The Nation Newspaper

Tag: banking

  • Victims’ support fund: Banking, oil sectors yet to redeem pledges, says Presidential C’ttee

    Victims’ support fund: Banking, oil sectors yet to redeem pledges, says Presidential C’ttee

    More than six months after key sectors in the Nigerian economy pledged more than N50 billion to support victim’s of insurgency in the Northeast, the pledges are yet to be redeemed, The Nation learnt yesterday.

    The largest sectoral donors – the banking,  oil and gas sectors – at the fund raising, which was held at the Presidential Villa,  Abuja, have not paid a dime out of the billions of naira they promised.

    A member of the committee told reporters in Abuja that the N15 billion so far received, came from other donors since August 2014.

    The official, who pleaded not to be named because he was not authorised to speak on the subject, spoke on the sidelines of an event organised by budgIT, a Non-Governmental Organisation (NGO), where it presented a report on Flood Relief and Rehabilitation Fund.

    Asked to state how much was realised after the pledges and how the funds were applied,  the official said: “It is about N15 billion as at August; we are going to publish our account very soon and it will be made available to the press. But in the mean time, we are trying as much as possible to ensure that individuals redeem their pledges, including members of the oil and gas sector as well as key palyers inthe financial sector.

    “We are appealing to them and we are hoping that they’ll redeem their pledges.”

    On how the N15 billion was disbursed,  the official said: “At the moment we are setting up blueprints. We have tried to take a census of the people that have been displaced in terms of military victims, police victims, women, children and all that. So, there’s really not been any disbursement so far except for the intervention that we have done in the three states including Abuja.

    “Apart from these interventions, there had not been much expenditure so far. But we had the flag-off at Waru here in Abuja and we have been to Borno, Adamawa and Gombe states.”

    The official explained that the disbursements would take place in different forms.

     “For example’” he said, “there are people who need educational support and we have to support them until they are up to 18 years. There are also people who need medical support services and there are families that need support in terms of food items.

    “There are entire communities that we are going to relocate and all of these people need to be helped and we have plans to do that especially after the elections.”

    On whether the monies will be given  directly to victims, he said: “Yes, on the advice of the CBN (Central Bank of Nigeria). The bank came up with a proposal for conditional grant transfer scheme for people who need economic rehabilitation. So, when we get there, we hope to work with the CBN to be able to access the IDPs directly.”

  • Taking banking to the grassroots

    Taking banking to the grassroots

    Agent banking is expected to deepen banking services and create more wealth for the citizenry. But achieving it requires the quick resolution of complaints and an improved regulatory environment, writes COLLINS NWEZE.

    Before now, banking was the exclusive preserve of the rich and the educated. Majority of the poor and illiterates kept their money at home. Far-away bank branches, cumbersome account opening requirements, lack of awareness of financial products and services,among others, were barriers that stood between the poor and illiterates and the financial system.

    But the coming of agent banking is expected to change all that by bringing into the bracket those at the grassroots. The Central Bank of Nigeria (CBN) signposted this with the inauguration of the Agent Banking Model which liberalised the financial system in favour of all, most especially the poor.

    Some of the services to be rendered by the agents are transactional in nature. They include: deposits, withdrawal, cash transfer, account opening, cheques request, bills payment and balance inquiry.

    For a country where more than 70 per cent of its 168 million population live below the poverty line and 46.3 per cent unbanked, achieving the goal appears herculean.

    For the operators, the CBN Director, Banking & Payments Department, ‘Dipo Fatokun, pegged the minimum shareholder fund for Super Agents at N50 million. He said to be licensed, a Super Agent must be a company with an existing business operational for at least 12 months and registered with the Corporate Affairs Commission (CAC).

    He explained that the agent must also have a minimum shareholders’ fund unimpaired by losses of N50 million and obtain a reference letter from a financial institution as part of its documentation for licence request.

    Fatokun insisted that with agent banking, everyone can now open and run accounts on the agent bank model. This is by allowing the agents to take customers’ fingerprints since the model runs on biometric-enabled Point of Sale (PoS) technology with that information, open account for the customers.

    The CBN’s objective is to reduce the number of adult Nigerians who are excluded from formal financial services from 46.3 per cent in 2012 to 20 per cent by 2020 with specific targets for payments, savings, credit and insurance. This, he said, can only be achieved with the support of the banks.

    “The CBN is trying to tell Nigerians that whether you are poor or rich, speak English or not, have means of identification or not, live in town or village, you have right to banking services. The only thing you need to open an account is the finger God has given you. No one can take it from you because no one has your finger type,” the apex bank said in a statement.

    Operational channels

    Managing Director, Enhancing Financial Innovation & Access (EFInA), a financial sector development organisation that promotes financial inclusion in Nigeria, Modupe Ladipo, said sustaining the country’s development hinges on ensuring that at least 80 per cent of all adults have access to affordable financial services as well as the right environment within which to flourish economically.

    She said agent banking model would ensure increased activity in the delivery of banking services outside traditional brick and mortar bank branches. This, she explained, can be done through additional financial access points such as existing retail stores, petrol stations, post offices or via PoS devices and mobile phones.

    But Chief Maurice Adekunle, a traditional ruler based in Lagos,  expressed fears over grassroots banking in the country. He said there are several cases where smaller banks closed shops, and the people lost their money. He said operators of the agent banking project needed to assure depositors that their funds are safe.

    Group head, e-Business, Sterling Bank Plc, Fatai Amoo,  said the bank’s agent banking operation takes security of funds seriously. He said the bank is determined to have the highest level of agent outlets in the country provided such locations have sizeable number of commercial activities and do not pose any risk to depositors.

    “We can only set up in locations that have some semblance of commercial activities. The agent must have a running business, integrity, and be a respected person. The environment also needs to be secured. We need someone who is able to read and write,” he said during a meeting with agents at the bank’s headquarters in Lagos. Amoo said agents have better opportunity of accessing credit from the bank.

    Agents speak

    But Yusuf Obe, an agent, said although banks promised that the biometric-enabled PoS will help in the payment of utility bills, that service is not available. She also complained about tedious account opening process and inability of the machines to check customers’ account balances. Obe said fixing botched transactions is frustrating and takes months to resolve and that has been very bad for the business.

    Other agents also expressed fears encountered in the course of the business such agent fraud, unauthorised fees, loss of customer assets and records, data entry errors, system failures among others. Amoo said the bank is working on installing a technology that enables the customer to hear their balances in local languages. “We have all these facilities but they have to be installed in phases so as not to confuse the customers. We also have dedicated team going round, ensuring that nothing goes wrong. We will be in every location that is potentially viable,” he assured.

    He said for security reasons, the bank ensures that the agents do not handle more cash than they should ordinarily do. “The agents are economic agents that do transactions and the kind of limit we will allow each of them to do, is also a function of the amount of cash the person can handle,” he said.

    He said such agents can also take deposits, but cannot accept deposits above the set limit to ensure they are not exposed to more cash that brings extra security risks around the agent. He said how much an agent earns is a function of volume and value of transactions done. “The agents must be able to go to the bank as quickly as possible to withdraw funds or deposit cash. The more accessible such agent is to the bank, the better,” he said.

    Heritage Bank is also one of the banks offering agent banking services in the country. The bank had in March launched its agent banking scheme with the opening of what it calls the ‘Corner Shop’ bank in the Gbagada Plank Market, Lagos.

    Ifie Sekibo, managing director, Heritage Bank Limited, said the customers now have the opportunity to enjoy financial services without visiting any physical branch location. He said banking services is for everybody. “With the small bank we have opened in the market, we are offering banking services to everybody in this market, irrespective of your educational background and what you do. From this small bank, you can enjoy a lot of banking services, which is available in the bank branches. You can send money to people, receive money from others, buy recharge card. You even send money to people abroad. You can do all these at this corner shop bank,” he said.

    Subairu Akano, a trader said banking is not complete without the customers being able to access credit from the bank. He said there is also need for the bank to assure them of security of funds and efficient services. “We do not want to hear bad story. We want mutually beneficial banking services,” he said.

    Regulators

    Managing Director, Nigeria Deposit Insurance Corporation (NDIC), Umaru Ibrahim, said although Nigeria has not reached advanced stage in its implementation of agent banking project, it is making progress. He said agent banking would go a long way in reaching out to the largely unbanked population, creating banking representations where banks ordinarily do not have enough resources to establish branches. Ibrahim explained that agent banks is a complimentary policy that is worthy of emulation as it provides simple banking services to a variety of people on behalf of various banks.

    He dispelled fears that banks with national banking licence would become lax in branch expansion with the introduction of the agent banks, saying “the banks will now be able to decide which will be more cost effective for them in reaching out to their customers, either opening up branches or using agent banks.”

    Bismarck Rewane of Financial Derivatives Company (FDC) Limited said banks’ commitment to financial inclusion will help reduce the level of poverty and underdevelopment in the country advising that funds and credit must flow with ease to those who need them.

    He said viability of agent banking will be determined by Gross Domestic Product (GDP) growth, per capita income, poverty and literacy level, mobile phone and internet penetration, electricity and level of insecurity among other factors.

    Complaints resolution

    The CBN has given banks and agents 72 hours to treat and resolve any customer-related issues in agent banking. The apex bank also said financial institutions shall be responsible for setting up dispute resolution mechanism for their agents to facilitate resolution of customers’ complaints.

    The CBN also pegged the minimum shareholder fund for Super Agents in Agent Banking at N50 million, a guideline released at the weekend stipulated.

    In a circular to deposit money banks, mobile money operators (MMOs) and switches, signed by Fatokun, the regulator said that Super Agent, must also have a minimum of 50 agents even as applications for such position shall be accompanied with board approval, certificate of incorporation, shareholding structure of the consortium, feasibility study for the agent network among other conditions.

    “The Nigeria Interbank Settlement Scheme (NIBSS) shall provide the switching infrastructure to enable inter-scheme CICO at all agent locations. The super-agents’ platform shall be for the management and monitoring of the activities of their agents only and shall not hold electronic money value, whereas, the financial institutions shall provide and operate the Mobile Money platform and hold electronic money value,” he said.

    Explaining further, he said all MMOs operators platforms must be up to date (inclusive of mandatory integration to NIBSS), tested and active to ensure interoperability between MMOs. Also, all licensed MMOs shall ensure that their platforms are upgraded as needed, tested and active within 30 days from the release of this document.

    For over-the-counter (OTC) transactions, it said the period for holding funds not withdrawn by a receiving customer shall be 30 days. Thereafter, the fund shall be reversed to the sender even as notifications sent to the receiving customer shall indicate the expiry date for the transaction.

    Director, CBN’s Development Finance Unit, Paul Eluhaiwe, said agent banking requires the engagement of pre-qualified individuals in different locations that are predominantly financially-excluded to serve as agents to the bank under the CBN approved model.

    Eluhaiwe said CBN’s Consumer Protection Unit has been established to ensure that customers have an adequate level of protection. This, he said, will build consumers’ confidence in the industry as previously unresolved issues are now handled appropriately. He said there are different layers of inspectors ensuring that customers deal with only banks’ approved agents.

    He recalled that in 2009, the CBN had commenced measures to open up banking channels to non-bank agents. An amendment to the Banks and Other Financial Institutions (BOFIA) Act allowed banks to start using agents to deliver financial services. However, it was in 2012 that the financial industry, along with other stakeholders decided to make financial inclusion a top priority and launched a National Financial Inclusion Strategy.

     

  • Banking in a digital world

    Banking in a digital world

    For banking, it is no longer business as usual. Banks are to either innovate or die. Why? New competitors from adjacent industries and financial technology startups are flooding the market with products and services previously exclusive to banks. This reality has caught many banks watching their multi-billion naira transactions slip away, writes COLLINS NWEZE

    As 25-year old lawyer Zainab Okosun waited outside the courtroom for her colleagues, her smartphone beeped with the familiar facebook message alert. That was another reminder for her to buy her friend’s wedding fabric popular as aso-ebi.

    “We’re not going to the market again after this,” the message from her friend, Amina Yusuf advised. With her phone, Okosun quickly ordered for the aso-ebi and also paid for the pair of silver shoes she had seen on one of the online retail stores, Jumia. A few years ago, she could only have imagined being able to shop and make payment, online and with such ease without going to the banking hall.

    Conversely, a few streets away from the Marina, David Okafor, a civil servant, could not seem to stop chatting on any of his two mobile phones as he waited on a winding queue to make cash withdrawal at a nearby Automated Teller Machine (ATM). Then seconds later, the machine stopped dispensing cash; the long queue disappeared.

    Okafor decided to go into the banking hall where he met a longer queue. One hour later, a customer service officer announced a system downtime. “Please, be patient with us until the system comes up,” the officer stated. It took another 45 minutes before he was paid.

    Yet for every Okosun who is willing to leverage the internet for financial transactions, there are four Okafors who are frustrated by the poor quality of service they get from their banks.

    Again, before Tunde Abiodun left home for office, his four year-old daughter reminded him that the DSTV subscription had expired two days ago. Being on holidays, watching Cinderella cartoons is always her hobby. She got a promise that the subscription would be renewed that day. By evening when her father remembered to fulfill the promise, banks had closed for the day. The only option was to pay using his debit card via Paga, a money transfer service provider, where in three minutes, the subscription was renewed.

    “Mobile payment is where the world is heading and Nigeria cannot afford to be left behind. We do not compete with the banks since our funds are saved with them. But there are places where we clearly compete, and there are more places where we collaborate to do what we are doing,” Paga Co-Founder, Jay Alabraba, who has been in a rush since taking up the top job three years ago said  at his Lagos office.

    It is not just Paga that is making banks rethink their continued existence, since technology firms crept into some businesses traditionally meant for them. Social media platforms, e-commerce providers, and mobile money services, technology payment firms have brought new twists to how banking is done.

    Facebook, Twitter, LinkedIn, My Space, Tumblr, Instagram, Alibba, Jumia, Konga, Supermart, PayPal, Amazon, Square, Cellulant, Apple, Google, Visa and MasterCard are now part of banking operations, taking chunks of banks’ businesses and profitability. They are helping consumers to make payments, secure credits, and do things that banks consider impossible. Customers now think of speed and ways to have access to varied offers from the new competitors, leaving banks struggling for customer loyalty.

    Managing Director, Accenture Financial Services, Toluwaleke Ademosun, said digitisation has changed the financial services landscape. For him, these firms are latching on clear evidence that consumer behaviour and expectations of service and experience are changing.

    “With 25 banks and a network of 5,500 branches nationwide; 25 million banking customers against 127 million active mobile connections and 25 million users of smartphone, there is no doubt that a fertile market for digital play exists.

    “Besides, Nigeria has over 63 million internet data subscribers; 11 million Facebook users and fourth fastest growing number of users worldwide. On Twitter, the country has 1.6 million profiles while 1.03 million business profiles and an unconfirmed number of professionals are hooked to LinkedIn. Digitisation is no longer a future possibility for Nigeria, it is today’s reality,” he concluded.

    The Accenture boss said the take-off of e-commerce and emergence of fast rising online outlets, such as  Jumia, Konga and Supermart are opening up new avenues for e-payments and data collection that were previously left for banks.

    He explained that while many banks have been able to retain their customers through traditional channels and digital service offerings, recent shifts are threatening the customer base of those yet to key into it. Even long term banking relationships at traditional banks, he added, is susceptible to disruption.

    The Minister of Communications and Technology, Mrs. Omobola Johnson, said Nigeria would continue its movement towards a more digital and cash-less economy through increased internet access, more affordable data and improved mobile connectivity.

    “The annual value of e-commerce had soared from $35 million equivalent in 2012 to $550 million in October. While electronic transactions remain dominated by the use of ATMs, there has been very strong growth in online purchases through leading industry players such as Konga, Jumia, DealDey and Quickteller.

    “The increasing number of active mobile lines has facilitated the expansion of e-commerce. The most recent data from the Nigeria Communications Commission (NCC) showed that there were 130.8 million lines last June,” she said.

    Equally, the Central Bank of Nigeria (CBN) approved Globacom to establish 500,000 Mobile Money Outlets via Glo Xchange in partnership with some banks offering mobile banking services. Deputy Director, Bank Examination Unit, at Nigeria Deposit Insurance Corporation (NDIC), Mohammed Umar, said such feat would make banking available to the unbanked.

    He said no country in the world has large number of licenced mobile money providers as Nigeria. Umar said in the next 10 to 15 years, traditional banking branches of bricks and mortar would be drastically reduced, if not eliminated. For instance, younger customers, who are less interested in convenient branch locations and more interested in accessing digital services at the time and place of their choosing, are increasing likely to consider a branchless digital bank.

    “The idea of “convenience” in banking is undergoing shift toward digital products and services that interlock with consumers’ “smart” mobile-empowered lives,” he said.

    Chief Executive Officer of Konga, Sim Shagaya said the firm has opportunity to create an operating system for e-commerce not only in Nigeria but across Africa. He admitted that one needs heavy lifting and deep pockets to succeed in this business insisting that the entrepreneurial energy of Nigeria is greater than what Konga alone can do but, “we are going to leapfrog”.

    “$6 billion worth of e-commerce transactions is done daily in India, and we are looking at ways of achieving similar feat in Nigeria. I admit that online retail remains a tough business; we have to do a lot of convincing. We bought over 127 motor bikes for Lagos market alone and want to replicate same across the country,” he said.

    Co-Chief Executive Officer, Jumia, Nicholas Martin, who for eight years, worked with McKinsey & Company, says Jumia is taking the Nigeria market very seriously and is also taking precautions to guide against fraud. The online retail firm has over 100,000 Nigerian customer accounts with sales increasing by 15 per cent a month. He said the online retailer introduced cash-on delivery policy to ensure that customers match request with product quality.

    “We always insist on genuine products,” he said.

    Managing Director, Cellulant Ghana, Albert Ngumba, said his firm facilitated payment for agricultural value-chain, helping Nigeria farmers to buy fertilisers, paying through Cellulant platform instead of banks. Famers can also perform financial transactions like savings, transfers, loans micro insurance using its platforms.

    “We sit between the banks, mobile operators and merchants. We power payment and make transactions easier for the people,” he said when contacted on telephone.

    “Our wallet account holders can now enjoy the convenience of ATM cards to take out money from a machine and buy products or services. They don’t have to carry cash because they can get it from almost any ATM machine and pay bills easily and quickly,” he added.

    But Board Chairman, Parkway Projects, owners of ReadyCash Mobile Money, Richard Obire, explained that three parties are involved when mobile money transaction takes place. The banks, telecom operators and the mobile money operator are all involved, sharing the fee that come with the transaction.

    Obire, who was former Executive Director, Keystone Bank, said the cash involved in the transaction sits in the bank, although represented by electronic wallet. He said the coming of mobile money is not totally taking away business from the banks, but is helping the lenders to tap into the unbanked market. “The entire banking system is an ecosystem where the players are given roles to play. Such roles including banking the unbanked through mobile money will deepen the financial system,” he said.

    Global trends

    At the international level, Alibaba Group Holding, the Chinese e-commerce giant said first-quarter ended June net income almost tripled to $1.99 billion. Revenue rose 46 per cent in to the equivalent of $2.54 billion. The company had 188 million mobile monthly active users in June, up from 163 million in March. The firm, this year raised over $21.8 billion from shareholders.

    At $68 per share, Alibaba is valued at about $167.6 billion and is one of the most valuable technology companies on the planet ahead of Amazon.com, which has a market capitalisation of $150.2 billion and behind Facebook, which is valued at $200.2 billion.

    PayPal is a top online payment choice after credit cards, used in 193 countries, 26 currencies.  Amazon, has 230 million accounts, and dominates online shopping. Itsnet sales increased 23 per cent to $19.34 billion in the second quarter, compared with $15.70 billion in second quarter 2013.

    Apple has 600 million credit cards on file while Google is on one billion Andriod phones.  Visa remains the biggest network, got $4.4 trillion in purchases and 74.2 billion transactions in 2013. MasterCard, self-proclaimed fastest network achieved $3 trillion in purchases involving 45.5 billion transactions last year.

    Odds against banks

    Most times, banks carry out excess charges or debits in customers’ accounts, which are so minimal they are usually ignored by the victims. It is this little charge that overtime, constitute large chunk of bank income. Besides, some of the charges are not consistent with the monetary policies and bankers’ tariff stipulated by the CBN Guide to Bank Charges released last year.

    The newly re-introduced N65 ATM fee on other banks’ machines is also a sore point for customers. In many other cases, Commission on Turnover (CoT) fees was breached, with funds running into several billions of naira illegally taken from customers.

    Although CBN Director, Banking & Payments System Department ‘Dipo Fatokun explained that the N65 fee on remote-on-us ATMs (Other banks’ ATMs) was to cover huge financial burdens borne by banks which cover the remuneration of the switches, ATM monitors and fit-notes processing by acquiring banks, not many customers were convinced.

    CBN records also showed that banks lost over N20 billion to 2,478 cases of fraud and forgery in the last six months.  The figure, according to KPMG 2014 customer satisfaction survey said, represents an eight per cent increase over the previous year’s volume and indicates a significant increase in value of over 200 per cent from 2012.

    On cybercrime, the report said at two per cent of retail customers indicated that they were fraud victims last year, adding that while this number appears small today, it may signify be the start of a potentially disturbing future trend.

    Banks fight back with collaboration

    As banks’ revenues fall, the lenders are looking at areas that would bridge the revenue gaps. There is new zeal to raise cheap funds, fund power, mortgage, agricultural and educational businesses. Some banks have also gone into Facebook banking, social lending and partnership with global payment and technology firms. FirstBank, Fidelity and Union banks have partnered with PayPal to enhance online payment for shoppers. The partnership enables the lenders’ customers to register for a PayPal account from their internet-banking accounts.

    By linking their-issued debit, prepaid or credit cards to their new PayPal account, customers can then shop and pay on millions of websites around the world from their personal computers, tablets or smartphones, without having to share financial information with the seller.

    FirstBank Group Managing Director/CEO, Bisi Onasanya said the partnership would boost e-commerce evolution in the country. “We are glad to provide e-commerce transaction options for our customers and the generality of Nigerians,” he said.

    PayPal’s Regional Director for Africa and Israel, Efi Dahan said its payments are trusted by international retailers hence the practice where international companies reject cards from Nigeria will no longer arise.

    Fidelity Bank CEO, Nnamdi Okonkwo said that the introduction of PayPal is a deliberate attempt by the bank to make financial services easy and accessible to its customers. Specifically, he said that the development is in line with the bank’s commitment to consistently deploy innovative strategies to make life easier for its customers.

    Eyes on innovation

    Aside partnership with payment firms, some banks have also developed products that are technology-driven. The GTBank Instant, First Instant and Sterling Social Lender accounts were built by GTBank, FirstBank and Sterling Bank respectively to enhance social banking. Here, customers can open accounts online, creating convenience for them.  Sterling Bank’s Social Lender Account allows it to grant loans to customers on Facebook. It provides a platform for online fans, followers who are customers of the bank to obtain micro-credit loans via social media starting with Facebook and Twitter.

    The bank’s Head, Social Media, Kelvin Steve-Igbodo said approval of the loan happens within 10 minutes, and that borrowers can make the request online and get their accounts credited with the fund. He said although the bank started with N3, 000 for borrowers, the amount will gradually rise, and is targeted at customers with urgent cash need.

    Adaku Obi, a customer who benefitted from the loan narrated her experience: “While going to Yaba some days ago, I had no cash in my wallet. I needed cash badly. My cheque was not even with me. I couldn’t find my bank branch around because I wasn’t familiar with the area. So, I tweeted at the handle of my bank. The response was swift. In 10 minutes, my account was credited with N3, 000 short term credit. That is how interesting banking has become”.

    Innovation from other banks

    Access Bank Plc, Visa and shoptomydoor.com, an online shipping company are collaborating to give Visa cardholders opportunity to shop online at retailers in the US, UK and China. Such customers, the bank’s Executive Director, Personal Banking, Victor Etuokwu said, will also enjoy exclusive shipping discounts and shop from the world’s major international retailers with more flexibility and convenience.

    “They can make purchases online in these countries as if they are local residents and also have them shipped in a few business days,” he said.

    United Bank for Africa (UBA) Plc has equally introduced Twitter-based transaction alerts that allow customers receive transaction alerts in their Twitter direct messages inbox.

    “Twitter is increasingly becoming a popular means of communication, especially among the young adults. We are giving the youth, who are increasingly banking with us an option to get transaction alerts on their preferred platform” Rasheed Adegoke, UBA’s Director, Information Technology said.

    Access Bank CEO, Herbert Wigwe, said the lender is taking banking to the grassroots via the Access Money Powered by Airtel. “We will be reaching out to million of people across the globe. We are not the first, and won’t be the last. We looked at the models where it has been successful. Those that have succeeded found partners that complemented their values. They found institutions,” the bank chief said.

    Managing Director and Chief Executive Officer, Airtel Nigeria, Mr. Segun Ogunsanya, noted that Airtel was strategic in partnering the bank to create an enabling avenue for millions of Nigerians to gain financial inclusion. “With Access Money powered by Airtel, millions of Nigerians will be able to make purchases, pay for services and receive payments by the touch of a simple button on their phones,” he said.

    Stakeholders speak

    Founder & CEO of design and innovation agency, Super Being Labs, Darshan Sanghrajka explained that lenders were preparing for the ensuing competition.

    “A senior Barclays’ executive in London, said Barclays is not fearing other banks but fearing the start-up in a bedroom. What we’re seeing is big banks finally realising that their competition is nimble, smarter and able to take more risks. Social media platforms and new start-ups can develop financial technology and deploy them faster, better and in a way that connects better with the consumer,” he said.

    This, he added, has prompted banks to invest in their own FinTech incubators across the world.

    “They want to capture the talent, nurture it and then roll it. They need to do this because, internally, they can’t innovate or take risks at this speed. Well, banks will have to justify exactly what value they provide and ensure they don’t take their customers for granted anymore.

    Sanghrajka, who spoke at a media training in London, advised banks to win hearts and minds by being brands that a more discerning generation wants to be a customer of, rather than trying to hijack attention on social media.

    “To put it simply, be the bank that young people can identify with and practice values that young people can get behind. Then, they will start talking about your brand on social media and word of mouth will spread amongst their friends. That’s how social media should work. At the moment, banks just interrupt young people on social media platforms. Why? It’s futile,” he said.

    For him, banks need to focus on what makes customers really happy and then simplify their offerings to give them exactly that.

    The Managing Director, CRC Credit Bureau Limited, Tunde Popoola, said deepening the financial landscape creates room for new practictioners and segments to emerge.

    “When the financial system is deepened, the banking industry will be the ultimate gainers. All transactions at the end of the day still go to the banking system. It is about money coming into the pockets of people. It can come though different ways like credit cards, transfer, among others. But the good thing is that people now have more choices to make. It is only banks that key into the new opportunities that will benefit,” he said.

    Continuing, he said: “But if they are able to innovate, and device ways of seeing their customers not necessarily coming to the banking halls, but getting the services they need wherever they are, then, they will be the gainer at the end of the day. Lenders that are unable to get to their customers through some of these forms and processes will lose the market,” he said.

    He said that those means of transferring financial services will keep on expanding. “Last year, when I wanted to send money to my children for their school abroad, I had to go to the bank to fill Form ‘M’ and all that. But it was through my laptop I did it this year. I did not leave my office. So, that’s the kind of things we are beginning to see. When you say you want to make a place, a financial hub, these are the kind of things you see. If you are a bank that still wants to be sitting face to face with your customers, then you have already lost the business because everyone is moving into de-personalising transactions.

    “Organisations like Paga, Cellulant are all part of what we are expecting. More of them will come. We have those who are in the telephone territory. There are those in the credit card territory and they are not formal banks. They are being licenced by the CBN to be able to give credit to people using plastics even without having bank accounts. These are the things that will become the formal feature of our economy,” Popoola said.

    For him, banks now have to make profit, not by charging customers more fees, but by having volumes of transaction from everyone.

    Connecting past with future

    Chief Executive Officer, White Sapphire, Biyi Fashoyin, said it is not just the banks that need to innovate, the world itself is now a global village, and the social media is a community by itself.

    “Any corporate entity that ignores the social media and technology is just on its own peril. Every body now is now on social media, including the kids. Any wise bank will know that’s where the market is. It is a ready market,” he said.

    Continuing, he said: “The industrial revolution came at a time. Europe, America and some other countries took part. Some other countries especially in Africa stayed back. Eventually those that participated became the global powers. Those that abstained were labeled third or fourth world countries.

    “That is exactly what is going to happen to the business world. Any bank that is stepping back now, running away from the current realities which reside in the social media space, or the virtual world, will soon be out of business. My advice is that every bank should come in and plug into it. That’s where your market is. That’s where your future is. Your future is actually in the social media,” he said.

    Fashoyin, who is a social media adviser, admitted that the platform has become a place for the good, the bad and ugly.

    “Some people go to the social media to commit atrocities. So, I expect banks to go there now, and have a positive impact on the lives of the people they meet there, especially the youths who form the majority of users. They have to promote values that would help orientate these children all over the world, and help them see the good of that community,” he advised.

    Sterling Bank’s Head of Retail Products, Gbenga Adegoke said the coming technology do not pose any challenge. “It is not going to cut banks’ profit. Remember that technology is for everyone and I can tell you that most of our services are technology-driven. They are up to date and get customers to do businesses with us seamlessly. Paga or other forms of payment services are welcome, and I do not see their coming as a competition, but as an opportunity to evolve as a bank as well,” he said.

    Managing Director, Cowry Asset Management Limited, Johnson Chukwu also agreed with Adegoke. For Chukwu, the new comers redefine the nature of banking services, hence the need gradually move away from the brick and mortar services, and connect with the present demand by customers.

    Solutions by stakeholders

    For Ademosun, banks need to take a fresh look at the digital customers, knowing the implications of not doing so, and benefits if they do. He explained that new technologies are changing the way customers and financial service providers interact and introducing a new demand for how banking services are delivered. “The Millennials, that is people under 30 years of age, have distinct preferences regarding financial services and digital technology; hence a customer-driven plan for digital experience is imperative for competitiveness. Customers are becoming dissatisfied with banking relationships that are merely transactional, rather than driven by advice or a broader relationship,” he said.

    “Digitally aware customers expect a new service proposition. They want banks to help make their financial lives easier by enabling them manage their money more proactively. Banks that do not craft a meaningful response, risk losing customers and revenues to other more digitally focused financial services providers,” he said.

    Founder, Development Diaries, organisers of the Nigeria Social Media Awards, Femi Aderibigbe said that to compete in the evolving environment, banks need next generation functionalities and capabilities to support key operational building blocks for competitive advantage. This, he said, can be achieved by having a structure as efficient and effective as possible; being able to seize opportunities in times of change and continuous innovation.

    “By truly focusing on customer needs and integrating data, analytics and insight with product development and delivery, lenders can transform not only the service proposition they offer, but the perceptions of their brand. That, in turn, will help drive overall loyalty,” he said.

    Aderibigbe explained that the next banking level would  encompass more complex services based on insights from various sources, such as social networks, mobile devices, apps, and harmonised internal data as seen in some developed and developing countries.

    For instance, Vodafone and Safaricom created M-Pesa to serve the largely unbanked Kenyan population. The product allows users to pay cash into their account at an agent, such as a gas station or supermarket, and then use their mobile phone to pay retailers or other individuals. M-Pesa serves as an alternative to bank accounts and credit cards, which is especially appealing to the rural population. In 2012, about a third of the Kenyan population used M-Pesa.

    For Fashoyin, banks’ tomorrow has started today. He believes that lenders that refuse to key into the new developments risk being left behind. “The opportunity for banks to continue to be relevant and position for growth and competitive advantage will be driven by relevant and higher valued propositions to customers,” he said.

  • Banking thrives on quality customer services

    Banking thrives on quality customer services

    Customers’ kingship in the marketplace is taken seriously by forward looking organsiations. This year’s International Customer Service Week celebrated by banks, presented opportunity for lenders to show customers how much they cherish them. Sterling Bank used the occasion of the event to tell a story of its continued commitment to its customers, COLLINS NWEZE,  writes.

    The need to properly address customer’s concern prompted quality conscious organisations across the world to set aside the first week of October, annually, to promote customer service and honour contributors to service excellence.

    Nigerian banks have taken steps to demonstrate their commitment to excellent customer services by embracing the 2014 International Customer Service Week was celebrated between October five and 10.

    The week-long celebration, is traditionally devoted to recognising the significance of customer service and honour the people who serve and support customers with the highest degree of care and professionalism.

    Leading financial, healthcare, insurance, manufacturing, hospitality and communications companies as well as other service-oriented organisations around the world join the celebration.

    However, the 2014 Customer Service Week may have come and gone, but the footprints and the glamour added to the celebration by Sterling Bank Plc will linger in the minds of its customers nationwide especially those who had what could best be described as the ‘One Customer’ experience.

    Customers who visited branches of the lender nationwide during the period were excited by the experience they got and the colour added to it. From the decoration of the banking hall to banners with the message: “Enjoy Exceptional Banking Service as We Celebrate You, Our Customers” strategically displayed, the One Customer T-Shirts worn by the staff and the various gift items on offer to customers, the customers of the bank could only wish that the celebrations never end. Better still, they definitely look forward to the celebrations in 2015.

    Specifically, the bank rewarded its loyal customers during the week by giving out various gift items such as hand sanitisers, branded phones, petts tablets, pocket cards, TV sets, fridges and other unique gifts. This confirms the stance of the bank as one that appreciates its customers.

    “At Sterling Bank, we view Customer Service Week as prime time to recognise our awesome customers through a week-long celebration with activities every day to give our loyal customers the Sterling Bank customer experience”, the lender said.

    A customer with the Kaduna branch of the bank who won a bed side fridge and spoke on condition of anonymity said: “Sterling Bank added a new dimension to the Customer Service Week celebrations as it gave out various gift items to its walk-in customers in all parts of the country and l am a beneficiary of that. This shows the premium that the bank places on its customers and we are really happy about that”. The customer also spoke about how the bank had enhanced customer satisfaction during the customer service week.

    “One thing is to provide quality service. It is another for such products to meet the expectation of the customer to ensure they are satisfied. Sterling Bank has in many ways exceeded their customers’ expectationsby providing consumer – centric products and services delivered in a timely manner. The bank has succeeded in further consolidating its relationship with its customers who are satisfied with its product offerings  coupled with what it did during the Customer Service Week”.

    Mr. Kingsley Okpara, an Engineer based in Aba explained that customer appreciation the Sterling way is unique as it will have a multiplier effect on the bank. His words: “I was surprised when l came to Port Harcourt to pick up some money at the Rumuola branch of the bank and received a gift for doing so. It is fantastic and will affect how I  perceived Sterling Bank henceforth and I  will tell the story to other people”.

    Mrs. Juliana Adebisi Lamikanra who banks with the Dugbe branch of the bank in Ibadan was surprised when she won a fridge on the last day of the week. She said: “Initially l thought it was a joke when l was asked to take part in the lucky dip. l was expecting to win a pen, pencil or at best a school bag, but l was shocked when they read out what l won and, it was a fridge. It was also presented to me on the spot. This is great. It is interesting to note that  banking is no longer about taking deposit and giving out loans, but that of rewarding and celebrating customers as well.”

    A source at the bank who spoke on the basis of anonymity said that the Bank celebrated its customers because “Our success story so far is attributed to the overwhelming support we have received from our customers. This is why we consider them the most important to us and hence the reason for us as a responsible financial institution to celebrate them during the Customer Service Week”.

    Over the years, Sterling Bank has remained consistent in the provision of  quality customer service across its service points and “we are using the celebration to leverage on our  planned enhanced customer service initiatives during the week”, the source said.

    Some of these initiatives already put in place by the Bank to make life easy for the banking public include the opening of additional branches to take the Bank’s quality banking products and services to the door steps of its customers, development of additional customer oriented products and services and deployment of additional Automated Teller Machine points to ensure that customers have access to the bank’s delivery channels at no additional cost.

    In GT Bank, Guest Tellering, an exercise in which top executives of the bank serve as tellers in various branches was  in practice. Skye Bank has equally inaugurated a public-friendly customer care centre, the ‘Yes Centre’, to enhance customer satisfaction and experience. Other banks have also found their unique way of communicating to customers at such times.

    The Central Bank of Nigeria (CBN) insists that customers’ expectations have taken a quantum leap in the new global financial landscape. “Financial services no longer involve providing only standard products to customers. The need for financial products to be personalized and customized to the individual needs of corporate and retail clients is the order of the day. Banks would, therefore, need to be more proactive and innovative in packaging and marketing their products,” it advised.

    Experts said that customers’ perception of quality services varies from person to person. Moses Obinna, a market leader in Balogun Market, Lagos, says he is always excited when his bank calls him or sends birthday message to him on his birthday. “I only want to know that my bank cares for me, my family and business,” he said. Another customer of a new generation bank, Idris Akintola says he is interested is getting a timely statement of account and account balance any time he needs it. But to another motor parts dealer at the Ladipo Market, Lagos, Okeke Okorie, a good customer service simply means giving customers the freedom to choose what they want. “Banks are forcing customers to use ATMs even when there is large scale fraud associated with the product. Anytime I make withdrawals across the counter, my bank charges me N100. It is a sad experience,” he said.

    Analysts insist that service-oriented banks should be able to boost staff morale through motivation, reward frontline representatives, promote teamwork among their workforce, raise companywide awareness of the importance of customer service and remind customers of their commitment to their satisfaction. Achieving this, he added, requires adequate staff training, designed to improve service levels, productivity and performance in the customer contact centres.

    Experts say that customer services transcend the way phone calls are answered or promises are kept. It is even beyond listening effectively, dealing with customers’ complaints or improving on turnaround time. Good customer services means to personally know the customers and recognize their individual needs. It is doing what you say you will, when you say you will, how you say you will, at the price you promised – plus a little extra tossed in to say “I appreciate your business.”

     

    Global practice

     

    According to reports, the International Customer Service Association customer service week was created in 1988. In 1991, the Customer Service Group became the nationally recognised sponsor, providing employers with celebration materials and how-to information.

    Reports have it that the Customer Service Group also serves as a resource for professionals who want to share plans and ideas for the event. In 1992, the congress of United States declared customer service week as a nationally recognized yearly event. Same year, President George H. W. Bush signed the Customer Service Proclamation.

     

  • ‘The future is in branchless banking’

    ‘The future is in branchless banking’

    Paga, a money transfer service provider works with banks, microfinance institutions and mobile network operators to bring banking to the banked and unbanked  population. Its co-founder, Jay Alabraba said Paga Merchant Services allows businesses to collect payments and conduct money transfers. He said it is deepening the financial inclusion policy of the Central Bank of Nigeria (CBN), and that branchless banking is where the future lies, COLLINS NWEZE writes.

    Mobile payment is where the world is heading and Nigeria cannot afford to be left behind, Paga Co-founder, Jay Alabraba, has said.

    Speaking during a media interaction in Lagos, he said the mobile payments service firm, has formally announced the launch of its new business focused service line – Paga for Business.

    Suitable for large-to-small businesses, the product is a one-stop-shop solution for any business looking for a smart way to collect payments from its customers in person, online, or remotely, anywhere in the world.

    The solution, he added,  also allows businesses to disburse cash, airtime  to any bank  account or phone number in real-time.

     

    Mobile payment firms vs banks

    Alabraba said Paga does not compete with the banks since its funds are saved with the banks. He however admitted that there are places where it clearly competes with banks and there are more places where it collaborates with banks to do what it is doing.

    “Certain banks have licenses to do mobile payments. There are places you can extend what we are doing beyond where people do it today. For example, you don’t find many bank pursuing collections of payment by small or medium businesses the way we do.

    “Banks have braches and large banks can have maximum of a thousand branches. Paga alone has 6,500 agents across 32 states in the country. This is a larger service network than all the banks in Nigeria combined. Besides, banks are serving people that are banked.”

    He said people who do business  may not necessarily be in the rural areas, adding that because they are not banked, they are not finding the efficient ways to make payments. But somehow, he explained, “there is a gap and that is the place we play as well. Half of our customers are banked, just that they find Paga to be a lot efficient, creating more options for them to access their services.”

    He said if you are to pay a plumber N2,000, with Paga, sitting in your office, send him a message that sends him his cash. He comes out of his store, goes left to a provision store and collects his money. He didn’t have to come and meet you in your house, neither was your bank involved,” he explained.

     

    Lagos market

     He said Lagos has fewer geographical states that will be considered rural.

    “When I talk of rural focus, beyond Lagos, there are going to be villages where you have self-owned networks. While you will not see the big splash, billboards and television in those places, pay close attention to how they use those services.”

    Typically, he explains, “we have one or two agents there doing transactions. When you talk about Paga, you don’t only pay attention to the person picking up their phone to do transaction. There are multiple ways customers will use paga. People can use page to send SMS, application, paga can be accessed and used online. In that case, you are not even riding on mobile phones network.

    “So when you say mobile, apart from mobile phones, think about connectivity and ability to access any kind of laptop, tablet, device, from the lowest feature phone that can only do SMS to a complicated laptops. These are all connected devices, named mobile,” he said.

    He explained that there are another set of customers that don’t interact with Paga via their phone, but through agents, which is their service point in their community and that agent can do any transaction that they want to do on Paga.

    As he put it: “If they want to transfer money to another person in a remote area, they can take their cash to the agent and send the money and the person receives SMS that the money has been paid. Then, they will go to the agent, present their withdrawal code and cash it. All they have done is to use the phone to receive the alert but the transaction is happening at the agent. The important thing is that as long as there is an agent point in that place; it is possible to serve those customers,” he said.

     

    Confronting infrastructure hurdles

     Alabraba said infrastructure challenge is a subject of concern to any type of business. “Recently we were at an event hosted by one of the large international organisations and infrastructure was the subject and how it affects small and large size businesses, from the stand point of power, cost of connecting telecoms and the reliability of such connection.

    “We built Paga to work in inadequate infrastructure environment; this is not importing software and assumes it is going to work. We have taken into account the fluctuations we will have in power, or telecommunication networks, or other types of infrastructure challenges. The technology is built to work in emerging markets where technology challenge exists, we use an appropriate technology,” he said.

    He said should power be lost in any of its data centres, there are multiple backups to ensure there will not be any loss of data about the transaction.

    “If a customer does a transaction, details are sent through SMS, and there are other ways to confirm. You could reach our call centre or go online and check. We have designed this to work with the challenges that exist here and exceed expectations as things improve and things are improving. We are working closely with the power and telecoms sectors.  We are working closely with the telcos and they are investing heavily in improving infrastructures so that SMS are not delayed,” he said.

     

    Other challenges

    Alabraba said the primary challenge the firm faces is inadequate awareness. He said the firm is focusing on deepening the reach of its operations to uncovered regions in rural and semi urban places.

    “Today about 18 per cent of our agents are in places that are considered rural and semi urban, which is a very big focus on the CBN financial inclusion agenda. We want to reach those places and we look for products and services that will meet their needs, because when somebody you know or trust is doing something, it is a lot easier for you to pick it up,” he said.

    He said the mission is to get more people hooked on to the money transfer services, from where there will be gradual propagation into the communities as well.

     

    Market gap

     The Paga co-founder said the firm discovered a gap in the market and decided to explore it. “Today, we see a gap in that market and we have several businesses that directly address it. We are a business that desires to go online, ——they are not able to collect cash, Paga has multiple products for those kinds of businesses. In most cases, we are collaborating with banks to improve the services to their customers,” he said.

    “I think the future of banking is branchless rather than mobile. One is the fact that increasingly, people are comfortable doing things electronically because you don’t need to queue in the banking halls  for hours to deposit or collect money.

    Branchless in the sense that people can use connected devices to access their transactions. But even more interesting is this trend towards true branchless banking but still physical, where the retail shop in your community ends up being your bank,” he explained.

     

    Paga overview

     Alabraba explained that a Paga agent is a place where you can go, send money, pay bills, buy airtime, deposit money into any bank in Nigeria and receive money from anybody in Nigeria.

    When you really think about it, it is mini bank, where you go buy breads, soft drinks, the person equipped as a Paga agent can do any of those transactions for you. We are collaborating with banks and we are going to see a lot more around banking services being delivered through here, and this will be from partners as well.

    He said those who can use their phones to do transactions will do so, but that there will be a lot more people who will rely on their low paga agent to achieve this goal. This is a person that knows them, knows the number of children they have and the fact that they are always sending money to them.  The local agent is also earning money whil;e offering this service.

    It is here we emphasise that small and medium businesses are the life blood of the economy. It is trusted; they bring good products, give credit to their local communities.

    That small business is pushing the future of banking and is actually in the position to explain to the local community members what the product is,” he said.

     

    Product innovation

     He said that in any situation where value is being sent from one party to another, be it a customer or a business, Paga has a role to play and can improve the flow of the value.

    “Every business needs payment, whether small or big payments. It may be cash or electronics. So, we have products under the collection umbrella that allows businesses of all kinds to collect payment.

    Like Jumia, online company is able to use cards on Paga mobile payment to collect payment from their customers. The customers may be online or offline and there is opportunity to collect through our agents and it still reaches the same online merchant.

    There is also offline payment. You think of the small provision store that is near your house that is a person that wants to collect cash or cards. We have series of products available and more coming that will support that kind of a business. More importantly, like the electronic company, the Ikeja Distribution Company for example; you can go to any Paga agent or go online to pay that bill. You don’t necessarily have to go to the electricity company. So, collection is another thing,” he said.

    He said the firm also has corporate payment tools, called bulk payment tools.

    “The company may use either bulk payment to pay all its staffs, the payments may go directly to their phones. So, think of day laborers that may be paid in bulk. So, if there are 100 people that need to be paid N10,000 each, Paga could send the money to all of them and what they need to do when they receive the alert is to cash it in their neighborhood or go to an ATM to cash out. Similar product exists for airtime,” he said.

    Lending

     The Paga chief said the firm is working with its partners to offer loans to is clients.

    “We have multiple partners. We are licensed and regulated by the CBN which has done a lot in advancing the future of financial services in the country.

    Two key frameworks CBN has come out with, are the mobile payment framework which came out in 2009, that regulates the core business that we do. However, more recently, the  CBN has brought out the agency banking framework that guides how banks and other financial institutions can go branchless,” he said.

     

     

  • The many sides of cash-less banking

    The many sides of cash-less banking

    Cash-less banking comes with varied benefits, but grassroots campaign and enlightenment must be sustained to fully tap the opportunities it presents. The nationwide roll out on July 1, presented a huge opportunity for banks, regulators and other stakeholders to collaborate to achieve the desired objectives, writes COLLINS NWEZE.

    Michael Abiodun, a 32 year-old entrepreneur, spends a part of his business time in banking halls making payments to his suppliers of goods.

    During one of such visits to a bank in Central Lagos, a cashier who has been monitoring him for months, including his frequent visits to the banking hall, decided to tell him about electronic payments.

    “You don’t need to be physically here to pay your suppliers. You can do it at home, or even in your shops or through mobile phone,” the cashier told Abiodun.

    The use of Automated Teller Machines (ATMs), Point of Sale (PoS) terminals, web payment, online transfers and even mobile money, are just getting popular in Nigeria, after years of relying heavily on cash for payment for goods and services. Although e-payment saves costs and time, just about four per cent of transactions done in Nigeria are carried out through the process.

    The figure was less than one per cent until January 2012 when the Central Bank of Nigeria (CBN) launched the cash-less banking initiative in Lagos. The ‘Cash-less Lagos’ as it is called, was later replicated in six other states and Federal Capital Territory last January. The nationwide implementation of the policy began on July 1.

    As electronic payments gain ground, the number of connected card readers has increased to about 158,000 from 5,000 before 2012, according to the CBN statistics. The value of transactions rose 26 per cent to N1.4 trillion ($8.5 billion) in the first half of last year from the position, a year ago.

    The CBN said it is targeting an increase to 375,000 readers by the end of next year. For him, improved e-payment would make monetary policy more efficient because of ease in which cash movement is monitored.

    The rise of online-shopping websites, such as Jumia and Konga.com, has also spurred Nigerians to consider electronic payments. The value of online retail transactions, estimated at N62 billion in 2011, may rise to N150 billion this year, according to Euromonitor International, a London-based researcher.

     

    ATMs gain ground

    ATMs withdrawals accounted for 93 per cent of electronic payments by volume in the first half of 2013, according to CBN data. Mobile money also hasn’t taken off in Nigeria, with phone payments accounting for just 3.7 per cent of all electronic transactions. The mobile money which allows mobile phones to be used to send and receive money, buy recharge cards, pay subscription fees for DStv, pay electricity bills, use of PoS terminals to pay for goods and services among others is under threat.

    The telecommunication companies (Telcos) and banks which are expected to drive the process are not doing so. Both sectors want to drive the mobile money business and have found it extremely difficult to work together.

    General Manager, IBM Africa, Taiwo Otiti, said the strategy being adopted by the key stakeholders is stifling the success of mobile money in the country.

    He said: “The approach we have taken in mobile money is the challenge. We have over 30 million unbanked, compared with over 100 million mobile phone users, the people who are unbanked, may have mobile phones, but how would you get them into the financial system. You must be able to get into his lifestyle for you to be able to get him subscribe to mobile money scheme. But many of the stakeholders are not doing that”.

    Otiti said the getting the mobile money scheme running requires both the payment and supply chain properly defined and implemented by the stakeholders. He said there is need for a paradigm shift that sees all the stakeholders working together. “The telcos can’t also do without the banks, so also are the banks. It is only by collaboration, will the mobile money project begin to deliver the needed results,” he said.

    The Executive Vice-Chairman of NCC, Eugene Juwah, said critical success factors for mobile payment in the country are the integrity and security of the end-to-end transition during a payment transaction process. He said the chain of transaction must be secured from initiation to authentication. Therefore, confidentiality and integrity of the data transition are critical factors in mobile payment.

    While mobile payments increased more than threefold in recent years, only N6 million was transacted using mobile money, compared with N57.2 billion ($352.5 million) on ATMs, and PoS.

    The central bank wants commercial lenders to drive growth rather than phone operators because they regulate the banks and not the telecommunication companies, Moghalu said.

    Even among Nigerians with ATM cards, cash still dominates daily business as connection and network difficulties and delays in transaction times get worse. There have been cases where consumers are debited twice for the same purchase.

    About 50 per cent of card-reader transactions also crash because of patchy radio and phone networks, Moghalu said. The CBN is trying to reduce failure to below 10 per cent over time, he said.

    Fixing botched transactions causes “quite a bit of frustration” because they can take months to resolve, Bisi Lamikanra, a partner and head of management consulting at KPMG Advisory Services, said adding that with these hitches, consumers typically rather withdraw cash from the ATM, even if they’re withdrawing it outside the shop. The start of chip-and-pin-card technology in 2010 helped lower incidents of ATM fraud by more than 90 per cent.

     

    Incentives for e-payment

    The Nigeria Interbank Settlement System (NIBSS) is encouraging the use of cards to pay for goods and services via PoS terminal. The agency, collaborating with banks is working out modalities that will ensure that bank customers that use their e-payment cards to pay for goods and services on PoS terminals and web platforms will now be rewarded with cash back of 50 kobo for every N100 spent.

    Chairman, Committee of E-Banking Industry Heads (CEBIH), Mr. Chuks Iku, the committee and  member-banks have partnered with NIBSS for an incentive scheme for members of the public. The scheme, he said, will allow cash back rewards to card holders for using their cards to make payments on alternate channels. “The objective is to encourage usage of cards on PoS and the Web,” he said.

    Banks are also taking steps that would ensure the security of customers’ transactions. The lenders are discussing with Microsoft Nigeria to extend security features in Microsoft XP being used by most Nigerian ATMs.

    With the expiration of the April 8 deadline set by Microsoft for users of Windows XP to migrate to Windows 8 Operating System (OS), there are fears that the ATMs of most of the lenders in the country may be vulnerable to fraud. Iku said Microsoft Nigeria had directed banks to migrate to the improved platform, which, he said would allow for enhanced banking benefits and security.

    The banker said despite failure to comply by some lenders, ATMs remain secured and safe for transactions. He however said non-compliant ATMs might not be able to carry out improved service delivery.

    “By upgrading, we are taken to a higher version, but that does not mean that the version that you have will not run. The ATMs are still working, and are not going to go down. “But the migration will only enhance the features of the ATMs. There is really no cause for alarm, the important thing is that we should do it quickly to ensure that our ATMs are in top performing levels,” he advised.

    General Manager Microsoft Nigeria, Kabelo Makwane said several banks have identified non-migration to the new technology as a priority for them and are taking steps to address the challenge. He said non-migration to the Windows 8 could open the banks up for potential security vulnerability and threats.

  • The many sides of cash-less banking

    The many sides of cash-less banking

    Cash-less banking comes with varied benefits, but grassroots campaign and enlightenment must be sustained to fully tap the opportunities it presents. The nationwide roll out on July 1, presented a huge opportunity for banks, regulators and other stakeholders to collaborate to achieve the desired objectives, writes COLLINS NWEZE.

    Michael Abiodun, a 32-year-old entrepreneur, spends a part of his business time in banking halls making payments to his suppliers of goods.

    During one of such visits to a bank in Central Lagos, a cashier who has been monitoring him for months, including his frequent visits to the banking hall, decided to tell him about electronic payments.

    “You don’t need to be physically here to pay your suppliers. You can do it at home, or even in your shops or through mobile phone,” the cashier told Abiodun.

    The use of Automated Teller Machines (ATMs), Point of Sale (PoS) terminals, web payment, online transfers and even mobile money, are just getting popular in Nigeria, after years of relying heavily on cash for payment for goods and services. Although e-payment saves costs and time, just about four per cent of transactions done in Nigeria are carried out through the process.

    The figure was less than one per cent until January 2012 when the Central Bank of Nigeria (CBN) launched the cash-less banking initiative in Lagos. The ‘Cash-less Lagos’ as it is called, was later replicated in six other states and Federal Capital Territory last January. The nationwide implementation of the policy began on July 1.

    As electronic payments gain ground, the number of connected card readers has increased to about 158,000 from 5,000 before 2012, according to the CBN statistics. The value of transactions rose 26 per cent to N1.4 trillion ($8.5 billion) in the first half of last year from the position, a year ago.

    The CBN said it is targeting an increase to 375,000 readers by the end of next year. For him, improved e-payment would make monetary policy more efficient because of ease in which cash movement is monitored.

    The rise of online-shopping websites, such as Jumia and Konga.com, has also spurred Nigerians to consider electronic payments. The value of online retail transactions, estimated at N62 billion in 2011, may rise to N150 billion this year, according to Euromonitor International, a London-based researcher.

     

    ATMs gain ground

    ATMs withdrawals accounted for 93 per cent of electronic payments by volume in the first half of 2013, according to CBN data. Mobile money also hasn’t taken off in Nigeria, with phone payments accounting for just 3.7 per cent of all electronic transactions. The mobile money which allows mobile phones to be used to send and receive money, buy recharge cards, pay subscription fees for DStv, pay electricity bills, use of PoS terminals to pay for goods and services among others is under threat.

    The telecommunication companies (Telcos) and banks which are expected to drive the process are not doing so. Both sectors want to drive the mobile money business and have found it extremely difficult to work together.

    General Manager, IBM Africa, Taiwo Otiti, said the strategy being adopted by the key stakeholders is stifling the success of mobile money in the country.

    He said: “The approach we have taken in mobile money is the challenge. We have over 30 million unbanked, compared with over 100 million mobile phone users, the people who are unbanked, may have mobile phones, but how would you get them into the financial system. You must be able to get into his lifestyle for you to be able to get him subscribe to mobile money scheme. But many of the stakeholders are not doing that”.

    Otiti said the getting the mobile money scheme running requires both the payment and supply chain properly defined and implemented by the stakeholders. He said there is need for a paradigm shift that sees all the stakeholders working together. “The telcos can’t also do without the banks, so also are the banks. It is only by collaboration, will the mobile money project begin to deliver the needed results,” he said.

    The Executive Vice-Chairman of NCC, Eugene Juwah, said critical success factors for mobile payment in the country are the integrity and security of the end-to-end transition during a payment transaction process. He said the chain of transaction must be secured from initiation to authentication. Therefore, confidentiality and integrity of the data transition are critical factors in mobile payment.

    While mobile payments increased more than threefold in recent years, only N6 million was transacted using mobile money, compared with N57.2 billion ($352.5 million) on ATMs, and PoS.

    The central bank wants commercial lenders to drive growth rather than phone operators because they regulate the banks and not the telecommunication companies, Moghalu said.

    Even among Nigerians with ATM cards, cash still dominates daily business as connection and network difficulties and delays in transaction times get worse. There have been cases where consumers are debited twice for the same purchase.

    About 50 per cent of card-reader transactions also crash because of patchy radio and phone networks, Moghalu said. The CBN is trying to reduce failure to below 10 per cent over time, he said.

    Fixing botched transactions causes “quite a bit of frustration” because they can take months to resolve, Bisi Lamikanra, a partner and head of management consulting at KPMG Advisory Services, said adding that with these hitches, consumers typically rather withdraw cash from the ATM, even if they’re withdrawing it outside the shop. The start of chip-and-pin-card technology in 2010 helped lower incidents of ATM fraud by more than 90 per cent.

     

    Incentives for e-payment

    The Nigeria Interbank Settlement System (NIBSS) is encouraging the use of cards to pay for goods and services via PoS terminal. The agency, collaborating with banks is working out modalities that will ensure that bank customers that use their e-payment cards to pay for goods and services on PoS terminals and web platforms will now be rewarded with cash back of 50 kobo for every N100 spent.

    Chairman, Committee of E-Banking Industry Heads (CEBIH), Mr. Chuks Iku, the committee and  member-banks have partnered with NIBSS for an incentive scheme for members of the public. The scheme, he said, will allow cash back rewards to card holders for using their cards to make payments on alternate channels. “The objective is to encourage usage of cards on PoS and the Web,” he said.

    Banks are also taking steps that would ensure the security of customers’ transactions. The lenders are discussing with Microsoft Nigeria to extend security features in Microsoft XP being used by most Nigerian ATMs.

    With the expiration of the April 8 deadline set by Microsoft for users of Windows XP to migrate to Windows 8 Operating System (OS), there are fears that the ATMs of most of the lenders in the country may be vulnerable to fraud. Iku said Microsoft Nigeria had directed banks to migrate to the improved platform, which, he said would allow for enhanced banking benefits and security.

    The banker said despite failure to comply by some lenders, ATMs remain secured and safe for transactions. He however said non-compliant ATMs might not be able to carry out improved service delivery.

    “By upgrading, we are taken to a higher version, but that does not mean that the version that you have will not run. The ATMs are still working, and are not going to go down. “But the migration will only enhance the features of the ATMs. There is really no cause for alarm, the important thing is that we should do it quickly to ensure that our ATMs are in top performing levels,” he advised.

    General Manager Microsoft Nigeria, Kabelo Makwane said several banks have identified non-migration to the new technology as a priority for them and are taking steps to address the challenge. He said non-migration to the Windows 8 could open the banks up for potential security vulnerability and threats.

     

     

  • CIBN plans banking, finance confab

    CIBN plans banking, finance confab

    The Chartered Institute of Bankers of Nigeria (CIBN) has concluded arrangements to hold the eight Banking and Finance Conference in Abuja. The event, focused on transforming Nigeria’s payments systems into global reckoning will hold from September 23 to 24, 2014.

    The institute said it has assembled high profile and seasoned experts from the public and private sectors of the economy to address the topical issues at the conference.

    To participate at this year’s conference are Co-ordinating Minister for the Economy/Minister for Finance, Dr. Ngozi Okonjo-Iweala; Minister of Industry, Trade and Investment, Dr. Olusegun Aganga and Minister of Communication Technology, Mrs. Omobola Johnson  who will present the Government perspectives.

    Also to speak are Country Director, Visa Central & Eastern Europe, Middle East and Africa, Ade Ashaye and Co-founder, Pagatech Nigeria Ltd, Mr. Jay Alabraba who will give the private sector perspective. The focus of the Conference is “Positioning Nigeria’s Payments Systems for Global Competitiveness” which is deliberately designed to further support the Payment Systems Vision 2020 (PSV2020) initiative of government is expected to further promote privacy, integrity, compatibility, good transaction efficiency, acceptability, convenience, mobility, low financial risk and anonymity in the Nigerian financial system.

  • Promoting grassroots banking

    Promoting grassroots banking

    The Central Bank of Nigeria (CBN) has instituted a three-tier Know-Your-Customer (KYC) initiative to take banking to the grassroots. COLLINS NWEZE examines the implication of the policy and the growth of the financial system.

    In most developing countries, a large  population of low income earners has little or no access to financial services. As a result of this, many of them depend either on their own or informal sources of finance to get their businesses done. Lending to the economy is affected because a large portion of the funds are outside the banking system.

    The CBN statistics show that about 64.1 per cent of adult Nigerians (56.3 million) do not have access to financial services. Various factors account for the high level of financial exclusion. These include irregular income, distance and low number of bank branches and cumbersome account opening requirements/procedures.

    The CBN said the lowering of the KYC policy is to allow the unbanked access to the financial system. According to him, the regulator is interested in bringing small savers into the financial sector in line with its financial inclusion policy.

    This is so because low income earners, poor and socially disadvantaged segments of the population, majority of who live in the rural areas, do not have access to financial services mainly because they also lacks means of identification which is a requirement in account opening.

    It, therefore, came as a relief to most grassroots customers when, in furtherance of its objective of enhancing financial inclusion and access to finance, the CBN developed the tiered Know Your Customer (KYC) requirements for compliance by banks and other financial institutions under its regulatory purview.

    The CBN had introduced three-tier KYC requirements for banks. The policy, categories bank customers into Low Value Accounts (Level One); Medium Value Accounts (Level two) and High Value Accounts (Level three).

    A circular to all banks and other financial institutions (OFIs) signed by CBN Director, Financial Policy and Regulation, Chris Chukwu, explained that the policy became exigent after the CBN recognised that access to basic banking facilities and other financial services is necessary in achieving the policy on financial inclusion. He advised banks to adopt the new KYC requirement adding that the proposed deposit limits is meant to reduce the risk of money laundering and financing of terrorism.

    He said the Low Value Accounts are subject to close monitoring by the financial institutions and less scrutiny by bank examiners.

    The CBN director said the accounts can be opened at branches of banks by prospective customer or through banking agents and no amount is required for its opening. However, such accounts prohibit international funds transfer.

    According to him, the Medium Value Accounts can be opened face to face at any branch of a bank by agents for enterprises or by the account holder but, the accounts are strictly savings within no amount required for its opening. Also, where cross-checking of client’s identity cards information is not completed at the point of account opening, withdrawal would be denied.

    Chukwu added that for the High Value Accounts, banks are required to obtain, verify and maintain copies of all required documents for opening them. Account is to be opened at the bank branches by physical presence of the prospective customer and the accounts could be both savings and current. However, for mobile banking products, the account attracts a maximum transaction limit of N100, 000 and daily limit of N1 million while such products are subject to the CBN Regulatory Framework for Mobile Payments Services in Nigeria.

    He said banks are required to have robust, effective and efficient anti-money laundering/combating the financial terrorism (AML/CFT) solutions with screening tools  that will monitor the various thresholds. “All accounts, no matter how low the transaction or the risks, must be subjected to continuous suspicious transactions monitoring by financial institutions which will determine when incremental KYC requirements need to be provided by the customers,” he said.

    KYC Vs money laundering

    Inter -Governmental Action Group against Money Laundering in West Africa (GIABA) has advised banks to strengthen their enforcement of Know-Your-Customer (KYC) policy of the CBN.

    GIABA Representative in Nigeria, Timothy Melaye, told The Nation that removing Nigeria from the list of countries identified as jurisdictions with significant deficiencies in their Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) regimes was good for the country.

    He said banks should do more in ensuring that they understand their customers’ businesses better by adopting the new KYC rule. He said Nigeria has taken the right steps, including the establishment of legal and regulatory framework that will assist it meet its anti-money laundering initiatives, the Financial Action Task Force (FATF).

    He said adopting an efficient KYC policy will ensure that Nigeria does not return to the list of non-compliant countries on money laundering going forward.

    “The FATF welcomes Nigeria’s significant progress in improving its AML/CFT regime and notes that Nigeria has established the legal and regulatory framework to meet its commitments in its Action Plan regarding the strategic deficiencies that the FATF had identified in February 2010. Nigeria is, therefore, no longer subject to FATF’s monitoring process under its on-going global AML/CFT compliance process. Nigeria will work with GIABA as it continues to address the full range of issues identified in its Mutual Evaluation Report,” he said.

     Other stakeholders speak

    A bank customer, Moses Adigun, said the new KYC rule has made it possible for him to own bank account. “I think the policy has made it easier for most people to have bank accounts. Before now, banks were asking for all sorts of documents for simple account opening. But all that has changed,” he said.

    Adigun said with this policy, more deposits would embrace banking, adding that this would boost lending to the productive sectors of the economy.

    Deputy Managing Director, Diamond Bank Plc, Mr. Uzoma Dozie, stressed the need to continue to drive policies that will enhance access to finance to support economic growth. “There is need to focus more on financial inclusion and also to provide the enabling environment for small businesses to thrive. What we found out is that a lot of business starts, but they falter after some years.

    “There is need for greater collaboration between the Central Bank and the Federal Government and agencies, such as the Federal Inland Revenue, the legal system, to reduce the burden of financial inclusion in the society because the more people we have included in the financial system, the better the effect of monetary policy transmission,” he said.

     How the KYC rule works

    The ‘tiered’ KYC requirements regime ensures application of flexible account opening requirement for low-value and medium value accounts. This means that account opening requirements will increase progressively with less restrictions on operations. However, the main objective of the proposed approach is to promote and deepen financial inclusion.

    CBN Acting Director, Financial Policy and Regulation, Nwaoha I.T., said the tiered KYC is about financial inclusion. He explained that the KYC requirements were made in such a way to reduce the incidence of identity fraud.

    According to him, “the requirements are such that if you don’t cascade it down and simplify it as the financial requirement becomes less, you will automatically rule out a large segment of Nigerians from the system. He explained further that the tiered KYC requirements were fashioned out to ensure that those who otherwise would not be qualified for an account relationship on account of the rigour associated with the detailed KYC requirements of the past are also given opportunity to open account and transact business to the extent of the amount of business that they do.

    Nwaoha explained that there was need for proper implementation of the policy to ensure its success as an improved KYC regime would not only promote financial inclusion, but increase the effectiveness of its requirements. It will also improve the quality of KYC information obtained by the financial institutions from their customers.

    “We have observed that the laudable policy would produce lasting result if it is properly implemented and monitored timely from its inception,” he said.

    The CBN director said the strategy ensures that CBN carries out certain commitments to demonstrate its seriousness to the project while the financial institutions comply with the various provisions of the guidelines while putting in place the required infrastructure.

    He said the financial institutions are expected to undertake a detailed evaluation of the policy to determine how best to implement it. Also, CBN and banks are expected to undertake mass public awareness campaign, particularly in the rural and sub-urban areas as such would promote wide acceptance of the policy.

    KYC for DNFBPs

    To ensure compliance by the Designated Non-Financial Businesses and Professions (DNFBPs) to the KYC policy, the CBN has extended the deadline for additional KYC for the subsector till this month. The apex bank had set December deadline for the plan, after initial postponement from April 30, last year.

    In a statement, the CBN Acting Director, Financial Policy and Regulation, A. O. Ikem advised DNFBPs that have not registered with Special Control Unit Against Money Laundering (SCUML) will have to do same before the deadline ends, failing which they would not be allowed to operate such accounts.  The CBN said the extension is meant to address some of the challenges encountered by SCUML as a result of the number of persons seeking to enjoy late compliance.

    The CBN had earlier issued a circular, mandating DNFBPs on the need to provide additional KYC requirements to their banks and Other Financial Institutions (OFIs). It said compliance is in line with international best practice against adverse developments resulting from money laundering and financing of terrorism globally.

    CBN Acting Director, Consumer & Financial Protection, Mrs Dutse Umma Aminu, said the overall strategy of the policy is to reduce adult exclusion rate from 46.3 per cent in 2010 to 20 per cent in 2020 as such feat would support the empowerment of many Nigerians and promotion of economic growth.

    She said the CBN strategy defined clear objectives and sets specific targets across five primary products and services on payments, credits, savings, pensions and insurance. He said the priority is on transforming the KYC regulation into simplified risk-based tiered framework that allows individuals who do not meet formal identification requirements to enter the banking system.

    She said the CBN is also pursuing the development and implementation of regulatory framework for agent banking to enable financial institutions deliver services through agents such as post offices in locations that will otherwise be unprofitable to open physical branches.

    Aminu said the CBN has also developed and is implementing a National Financial Literacy Framework to guide delivery programmes that will increase the awareness and understanding of financial products and services with the ultimate goal of increasing sustainable users.

    The banking watchdog, he added, is also implementing a comprehensive consumer protection framework to safeguard the interest of consumers of financial products and services and sustain confidence in the financial system.

  • Banking to resume in Kwara community, says CBN

    Banking to resume in Kwara community, says CBN

    Normal commercial banking will resume soon in Omu-Aran, headquarters of Irepodun Local Government Area of Kwara State, Acting Governor of the Central Bank of Nigeria (CBN), Mrs. Sarah Alade, has said.

    About 11 months ago, commercial banks in the ancient town suspended banking following violent robbery incidents that affected some of them.

    Specifically, a robbery attack on May 14, last year led to indefinite closure of commercial banking operations in the town, forcing residents to travel more than 60 kilometres for their banking transactions.

    Alade gave the assurance this yesterday in Omu-Aran while handing over two Hilux pick-up vehicles donated by the community to the Police.

    Represented by the CBN Branch Controller in Ilorin, Mr Monday Olotewo, the Mrs Alade said the bank is aware of the community’s social and economic predicament following the closure of banking operations.

    She said the assurance given the community was based on the high level synergy between the community and law enforcement agencies.

    She said: “It is always a precarious situation for us in the banking sector, particularly the CBN to continue to witness indefinite closure of bank branches as a result of incessant armed robbery attacks.

    “But when such attacks now involve loss of precious lives, it becomes more compounded.

    “But the good news is that with the level of commitment shown by the people of Omu-Aran community, with this donation and other efforts in assisting security agencies, I assure you of the re-opening of the banks very soon.”

    State Commissioner of Police Ambrose Aisabo expressed happiness at the community’s gesture, and promised to make judicious use of the vehicles.

    He urged financial institutions to furnish the command with useful security tips on how to improve security around them.

    He said: “I am assuring the Omu-Aran community that these vehicles will only be used to service the immediate security needs of the town.

    “With the presence of all security apparatus in Omu-Aran, the police including regular and mobile units, Special Anti-Robbery Squad, and the Military patrol team, I think the banks can start their operations.”

    Also speaking, the President, Omu-Aran Development Association (ODA) Chief Peter Oyinloye, President said the association would also assist the police in the maintenance and fuelling of the vehicles to achieve smooth operations.