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Adedayo Amzat is group managing director, Zedcrest Group, a leading diversified financial services company with subsidiaries that operate across securities dealing, proprietary investments, and consumer lending. He speaks about the company’s strides over the years and its economic outlook for 2021.
For the second year in a row, Zedcrest Group was recognised as the Diversified Financial Services Group of the Year at the BusinessDay Banks’ & Other Financial Institutions (BAFI) Awards. How has Zedcrest been able to achieve this feat in such a competitive sector?
Our story and vision at Zedcrest is an uncommon one and while it is a tremendous honour, it is no surprise we are being duly recognized for the second year running. We have a very diversified business; we are market leaders in consumer lending with Zedvance; financial markets through Zedcap Partners. We also have forayed into Wealth/Investment Management as ZIMVEST, trying to bridge the gap between the necessary trust and the required innovation to open up the investing space for Africans.
In 2019, we started our venture capital business where we invest in promising African businesses, and by so doing, we indirectly extended our play into verticals where we do not have an in-house proposition. Our portfolio companies are engaged in a diverse range of sectors: Edtech, Healthtech, Fintech, Logistics, Artificial intelligence, Identity Management, Retail, SaaS amongst others.
2020 was a challenging one on a number of fronts. In the midst of the crisis, analysts pointed out that new opportunities were still there for companies that were nimble enough to seize them. How did Zedcrest respond in that environment?
Thankfully, we came to realize we have a somewhat shockproof business during the Covid-19 crisis. We were exceptionally fortunate to have built a resilient technology services stack that allowed us to achieve close to 100% uptime during the crisis. The biggest scare for us was in the lending business. Here again our deliberate strategy of going after niche, closed-end lending partnerships over the past 2years enabled us to avoid most of the pitfalls that lenders faced as the crisis decimated the earnings of small businesses and households.
Our financial markets business thrives on volatility. Naturally, we took advantage of dirt-cheap asset prices in March/April. These opportunities were generally observed in both equities and debt capital markets globally. The yield on dollar-denominated bonds of emerging market countries became chronically mispriced, an unfair cost paid by African countries any time there is a shock of global proportions.
Read Also: Nigerian companies raise record debt in 2020 on low-interest rates
The Group’s operations cut across 4 main areas: proprietary investment, wealth/investment management, securities dealing, and consumer finance. How has each of these performed against 2019 results?
We have had significant growth in revenues, driven largely by our more mature verticals, specifically consumer lending and securities dealing/financial markets business. Our board is pleased by the steady growth in these our traditional bread-and-butter business lines.
Operational development in our wealth management business was slower than anticipated as we launched just right on the edge of the lockdown. Hiring and product development efforts were hampered by the lockdown, but we have essentially picked up the pace in the last couple of months.
We started the registration process for having some mutual funds and other specialized products at the SEC. We really mean business when we say we want to bring our domain expertise and innovation to the wealth management space.
In the aftermath of COVID-19, there has been a lot of talk around the dawn of a New Normal, most of which has focused on digitalization and the quickening of technology upgrades to serve customers better. Could you share live examples of the Group’s execution and investments in these areas?
Digitization used to be a cliché word that most mature businesses pay lip service to. Words like Omni-channels and digital strategy have been thrown around for years without actually meaning much. Locked down, the world had to accelerate the adoption of technologies at a pace that would ordinarily have taken a decade to adopt. We saw the rapid adoption of teleconferencing and remote work tools which enabled businesses, institutions and governments globally to forge ahead with minimal disruptions
At Zedcrest, we have been bullishly expanding our technology stack in the periods before the crises, which has been paying off. For example, a key mission for us is to build all our core operating solutions across the business in-house. While it is true we did not start out being a tech powerhouse, we have made significant improvements in the last 24 months, headcount in our shared technology group is now more than 20 engineers focused on different projects. Finance, HR and all other internal processes are now entirely automated. We don’t bother to build non-core operating systems.
Zedvance, a subsidiary, took up the award for Most Innovative Consumer Lender of the Year at the BAFI Awards. With rising economic uncertainty and attendant defaults in loan repayments, what measures is it taking to ensure its balance sheet is not threatened?
The most affected financial institution in an economic or security crises are arguably unsecured lenders. This is the reality in 2020 and lenders have to renegotiate loan terms for stressed customers. It is a cyclical business that is directly related to economic cycles. With our expectation of an improvement in the terrain in 2021, lenders like Zedvance have to prioritize empathy and customer service over immediate profitability. We need to bear the brunt and help our stressed customers through the thick of the crises. It will pay off.
This year marks the Group’s 8th year of operations during which it has achieved a lot. Looking back, what lessons have you picked up along the way to growing a strong financial brand in record time?
The team is everything. I think we understate the importance of team dynamics. When people draw up financial projections and business plans, there is insufficient thought giving to putting a deliberate people policy in place. The right team makes the work look easy, while it’s a nightmare working with the wrong people. I have seen both sides frequently in my journey. In every business where we have made a big impact, it was because we had a solid team in place. I have fantastic colleagues, with Seyi Akinbi leading the financial markets team, and Ever Obi and Adegoke Orimolade managing the lending business.
Next, customer experience is the truth. Human-centred experiences curated to delight users will bring better results than billions of naira spent in marketing. It is a humbling lesson I am learning from the younger startups in the ecosystem on a daily basis. From our early days, we prioritised and invested in the customer experience. It is not an after-thought.
Finally, I’m a strong believer in keeping one’s wits about one. Never outsource your thinking capacity. I started Zedcrest at a relatively young age, and over time I’ve come to trust my judgment. I’d say being daring, even contrarian has played a huge role in getting us here in record time.
These three attributes have made all the difference in our growth journey.
What is your outlook for 2021?
I am very optimistic about 2021. As the world puts behind the travails of COVID-19, I expect a sharp recovery in the macroeconomic environment. Global economies have indicated the low-interest rate is here to stay, well into 2021, while we expect a gradual uptick in interest rates in the domestic space. Nonetheless, we think capital markets are in for an interesting play in 2021 as we watch markets and industries recover from the impact of the pandemic.
Going forward, investors should ask themselves which markets and/or industries would be more geared towards 2021’s global recovery, and be strategically positioned to get a slice of the pie.
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