M Oriental Bank cuts out ATMs as it sets sights on family businesses

M Oriental Bank says it has stopped offering automatic teller machine (ATM) services in a strategic shift that will see the lender target wealthy family-run businesses.

The newly acquired lender, which was formerly known as Oriental Commercial Bank yesterday said it would mostly focus on banking large family businesses in a bid to grow its loan book and balance sheet.

“M Oriental Bank is being repositioned as a wholesale bank focused on large family businesses in Kenya offering innovative products and services. We will not be offering ATM services,” said the M Holdings Group chief executive officer Sanjeev Kumar yesterday during the unveiling of the bank’s new identity in Nairobi.

M Oriental assumed the new business strategy yesterday after completion of its acquisition by its new majority shareholders Bank M Tanzania Plc.

Bank M in early June became the first Tanzanian lender to enter the Kenyan market after 73 per cent of its shareholders under the M Holdings Group agreed to buy a 51 per cent stake in Oriental Commercial Bank.

The regulator also approved an application by M Holdings Ltd to form a non-operating holding company as required by law, as well as a name change from Oriental Commercial Bank Ltd to M Oriental Commercial Bank Ltd.

Niche business model

Mr Kumar yesterday said M Oriental will seek to replicate its niche business model that has seen the Group’s Tanzanian unit attain success by restricting banking services to high net worth individuals and family businesses.

Mr Kumar said he sees a huge opportunity for growth under the segment, exploiting the fact that a majority of lenders in the Kenyan banking sector operate universal banking models, therefore neglecting the segment.

“We have created Bank M as a strong wholesale bank in Tanzania and we aspire to transform M Oriental as the preferred bank for large family businesses in Kenya,” he said.

A recent study by Visa International showed that a majority of high-net worth account-holders around the world do not use ATM machines, preferring to swipe their cards instead.

Most banks operating in Kenya place ATM withdrawals limits at between Sh20,000 and Sh50,000.

Mr Kumar said as part of a strategy to target the family businesses, M Oriental would strive to offer personalised service to its clients besides operating all days of the week including Sunday between 8am and 6pm  subject to approvals by the CBK.