How Banks Make Billions – You Too Can: Part 3

This is going to be the final post on this series. I hope you have found this to be very informative. Did you miss any? You can read part 1 & 2. see links here 1

and part 2 2

Someone talked about segmentation and not participating in every market. Yes that’s true but what most banks also do is they outsource management of some segments to third party providers or partner strategically. Because those segments might not be their core or it might be expensive managing and acquiring the customers there. Banks understand partnership, so they look for strategic partners to push certain kind of business to their market while they just provide support. So this could be the case for you in your business, Partnership is key. Let me also emphasize that it depends on your business model and what your business goals are.

So to the main discussions.

3. They look for where the crowd gathers

Banks don’t just open branches anywhere, they look for where the footfall is high and there is a genuine demand for banking service. With business presence and a lot of commercial activities and the banks can recover or break even in less, within 12 months or slightly more. Because it’s very expensive to start a new branch. Banks don’t want to waste funds, there must be business case that will justify the investment. Even in the bible it says who wants to first build a house and not count if he will be able to finish it. You must justify your investment in any business or even location. So, do the simple maths, project and show the potentials, banks don’t joke with that. This doesn’t imply that some of the banks have not made mistakes, in fact some have even closed or merged some of their locations as it turns out to be unprofitable over time.

I have handled a lot of financial projects both local and international and as the project manager of these projects, I must always show the business case and why we need to make that investment before the sponsor approves, nobody wants to throw his money away based on speculations there must be data to back it up.

That’s why you see banks like GTbank don’t open branches like every other bank, they are very strategic in their investment and they always get it right.

I believe that before you start a business or sell any product, you must be able to identify your market and where you will get the maximum of your customers, do the analysis and consider the size and their impact on the product or services you are about to launch. If your customers are on social media platforms, there is no need investing hard earned money on physical locations except there will be a general impact on your brand or product.

in a nut shell, identify and follow where the most of your customers are and pitch your tent there.

4. Always Concerned about Operating Cost:

Banks understand the impact of operating cost, so they don’t joke with it, that’s why you see that banks can sack thousands of people without blinking an eye lid. Because operating cost can wipe out all your income and put you in a loss-making position, they always seek ways to reduce cost and one of the easiest ways is to reduce the workforce. I don’t always agree with their style though, but this happens regularly. You won’t understand this except you are running your own business. I never understood this until I started running my business, a lot of cost were just dropping on my table, so I started watching all our expense lines and you know what? apart from power especially in Nigeria, staff cost is one of the highest.

As I close this series I will say, don’t just stop where you are, keep improving, keep growing and make a difference

I appreciate all who liked, made comments and shared their perspective. If this series have been very helpful, please share with your friends and on every platform. Also drop your message for more conversation

To Your Success

Lawrence Obi


How Banks Make Billions – You Too Can: Part 2

Some days ago we started this series and I am glad by the number of discussion and feedback it generated. Here is the second part for your reading pleasure. but if you are yet to read part 1 here is the link

What I have shared is not just a story, but a practical experience and what I am currently applying in my business, and I have also helped so many businesses to accept some of this concept to grow their businesses.

I have seen several arguments and responses that this concept might not apply to most businesses, yes, it’s true but it depends on where you are and where you want to be per time. I have reviewed several businesses both local and global and I have seen some of this strategy work for them, including the top global revenue generators like Amazon, Walmart, Amazon, google, Facebook, Apple.

People say some products are premium like apple, yes, I agree, but the truth is because of our exchange rate, standard of living strength of our currency, it now looks like some foreign products are out of reach to most Africans. Apple is a value product properly priced for their market.

The average minimum wage earner in the US can afford an iPhone which is the mass market, while in Africa or Nigeria you must be in the middle class and earn a minimum of N400k to be able to afford a brand-new iPhone, add to the fact that no telco’s will even give you a plan, so you repay little by little which is very common in the western world. In 2017 alone apple sold over 200million phones and targeted 300 million in 2018, that’s about the population of west Africa and they sold 77million in first quarter of 2018.

Having a lean customer base, no matter the type of product you sell, can never cut it for you. Even some Oil companies don’t go for countries with low population they want to import refined products into Nigeria where the consumption rate is high in a month.

Straight to the second things Banks do:

2. Banks create products for every potential customers:

Banks segment their customers and create value products that will suite them. You know why they do this? So, they can increase their customer and cash deposit base because they call it cheap funds. So the ultimate goal is to have as much as they can get from these cheap deposits. There is no customer discrimination if the person is bringing money.


They always work tirelessly to create a product for any identified customer segment if there is a market and crowd for it. The crowd factor is key here, the product might be similar and the same with every other high valued product, but the entry point will just be made easy.

So those who think they are enjoying the banks premium product, stop deceiving yourself you are just paying higher than most people, but everything is same, if they say you have access to lounges when you use a card, just know you are the one paying for that lounge and the drinks you enjoy there. In business nothing comes free to the customer you pay for it one way or the other, they gather all the thing you like put it together as a package and you pay for it based on the amount you can afford. For example see GTbank Nigeria report

They have a customer deposit base of N2.247Thrillion ($6.1Billion USD) as at December 2018 this is mostly made of cheap funds from the customers. if you go dip into the full report you will see their deposit mix and how it impacts on their revenue.

It is also very important to note why you should segment your customer especially in Africa, the rich want to have something the poor can’t afford, and the poor wants to have what looks like that thing the rich is holding, so you create a balance on your product.

so as an entrepreneur or business, segment your customer base and create product for each of the customer categories. ensure proper pricing to suite each of the segments.

If you find this informative and valuable, please drop a comment, while we wait for the Part 3.

To your Success 
Lawrence Obi