culled from: Businessday Newspaper
o gain a better competitive edge, it behoves banks in the country to extend financial services beyond branches by the use of technology such as mobile phones and Point of Sale (PoS) devices.
This is to promote financial inclusion in both rural and urban areas of the country. It also answers the question of how the country can leverage technology and non-bank channels (such as retail stores) to increase access to a range of financial products for the unbanked, especially those in remote rural areas.
According to 2010 survey conducted by Enhancing Financial Innovation & Access (EFInA), with over 59 million unbanked adults, finding new ways of reaching this market is a major challenge for service providers. New ways of thinking and innovation in bank product and service offerings are needed to capture the market.
The survey placed emphasis on the need for the banking industry to take banking services closer to the customer through agent banking, and to ensure that the benefits of having a bank account is widely communicated to the unbanked and low-income population through several different channels.
Furthermore, the survey noted that formal financial providers should identify innovative ways of extending micro and retail loans to the low income segment.
Robert Stone, director, policy management, Oxford, admitted that mobile phone would serve as a channel to reach out to those in the rural areas, as there was also fertile ground for mobile financial services, given that 50 percent of the Nigerian population already had access to a mobile phone.
On the part of policy makers, the survey stated there was need to maintain policy reforms that foster stability in the banking industry, especially as this was the top criteria for deciding where to open a bank account as well as to ensure robust consumer protection policies that address transparency, fair treatment and effective redress mechanisms, tailored to the realities of inexperienced, low literacy consumers.
The Central Bank of Nigeria (CBN) explains that mobile financial services, which are the vehicle for branchless banking, have two arms: branchless banking via mobile phones, which enables the unbanked make basic payments and remittances. These are fast, easy, and cost-effective. Users can also participate in savings, credit, and insurance programmes all of which drive financial inclusion m-wallet solutions, micro-loans, and micro insurance.
It is also a channel for financial services for existing customers by providing them with a highly accessible and convenient portal for financial services.
Also, it is a popular method of banking that fits in well with a busy, technologically oriented lifestyle. It might also be referred to as Mobile-banking or Mobile Payment (M-banking or M-payment).
The amount of banking one is able to do on his mobile phone varies, depending on the banking institution in use, as some banks offer only transaction alerts and balance check.
The newest technology is that Nigeria is at the threshold of Mobile Money Transfer and Payment (MMTP).
Explaining how the mobile banking works, one of the operators of microfinance banks in Lagos, says "I think if you can use biometric point of sale for the withdrawal, you need to put your thumb print, which makes it very secured because no two people have the same thumb print. The issue of somebody has taken my money or the problem associated with ATM, you will have been able to avoid that because one of the things we do is to enroll our customer, take their finger print and at the point of withdrawal, the owner of the account will be identified.
"So, in terms of deposit, we also make it mandatory for all customer once they make a deposit to get a receipt from the system instantly and they must ensure that if they pay N2000, it shows on the receipt otherwise, somebody can take N10,000 and the person will record N100 or N1,000 and at the end of the day the money you have in your account will not be accurate."
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