First National Bank (FNB) under the guidance of Michael Jordaan was awarded the 2012 BAI-Finacle Global Banking Awards in Washington – THE WORLD’S MOST INNOVATIVE BANK. Michael Jordaan has accumulated more than 28 years of experience in the financial services sector. During this time Michael has held various leadership positions within the FNB ranks, a book many corporates and State-Owned Enterprises (SOE’s) could take a page from.
In 2012 Michael Jordaan also led FNB to superior performance results achieving a 27 percent profit before tax also achieving spectacular return on equity of 39 percent.
Within 4 years and now only at the age of 44, this dynamic and innovative CEO has challenged the banking sector market, industry and leaders in every way and has done so by leading from within.
Our interview finds out a bit more about a man who should be one of the most respected CEO’s our country has ‘seen’ in a long time. Achieving results in the heart of global fiscal contraction while leading thousands within the FNB ‘family’, we get to hear from the epitome of corporate leaders.
Michael Jordaan, before anything else, is a father, husband (in no particular order) and ‘son’ of the African sun, giving him the birth-right to challenge the course of our country. He certainly will not be the only one to make this challenge.
Michael, thank you for chatting to us and sharing you’re sought after opinions.
VA: Tell us a bit more about Michael Jordaan – no CEO stuff.
MJ: Thank you for your kind introduction. My twitter description says “Banker, economist and wine enthusiast” and I think this sums me up to a large extent. I am an economist by training and I’ve been involved in banking for many years. I am passionate about FNB, banking as a whole and the contribution banking can make to South Africa. You may know that I own a wine farm in the Cape and my wife is a superb wine-maker – one of my great joys is time at home with my family. I have a positive outlook on South Africa and Africa as a whole and want to make a difference through creating a great banking experience for our customers and helping small businesses to grow and create jobs for the wellbeing of the country.
VA: You’ve had a challenging few days, maybe.
MJ: If you had the choice, where would you and family take a break? It has been challenging, but I believe that it’s necessary to move forward and embark actively on another great year. But if we had to take another break we would go to the Cape West Coast – we love that part of the Cape and it is a great place for our family to rest.
VA: What is a good read on innovation and you are currently reading?
MJ: A good read on innovation is a book called The Innovator’s Dilemma by Clayton Christensen, which describes how the culture of a company can determine how quickly it can keep up with industry-changing innovations. Ironically, while it has great insights, we at FNB have taken a different view and bring innovations in-house with the existing culture.
VA: Are you out-numbered at home?
MJ: I live with 4 women, so I am most definitely outnumbered at home! Family life is one of my greatest treasures though and my wife and daughters are a great joy to me.
VA: Let’s move on to the more serious stuff! It’s a good time for emerging markets?
MJ: It is. Of course, emerging markets also have their challenges, but in general I think we’re most likely to see alpha growth come out of the emerging economies. Bear in mind, though, that there are many parties looking at the same pie, so it will take strong business sense and appropriate risk taking to optimise the opportunities in the emerging economies.
VA: How did you lead to achieve, to become the world’s most innovative bank?
MJ: Firstly, you must know that much of the celebrated success of being an innovative bank has come out of the innovation of the people who work for FNB. Very little of it is driven by me, but I hope that the way in which I lead and the culture we have built empowers innovation. My leadership style is very simple – I try my best to live out the values of empowering people, encouraging innovation and building a great business through excellence, diligence, accountability and integrity. As clichéd as it may sound, empowering people and being explicit about the intention to innovate is imperative for creating an innovative organisation. It has taken a number of years to get this right, but of course I am extremely proud of the staff at FNB for making us the most innovative bank in the world.
VA: How tough was this feat in the banking sector – considering downgrades and general fiscal challenges?
MJ: The South African banking sector is generally facing some uncertainty around changing regulations and the world’s perception of the state of the industry. But I have found that innovation often thrives in uncertainty and in tough environments. The SA banking industry is extremely competitive, and innovation is not only important, it is the key to creating a competitive advantage.
VA: Let’s be frank, you have turned the industry on its head (from an innovation and results perspective) but 80 percent of Africa’s population still does not have access to any form of financial services?
MJ: True, and this is where innovation is important. It’s less about creating new, fun products, and more about creating products and services that are useful and even crucial for the consumer market. The African consumer base is steadily becoming more dependent on mobile phones and it is therefore important that banking moves toward mobile channels. We have done this through FNB Connect very successfully. We also want to reach the parts of the country (and continent) where walking into a branch is not always easy to do and you can now transfer and withdraw cash from the Spar, Pick ‘n Pay, Checkers and Shoprite retail network through FNB’s Cash@Till innovation, free of bank charges. Instead of bringing people to banks we are looking for innovative ways to bring banks to people.
VA: Watching the CNBC Davos Debate last week, we saw that Africa’s growth is pegged at 5,3 percent for 2013. If we take South Africa out of the equation, this could be 6 percent?
MJ: I do believe that we are going into a time of lower growth, and this presents a challenge for all businesses (and ultimately consumers). Companies can no longer ride the wave of GDP growth alone – innovation, new thinking and creative solutions are required if we want to beat nominal inflation growth. That said, there certainly are growth opportunities in Africa and these need to be actively worked into company strategies.
VA: Pretend you’re on the last make or break road show. Sell South Africa to investors and what would you say are the expected returns for Foreign Direct Investment (FDI)?
MJ: I would firstly recognise that we do have a number of challenges that we need to work through as a country. But the facts are that we are getting many of the basics right – for instance, we were ranked highly for our banking governance system and financial stability in the WEF 2012/2013 report. Our Reserve Bank and our stock exchange are world class, and this provides a helpful structure to doing business in South Africa. The second element is the scale of opportunity we have in the country. We have an upwardly mobile middle class, a mass market that is desperate for jobs and a wealth of resources that require FDI. We have considerable expertise in the fields of engineering, finance, medicine and law and we have a growing network of entrepreneurs who are fuelling the innovative potential of South Africa. So while we do clearly have challenges, as every emerging economy will, there are certainly enough factors to mitigate some of the investment risks that investors may not find in other emerging markets.
VA: When you were a kid, can you remember having any opinion on what you thought was a good environment (politically if you like) or what stood out for you growing up in Germany?
MJ: I didn’t actually grow up in Germany, but was born and raised in South Africa. I had a sense of stability in the world growing up, and was cognitive of the social and political pressures on the country. As I’ve gotten older the reality of the structural differences between countries has become more evident to me.
VA: How is FNB contributing to (from a CSI perspective) to creating a better environment for our kids of today?
MJ: FNB has a CSI team who are actively involved in volunteering and providing services to the communities that we have chosen to impact. However, we also feel that we should do “good business” and create a better world as we go about our daily jobs. Providing cost-effective, easy access to banking is a huge part of giving our consumers (and ultimately their children) the opportunities that they need to save, transact and create a life for themselves. We hope that the culture of banking and using money wisely will be passed down to the children in this generation. We constantly return banking fees back to customers in the form of rewards (or eBucks), which makes banking with FNB cost-effective and rewarding. We also have initiatives that use funds to invest in growing entrepreneurial businesses. I personally believe that small businesses are the answer to reducing unemployment and therefore giving children a better opportunity to find work when they are adults.
VA: The Economist: Over the Rainbow Nation (Oct 20, 2012) states that after 18 years of democracy, South Africa is one of the most unequal countries in the world. Give us your philosophical view on improving this.
MJ: I agree with the Economist on this one, and I truly believe that the only way that we will move toward income equality is through creating opportunities for employment. I have enormous respect for small businesses and entrepreneurs solving problems for their communities in the townships, but we need to create more opportunities for growth in SMEs. The more people are empowered to start their own business, or train themselves up for employment, the more downward pressure we will put on unemployment.
VA: On 01 June, 2012 – The Times Live published an article on “Education System a National Disgrace”. In the first paragraph it states and I quote “a UNICEF report – A Review of Equity and Child Rights’ reveals that of South Africa’s 19 million children, 662 000 attend neither primary nor high school, and 15 percent of high school – age children attend primary school, with repetition rates the highest in Grade 10 and Grade 11. From an economists’ perspective, how should these statistics be interpreted?
MJ: This is a harsh reality to take in, and if we don’t improve in the area of education we will fuel another generation of unemployment. Of course, as an economist my concerns would be around further social unrest, further unemployment and stunted economic growth. However, I must also say that once again there is large-scale opportunity for education in SA. Online educational programs and tutoring businesses are springing up in both urban and rural parts of the country. I get excited about the impact of technology on educational with programs like Khan Academy or the iUniversity.
VA: Does FNB find an over-supply of skilled individuals to fill the FNB ranks?
MJ: We have found many exceptional and highly skilled individuals in the job market, but we also take it upon ourselves to invest in talent and train people up to be able to deal with business complexities in a creative and innovative way in-house. I’m not sure that I would say that we have found an “over-supply” because there is a limited pool of skills and competition among the banks for these skills.
VA: Where there are problems, we have the opportunity to find solutions. Is the global increase and spotlight on Africa justified?
MJ: From a global perspective, South Africa and Africa have a mix between great growth opportunities and emerging market challenges. I would agree though, that in the right environment, innovation and entrepreneurialism can find solutions that could create opportunities that we wouldn’t otherwise take the time to imagine. The question is whether we will be able to create this environment for the generations to come.
VA: What kind of multinational companies does South Africa (of Africa if you want to venture north) need?
MJ: South Africa really needs business and social partners, rather than pure financial investors. We need multinationals that are committed to continuing business in South Africa despite the challenges they face and to make a difference to the communities in which they operate. South Africa needs committed partners who will lobby for positive change, who will reinvest dividends locally rather than extracting them abroad, create jobs and who will share their international experience with local business.
VA: From an economic perspective South Africa is no riskier that an economy in Europe at this point. What other factors play a role in assessing investor risk?
MJ: True – there are many risks inherent in investments into European economies, and certainly the global trends that are apparent currently must be evaluated in making investments anywhere in the world. Political factors and “ease of doing business” from a governance perspective are less of an issue in the developed economies, but play a role in African economies. Ultimately as an investor you want to find investments that are managed by strong executive teams and that have growth potential from their environment as well as their industry and internal fundamentals.
VA: What are FNB’s ambitions for Africa?
MJ: FNB is already fully operating in 7 African countries and is looking at opportunities in Nigeria and Ghana. We believe that we have good coverage of the countries that we want to be in, but it is now more about leveraging our existing platforms to provide great banking experiences to those in Africa.
VA: The areas we as South Africa need to negotiate terms for our commodities that will see substantial growth for people?
MJ: I’m not entirely sure about what you mean here, but there is certainly substantial interest from abroad for the assets and commodities of South Africa and Africa as a whole. There is a duty upon all decision makers in transacting with foreign investors to protect the value of the assets in the country for the generations to come.
VA: Again, thank you for raising the bar in South Africa demonstrating the leadership we ought to encourage in Africa.