Today’s Business Daily had an in depth feature written by Titus Muya, the founder of Family Bank who started the bank in 1984 as a building society; and which has grown to become one of Kenya’s leading banks, with a customer base of close to 600,000 clients with assets in excess of Sh10 billion.
Fascinatingly, on the same page, there was a story on Bank of America (though on different content) that brought forth striking parallels between Muya and Bank of America’s founder Amadeo Peter Giannini. Though both entrepreneurs created their banks in different eras (the pre-cursor to Bank of America, the Bank of Italy was founded in 1904 in San Francisco) and on different continents, their stories of starting and growing their banks into large industry players makes one wonder if maybe the Business Daily editor had the same thought in mind when placing the two stories next to one another.
Heritage
Just like Giannini who was born into a poor immigrant family, Muya also came from what he calls a less “well-known” family. The Kenyan banking sector back in the 1980’s was only composed of multi-nationals and banks whose ownership emanated from society’s elite. Thus when he approached the Treasury to get a banking licence, he was met with stares of disbelief from civil servants who were only used to dealing with the “who’s-who”. However, this did not deter Muya’s passion and belief in his quest to take the dream first implanted by a magazine article to grow from idea to a thriving business.
But you are NOT a banker!
Due to the poor circumstances of his childhood, Giannini quit school at the age of 14, and just like Muya, he had absolutely no training in banking. As Muya writes in his article “officers at those (Treasury) offices used to look at me and wonder how I could start a bank when I was not even a banker”.
Maybe it is this lack of banking experience that led both entrepreneurs to approach sector in a new way, seeing opportunity in what was a hitherto unexplored market. Giannini “was the first to challenge the unwritten rule that banks should only lend money to people who don’t need it” (agilewriter.com), whilst Muya saw the future in providing banking services to low-income people, who ordinarily would have been ignored by the big banks of the day.
At a time when the Grameen Bank model was unknown, Muya focussed on the poorer sections of society, who were mainly small holder peasant farmers. He believed, just like Giannini that hard-working poor people who wanted credit would pay back. In Giannini’s words: "give the little guy a bank that will do business with him."
When you find a brick wall, find a way around it
When Giannini decided to open the Bank of Italy, the bank’s first office was in a converted saloon, and he even kept one of the bartenders on as an assistant teller. Similarly, Family Finance’s headquarters and first branch was in Kiambu on the outskirts of Nairobi, adjacent to tea and coffee small holder farms. Indeed, as the building society grew, it more or less steered clear of the nation’s capital, focussing instead on rural agricultural areas.
Comparable to the Bank of Italy which was the first American bank to offer loan products to people who had no experience with credit, Family Finance under Muya’s stewardship also developed products that were specifically targeted at the bottom end of the market. As Muya says “the now universal word and industry term for business of ‘microfinance’ did not even exist”.
When life hands you a lemon
When the 1906 San Francisco earthquake rocked the city, Giannini was not discouraged. As a Time Magazine article on the top 100 builders and titans titled “Consumer banking owes a big debt to a produce seller who refused to say no” notes:
“In the days after the disaster, the man known as A.P. broke ranks with his fellow bankers, many of whom wanted area banks to remain shut to sort out the damage. Giannini quickly set up shop on the docks near San Francisco's North Beach. With a wooden plank straddling two barrels for a desk, he began to extend credit "on a face and a signature" to small businesses and individuals in need of money to rebuild their lives”.
Similarly Muya showed fortitude when faced with nay-sayers from the established banking sector who doubted the capacity of poor people to be worthwhile banking depositors and loan re-payers. Nevertheless, holding onto his goal of “enabling people to advance their quality of life” finally paid off. Self belief in his dream meant that Muya had already resigned from his stable government job on receipt of his building society licence to in his words, take up the post of CEO and first employee. There was no turning back.
The Pinnacle
In 1928, Giannini’s efforts had grown Bank of Italy to a stage where he managed to purchase the Bank of America, an old and respected institution in New York, and consolidated all of his banks under that name. He continued to open branches all over the United States in the same spirit, making Bank of America the first nationwide bank By 1945, Bank of America was the biggest bank in the United States and remains to date the largest with US$ 3.2 trillion of assets. He died in 1949.
Muya likewise continued opening branches close to his niche market and finally started offering financial services to SME’s as well as students in Nairobi. Family Finance was finally granted a banking licence in 2007, transforming itself into what is now known as Family Bank with 50 branches nationwide.
What legacy can the story of Bank of America and Family Bank offer? Maybe the most apt message is Muya’s conclusion in his article which offers wise advice for young entrepreneurs: “No one is born with expertise; it is learning experience born of utmost commitment to goals, to set benchmarks, self belief and God-given determination”.
Just like Giannini who was born into a poor immigrant family, Muya also came from what he calls a less “well-known” family. The Kenyan banking sector back in the 1980’s was only composed of multi-nationals and banks whose ownership emanated from society’s elite. Thus when he approached the Treasury to get a banking licence, he was met with stares of disbelief from civil servants who were only used to dealing with the “who’s-who”. However, this did not deter Muya’s passion and belief in his quest to take the dream first implanted by a magazine article to grow from idea to a thriving business.
But you are NOT a banker!
Due to the poor circumstances of his childhood, Giannini quit school at the age of 14, and just like Muya, he had absolutely no training in banking. As Muya writes in his article “officers at those (Treasury) offices used to look at me and wonder how I could start a bank when I was not even a banker”.
Maybe it is this lack of banking experience that led both entrepreneurs to approach sector in a new way, seeing opportunity in what was a hitherto unexplored market. Giannini “was the first to challenge the unwritten rule that banks should only lend money to people who don’t need it” (agilewriter.com), whilst Muya saw the future in providing banking services to low-income people, who ordinarily would have been ignored by the big banks of the day.
At a time when the Grameen Bank model was unknown, Muya focussed on the poorer sections of society, who were mainly small holder peasant farmers. He believed, just like Giannini that hard-working poor people who wanted credit would pay back. In Giannini’s words: "give the little guy a bank that will do business with him."
When you find a brick wall, find a way around it
When Giannini decided to open the Bank of Italy, the bank’s first office was in a converted saloon, and he even kept one of the bartenders on as an assistant teller. Similarly, Family Finance’s headquarters and first branch was in Kiambu on the outskirts of Nairobi, adjacent to tea and coffee small holder farms. Indeed, as the building society grew, it more or less steered clear of the nation’s capital, focussing instead on rural agricultural areas.
Comparable to the Bank of Italy which was the first American bank to offer loan products to people who had no experience with credit, Family Finance under Muya’s stewardship also developed products that were specifically targeted at the bottom end of the market. As Muya says “the now universal word and industry term for business of ‘microfinance’ did not even exist”.
When life hands you a lemon
When the 1906 San Francisco earthquake rocked the city, Giannini was not discouraged. As a Time Magazine article on the top 100 builders and titans titled “Consumer banking owes a big debt to a produce seller who refused to say no” notes:
“In the days after the disaster, the man known as A.P. broke ranks with his fellow bankers, many of whom wanted area banks to remain shut to sort out the damage. Giannini quickly set up shop on the docks near San Francisco's North Beach. With a wooden plank straddling two barrels for a desk, he began to extend credit "on a face and a signature" to small businesses and individuals in need of money to rebuild their lives”.
Similarly Muya showed fortitude when faced with nay-sayers from the established banking sector who doubted the capacity of poor people to be worthwhile banking depositors and loan re-payers. Nevertheless, holding onto his goal of “enabling people to advance their quality of life” finally paid off. Self belief in his dream meant that Muya had already resigned from his stable government job on receipt of his building society licence to in his words, take up the post of CEO and first employee. There was no turning back.
The Pinnacle
In 1928, Giannini’s efforts had grown Bank of Italy to a stage where he managed to purchase the Bank of America, an old and respected institution in New York, and consolidated all of his banks under that name. He continued to open branches all over the United States in the same spirit, making Bank of America the first nationwide bank By 1945, Bank of America was the biggest bank in the United States and remains to date the largest with US$ 3.2 trillion of assets. He died in 1949.
Muya likewise continued opening branches close to his niche market and finally started offering financial services to SME’s as well as students in Nairobi. Family Finance was finally granted a banking licence in 2007, transforming itself into what is now known as Family Bank with 50 branches nationwide.
What legacy can the story of Bank of America and Family Bank offer? Maybe the most apt message is Muya’s conclusion in his article which offers wise advice for young entrepreneurs: “No one is born with expertise; it is learning experience born of utmost commitment to goals, to set benchmarks, self belief and God-given determination”.
