How James Mwangi Turned Around Kenya’s Equity Bank
One of Africa’s biggest success stories is the turnaround and transformation of Kenya’s Equity Bank. The company which was founded as a building society in 1984 came back from being a small insolvent building society to become one of Kenya’s leading commercial banking groups with over half of all bank accounts in Kenya. In 1994, Equity Building Society (EBS), the precursor to Equity Bank, was tittering on the brink of collapse as it went into insolvency. A series of strategic missteps had led the bank to accumulate losses of over $300,000. The company’s board developed a strategic reorganization plan that was approved by Kenya’s Central Bank. Central to the development of the strategy was the bank’s VP for finance and strategy-Dr James Mwangi who had been hired when the bank was charting troubled waters.
Dr Mwangi, an accountant and banker who joined the bank was he just 31, helped to drive the reorganization of the bank from a mortgage based institution to a deposit taking institution focused on low income customers mostly farmers from rural areas. For Equity Bank, this was a strategic response to what was becoming a large and growing opportunity within the banking sector-a large under served and unbanked population of low income customers that traditional and large commercial banks had eschewed. The company simplified the application processes for opening bank accounts reducing the application procedure to a simplified form which clients could complete within minutes. It also reduced the collateral requirements for obtaining financing sometimes even allowing customers to use personal belongings as their collateral.
Under the leadership of Dr Mwangi, the bank refocused and re-targeted its core clients base. In addition to shifting its customer base, the company instilled a strong customer service culture. So it was not long before equity bank became the go to bank for Kenya’s low income customers who would be seen patronizing the bank’s outlets and hallways where they would have access to small micro loans. Dr Mwangi went further and instituted other changes such as encouraging employees of the bank to acquire shares in the bank from their salaries. The company also made a major technology upgrade and began to computerize its operations. Equity Bank has kept reinventing its business model has and moved to deploy the agency banking model where agents act as an interface between itself and customers. The agency banking model has become the cornerstone of Equity Bank’s strategy.
In 2004, it converted into a fully-fledged commercial bank, Equity Bank Limited (EBL). In 2006, the Bank was listed at the Nairobi Securities Exchange where it has become the largest Bank by market capitalization. EBL would later receive a $185 million investment from a UK based investor in 2007. Later assuming the reigns of the bank as its CEO, Dr Mwangi has driven the growth of the bank into one of Kenya’s largest banking groups and a growing regional powerhouse with a growing foot print in the East African region. The bank has set up operations in Uganda, Tanzania, Rwanda, and South Sudan with plans to expand into South Africa, Nigeria and Ghana. In 2015, EBL entered the Democratic Republic of Congo market with the acquisition of the local Pro-Credit Bank. In some markets, Equity Bank has shown strong growth. For example, Equity Bank Rwanda has been one of the country’s fastest growing banks. In other markets such as Uganda the bank has shown more modest growth. And as the company’s leadership claims, it has become a “movement for the social economic transformation of the people of Africa’