are unprecedented in the industry and has its door still open. AdmittedChase is a bank and liquidity for a bank is critical.
The role of any Central Bank in the world as a lender of last resort is to lend at whatever interest rate to banks in the industry that are solvent but face liquidity problems to maintain confidence and stability in the banking industry. Was chase bank insolvent? Why couldn’t Central bank lend to chase Bank? Was the regulator overzealous or mesmerized with accounting figures to the extent that they lost the big picture in maintaining confidence in the banking sector?
Who blew the whistle on Chase Bank? Was their harmony at the top management level? Were the auditors tipped by insiders of what was going on at the bank or they just stumbled upon this through their superior expertise?
The insider loans looks bad. Fellow bankers never came to their rescue. Instead they spoke like angels with Equity bank stating that they stopped insider loans 10 years ago. Insider loans are industry hazard. There is nothing wrong with insiders borrowing from their bank. There are limits of course. What is in doubt is whether the insiders intended to bring down their bank with this borrowing.
The bank they built was clearly worth more than they had borrowed. There is also evidence that they were willing to provide security for the loans. How come CBK could locate and confiscate assets worth over 10 billion belonging to them in less than a month. If the directors were stealing, then they are the dumbest thieves.
As a marketer, I loved Chase and my opinion may be biased but I posit that the regulator failed us as depositors. You do not save us by closing banks. We lose more.