Non-interest banking appears to be gaining momentum in Nigeria's financial landscape. In this interview with Emeka Anaeto, Business Editor of Vanguard Newspaper, the Managing Director of Summit Bank Limited, Dr. Sirajo Salisu, gave insight into the operations in the sub-sector as well as what his organization is bringing to the table. Excerpts.
Licensed in February 2025 and starting operations in July 2025, what has the experience been like so far?It is really challenging, but encouraging. It is encouraging in the sense that technology has changed almost everything. So even if you have a banking license, you have to begin to think of it as being a regular bank and a digital platform also, because that technology is now the key thing. As we are getting set to provide the banking services - the usual financing and the usual projects - we also have to be ready to go digital so that we can reach out to as many people as possible instead of spending much money building branches.
Most Nigerians are yet to have clear understanding or knowledge of what a non-interest bank is. How do you explain this to a layman? How is a non-interest bank different from other banks?The conventional banking system has been around for more than 100 years, and everybody is used to the word interest. How much is your bank charging you? That is interest. How much is your bank paying you? That is interest. Now, when you come with a terminology called non-interest, people will tend to think you are referring to an NGO or a non-profit system. This is because they are used to that word interest, and now you are talking about non-interest. People tend to assume it is going to be a free business. You go and collect N1m, you do your business, take your profit and return the same N1m, then, definitely that bank will not open its door for business after a while. So, the financial consequences to the customer is the same whether in non-interest or conventional banking. The difference lies in the process. Non-interest bank normally charges based on profitability. You take N1m, you do a business, you earn a profit of N300,000, you are going to share that profit with that non-interest bank. It is profit-sharing. However, when people hear profit sharing, they always become very skeptical, thinking as if it is 50-50, not knowing 90-10 is sharing, and 95-5 is also sharing. So, when you share profit with non-interest bank, it is not usually a 50-50 thing. If you set up your business, you have your staff, you have your office, you get to pay all your administrative expenses. So, if you do a business because you collected N1m from us and you earn a profit of N300,000, and we say, take N150,000 and give us N150,000, then there is no fairness, because you are also dealing with so many other expenses. So probably out of the N300,000 profit, a non-interest bank will say, give me N70,000 or give me N50,000 depending also on the number of steps taken in the funding. So that is the notion of non-interest. But if you would go deeper to even call it Islamic banking, that is even more confusing, in the sense that either deliberately or religiously, people would assume Islamic Bank is only for Muslims. A non-Muslim can actually be a shareholder or even the single owner of an Islamic Bank, because Islamic banking is just a commercial bank doing business based on Sharia principles. A non-Muslim can also be a customer of an Islamic bank. A non-Muslim can be an employee of a non-interest or an Islamic bank. So whichever name you call it - non-interest, Islamic, or ethical bank - the moment you keep the sentiment aside, you have a very good understanding of how it works. It is called non-interest banking because we do profit sharing. It is called Islamic banking because we do profit sharing, not because of anything Islamic. It is called ethical banking because it is transparent and fair.
