STANLEY Jacob, head of Consumer Distribution, Ecobank Nigeria and chairman, Committee e-Banking Industry Heads, CeBIH, Nigeria, speaks with Anayo Ezugwu, staff writer, Realnews on the margins of the Future Banking Tech West Africa Summit in Lagos, on April 24, about digital banking, new payment services banks being introduced by the Central bank of Nigeria; cashless economy and challenges posed by digital fraudsters in the financial sector

Realnews: Can you explain further why you said Africa runs the highest rate of shadow economy during the panel discussion on developing West Africa’s Cashless economy?

Jacob: Africa runs the highest rate of shadow economy because we have over 40 percent of our Gross Domestic Product, GDP, in the informal sector. When you look at countries across sub-Saharan Africa, you will discover that over the last 10 years they have been making deliberate steps to drive financial inclusion as a way to go cashless.  We have recorded significant successes especially in Nigeria. When you look as the Enhancing Financial Innovation and Access, EFInA, report and how financial exclusion percentage has been dropping, you will see that we have made progress. I agree that there is still a wide gap to cover and that is why we are still discussing this topic.

Realnews: What will you do to address this financial inclusion gap?

Jacob: Addressing issues like cashless has to do with the underlining basis. Before you can go cashless, there must be financial inclusion. Before you can get financial inclusion to work, there must be adequate use of cases. What I mean by adequate use cases is that the only reason why people put money in a bank and when they need it they go to take it as cash is because they want to spend it. But when you put digital financial services in the locations where they spend, where they eat food and pay for their health, transport etc, if those people can collect money through digital means, there will be no need to withdraw cash. That is why when you are going to a shop like Pack n’ Shop or Shoprite, you don’t need to go with cash if you have a card. So the reason why we are always looking for cash is because there are not enough places for people to access digital services. This is why in developing the products, we need to bear in mind what the customers are saying they want.

Realnews: Going forward, how do we solve these identified problems?

Jacob: Going forward, we need to look at this cashless and financial inclusion from three aspects. One is on the product leg – where we have the digital financial services and how are we giving them and who are we giving them to? Digital finance starts with payments to remitters, pension, insurance and all these are services that revolve around our everyday life. Who are we giving them to? Apparently, we need to go down to the poorer people at the bottom of the pyramids making sure that they have these services for them to be included and for them to trust the system enough. Number two, we need to have good distribution. Today, we are doing quite a lot on agency banking but we need to make it easier for people that are even in the agency banking operations. We need to have simplified interfaces, low cost deployment and have more agents riding on mobile because everyone has a phone. We need to ensure that we have micro-merchants, that is to say small businesses thriving on digital services through their mobiles. And lastly, we will see more of mobile banking coming up because we have payment service banks and the telecoms operators are now beginning to run banks through Payment Service Banks, PSBs.  You will see more collaboration between the banks and the PSBs and this will open up the eco-system and hopefully we can move forward.

Realnews: What is the meaning of the Payment Service Banks, PSBs?

Jacob: It is the new payment services banks the central Bank of Nigeria, CBN, is introducing in Nigeria. Don’t forget that before now in Nigeria, the telecom companies cannot do financial services unlike when you go to Ghana, MTN has a mobile money licence and can operate. But now these things are changing for us to achieve what we want. So we are going to see telecom operators and other entities coming up as payment service banks. The bigger the better, that’s a personal opinion.

Realnews: As we move towards cashless and financial inclusion, how do we address the infrastructural gaps in Nigeria?

Jacob: We are getting better on infrastructure. Honestly, we are because if you look back five years ago and look at the achievements today, we are getting better. All I can say is that we will continue to improve. There are no instances where you don’t have failures, but I tell you with the number of people that are joining the digital financial services eco-system in Nigeria, we are not doing badly. We have big room for improvement and I’m happy that we all agree that we have room to improve.

Realnews: Now that a lot of financial transactions are happening online, what pitfalls do you see and how do we work in terms of mitigations?

Jacob: In online or digital transactions we deal with disputes and frauds. Dispute in the sense that someone sends money and the other man said he didn’t see it. We need to make the dispute process easier. We need to deal with fraud and continue to educate the customer that if you disclose your pin, your money will be lost.

They need to continue to ensure that they don’t allow people look at their details. We also need to strengthen our system at the back-end to make sure that there is no attack on our infrastructure. Digitalisation and innovation comes with its own attendant risks and one of those risks is fraud. But it is not as bad as not digitalising. As the fraudsters are not sleeping, we are not sleeping as well. So that is how it is.

– Apr. 26, 2019 @ 16:59 GMT |