Equity Bank

Equity Bank

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James Mwangi, the CEO of Equity Bank, a microfinance services provider, oversaw a remarkable turnaround at his organization beginning in the early 1990s. Mwangi's association with the bank began in 1992, when a founder urged him to deposit his savings in what was then a struggling indigenous enterprise called Equity Building Society Mwangi agreed, both to help keep a Kenyan institution afloat and because he felt personally invested in its management team. He then watched EBS decline at an alarming rate.

In 1994, the Central Bank of Kenya found EBS to be technically insolvent with poor management and inadequate board supervision. Equity officials agreed to overhaul the firm's strategy and operations in exchange for avoiding dissolution. In 1995, Mwangi decided to get personally involved in turning Equity around. With several years of experience working for Ernst & Young and Trade Bank, he joined EBS as the finance director, and worked his way up to become CEO in 2004. During his time at Equity, he oversaw its massive transformation from a small, insolvent mortgage lending company, to a fast-growing, internationally recognized financial services bank.

Throughout the organization's evolution, it had focused exclusively on Kenya's economically marginalized citizens, the so-called "unbanked" population, who had historically been excluded from formal sources of capital, such as banks, building societies and other regulated financial institutions. This case asks students to examine what strategy Mwangi and his team pursued. Being able to define and identify strategy is fundamental to the task of the general manager, but often lacks clarity in practice because of confusion about where to begin and what to include.

Learning Objective:

This case highlights six issues intended to deepen the evaluation of EB's strategy: What factors account for Equity Bank's turnaround? What is Equity Bank's strategy? Identify Equity Bank's key policies in each functional area and how they support /fail to support the company's overall objectives. Be detailed and specific. Write a one-sentence statement that summarizes Equity Bank's strategy in competing in the microfinance industry.

What do you think of Equity Bank's strategy? Are Equity Bank's functional policies consistent with its strategy? Is Equity Bank's strategy well suited to the competitive environment that it faces? Why or why not? Is Equity Bank well-positioned relative to other banks? Relative to the NGOs? Why do for-profit banks and NGOs co-exist in the same market? Which contribute more to economic growth and social welfare? The teaching objective of the case is to enable students to identify, define and evaluate a strategy at the level of a business or individual business unit.

The Annual Percentage Yield is accurate as of the publication date, but are subject to change thereafter, including after account opening. Money Market Accounts require $1,500 minimum to open. Fees could reduce earnings on the account. See fee disclosure and account agreement for details. Equity Bank reserves the right to limit the amount of deposit.

The Annual Percentage Yield is accurate as of the publication date. Penalty will be assessed for early withdrawal and will reduce earnings. Minimum opening deposit of $1,000. Equity Bank reserves the right to limit the amount of deposit.