The banking sector, a vital pillar of the global economy, encompasses a wide array of institutions such as commercial banks, investment banks, credit unions, and Islamic finance entities, each integral to facilitating financial transactions, savings, and investments. This dynamic industry is continually shaped by technological advancements, regulatory changes, and evolving consumer demands, leading to the rise of fintech innovations and digital banking solutions that enhance efficiency and accessibility. Recent years have also seen a growing emphasis on sustainability and ethical finance, particularly through Islamic finance, underscoring the sector’s commitment to inclusive and ethical practices. Mr. Ajayi, as Chief Risk Officer, significantly impacts this landscape by leveraging his extensive experience and specialized certifications in Islamic finance to expertly manage risks and ensure regulatory compliance. His deep understanding of non-interest banking methodologies equips him to lead strategic initiatives that align with the industry’s evolving nature while fostering resilience and ethical integrity within his institution.
Mr. Ajayi has spent 20 years in the financial industry, navigating its constant changes and challenges. He believes that each challenge offers valuable lessons that prepare one for future opportunities. One significant challenge he encountered was taking on managerial responsibility about 10 years ago at a previous job. Managing people is a refined skill that comes with experience and proper mentorship. Initially, solving problems as a leader was difficult, but through consistency and resilience, he successfully navigated these challenges.
Throughout this period, he gained valuable lessons and experiences that have significantly shaped his career. These insights have made him a dynamic and resilient Chief Risk Officer, prepared to handle the complexities of the role.
Primary Responsibilities as Chief Risk Officer
As the Chief Risk Officer, Mr. Ajayi’s primary responsibility is to build and instill a robust risk culture throughout the organization. Additionally, he formulates the right policies and regulatory frameworks to create a strong risk management environment. Another crucial aspect of his role involves discovering and nurturing the right talent to drive these processes effectively.
Balancing the demands of compliance, risk management, and strategic planning relies heavily on work culture. When everyone understands that they are working towards a common goal, synergy among stakeholders becomes much easier. It’s similar to a chain reaction where each part influences the other, making collaboration essential. By understanding the needs of various departments and adhering to deadlines for relevant assignments and deliverables, Mr. Ajayi ensures that all aspects are managed effectively.
Opportunities and Challenges in the Banking Industry
The banking industry is presented with significant opportunities due to the diverse and economically vibrant population, which allows for innovative financial solutions to drive financial inclusion and add commercial value. However, there are also substantial challenges, he says.
“The volatile macroeconomic environment has seen policy rates reviewed three times this year, increasing lending costs and making it difficult for banks to generate revenue through lending. High interest rates deter customers from borrowing. Additionally, inadequate infrastructure development hinders business operations and can discourage local and international entrepreneurs. Despite these challenges, an innovative approach and intentional efforts to address these issues could unlock the vast opportunities in the region. The current administration is implementing policies to tackle these problems, offering hope for improvement.”
The Intersection of Banking, Technology, and ESG
Mr. Ajayi believes that innovation and technology are pivotal to the future of banking. He emphasizes that without continuous innovation, banks risk becoming obsolete. Evolving through technology is essential for sustainability, as it allows banks to reach a larger audience and operate more efficiently. Moreover, technology plays a critical role in financial inclusion, enabling banks to connect with underserved communities and streamline their services. Adopting innovative technologies is not just an option but a necessity for staying relevant and competitive in the industry.
He considers sustainability a passionate and key area, as it impacts the environment and influences various sectors where financial institutions operate. In his home country, the apex bank has formulated a position paper on sustainability to guide banks on the processes and methodology of the Nigerian Sustainable Banking Plan. Part of credit analysis in banks must align with the ESG (Environmental, Social, and Governance) framework, ensuring that businesses being appraised adhere to sustainability practices. By integrating the ESG framework into their operations, banks can contribute positively to environmental and social goals, promoting sustainable development within the industry.
He says, “Over the last decade, the banking sector has experienced phenomenal growth both globally and domestically. The asset size of financial institutions has increased significantly, and there has been remarkable diversity among these institutions. Various inclusion vehicles have emerged, including fintech companies, challenger banks, mobile banks, and digital banks. This diversity has provided numerous opportunities and options for the banking public. Consequently, banks have become more innovative to maintain their market share in a constantly evolving economy. With ongoing technological advancements, the industry is witnessing significant scaling up and disruptive enhancements. Looking ahead, further technological evolution promises continued transformation and innovation within the sector.”
Serving Underbanked and Underserved Communities
Mr. Ajayi believes that banks can better serve underbanked and underserved communities by creating more financial inclusion channels to assist in onboarding. Various vehicles, such as agency banking, telephone banking, and borderless banking, can facilitate this process. Banks need to be intentional about integrating the unbanked and underbanked populations, which is essential for building financial inclusion and incorporating funds currently outside the formal banking sector. Recent data analysis revealed that 65% of the system’s liquidity exists outside the banking sector—a substantial figure. Banks must simplify processes and encourage potential customers to recognize the value of participating in the financial industry. This approach enhances financial literacy and helps individuals build structured financial habits.
Exciting Technological Advancements in Risk Management
Mr. Ajayi highlights the advancements in risk assessments and risk ratings as particularly exciting. The technology of algorithms is crucial for data management, enabling financial institutions to make informed decisions based on adequate and reliable data. This is especially important for risk managers, who rely on technology to deploy the right mitigation techniques for various scenarios. These technological advancements are instrumental in improving decision-making processes, ensuring that risk management strategies are both effective and efficient. By leveraging these tools, banks can better navigate complex risk landscapes and enhance their overall operational resilience.
The Importance and Growth Potential of Islamic Finance
Mr. Ajayi underscores the significance of Islamic finance in today’s global banking landscape. The Islamic finance model provides stakeholders with better access to capital, particularly in asset and lease financing. It emphasizes the underlying asset of any transaction, which helps mitigate potential losses due to fund diversion, making it an excellent catalyst for industrialists, entrepreneurs, and SMEs. Islamic finance offers a wide range of products designed to unlock capital for discerning businesses. Additionally, it promotes ethical finance by discouraging hidden charges and exploitative interest rates. Most Islamic finance products are tied to fixed-term contracts or sales, making them largely immune to repricing after the agreement is set. This stability and ethical approach contribute to its growing appeal and potential for expansion in the global market.
Managing Work-Life Balance in a Demanding Role
Mr. Ajayi acknowledges that managing work-life balance can be tricky due to the overwhelming demands of his role. However, he emphasizes the importance of having a “cooling period” to recharge. He ensures he gets a decent amount of sleep by maintaining regular sleep hours. Additionally, he uses his weekends to bond with family and engage in self-discovery activities. These activities not only help him unwind but also contribute to creating additional value for himself and his professional craft. By prioritizing rest and personal time, he effectively manages the pressures of his demanding job.
Mr. Ajayi also enjoys reading and traveling as his main hobbies. These activities often help him unwind and stay motivated outside of his demanding professional life. Reading allows him to explore new ideas, gain knowledge, and find inspiration, while traveling provides an opportunity to experience different cultures and perspectives. Both hobbies play a significant role in recharging his mental and emotional batteries, enabling him to maintain a balanced and fulfilling life.
Greatest Mentor and Inspiration
Mr. Ajayi shares that his greatest mentor has been his current CEO, who stands out as a bedrock of support and knowledge. He admires her passion and strength in growing an institution from the ground up to become a formidable entity. Additionally, he draws inspiration from great financial investors and venture capitalists like Warren Buffet and George Soros, whose financial discipline and contentment are timeless case studies. He also emphasizes the importance of self-discovery and actualization by being his own greatest fan in terms of mentorship. Understanding oneself provides the right tempo to advance, grow strengths, address weaknesses, and collaborate effectively.
Advice for Aspiring Risk Management Professionals
Mr. Ajayi advises aspiring risk management professionals to adopt the right attitude and have an open mind to every challenge in their career. It’s also important to have an open mind to learning, unlearning, and relearning. The world is constantly evolving through change and to remain competitive you have to learn creative and innovative ways to stay relevant in an ever-changing sector. Lastly, surround yourself with value and people you can consistently learn from and create the right mentorship.
