How innovation is driving the financial inclusion campaign in Nigeria [Opinion]

By Victor Ilo

NIGERIA has come a long way in its quest for financial inclusion. From 2012, when the Central Bank of Nigeria, CBN, launched the Nigerian Financial Inclusion Strategy, NFIS, until almost 10 years later, a lot has happened.

One of the advancements is a service that allows customers to withdraw money through mobile money agents from their bank accounts without using an ATM, ATM, or card. This cardless cash withdrawal service uses a secure gateway that protects customers against fraudulent transactions and requires validation using their bank PIN.

But how important is it? Although there has been progress in financial inclusion in Nigeria, data from Enhancing Financial Innovation and Access, EFInA, revealed that in 2018, only 59.1% of women compared to 67.5% of men were financially included, representing a gender gap of 8.4%. hundred.

Although there is a slight improvement from the 9.8% recorded in 2016, the gap needs to be closed sooner. This takes into account the fact that there are approximately 2.8 million more women than men in Nigeria. Without closing the gap, Nigeria can only dream of reaching the 95% inclusion target set by the CBN for 2024.

As in the case of many developing countries, mobile money is more likely to close the financial inclusion gap for women than financial institutions and regular bank accounts.

So how can Nigeria close the gender gap and effectively meet its financial goal? The idea is that all financial service providers work in synergy to allow disruption of technological innovation to take the lead.

If traditional banks could do this on their own, we will now have a rather insignificant exclusion percentage. It is reasonable that the CBN introduced the NFIS and, later, agent banking structures, allowing interested organizations to contribute to financial inclusion efforts.

The nature of mobile money, aided by bank agents, makes it easier and cheaper for financially undeserved communities to access basic financial services.

The NFIS has enabled innovation in the banking and financial sector, and technology has revolutionized the traditional banking system. It has enabled the growth of fintech in Nigeria with solutions such as digital banking and payment gateways. The competition that digital banks have posed to traditional banks has forced them to either imbibe digital products or create their own digital platforms.

As a Stears article puts it: “When Wema Bank launched its digital bank, ALAT, in 2017, it signaled that Nigerian commercial banks woke up to the age of fintech products.” Around the same time, a number of Nigerian banks also launched their digital products.

An Agusto & Co 2020 Consumer Digital Banking Satisfaction Index report showed that digital banking has made good progress with the involvement of traditional banks. However, only 46 percent of survey respondents are aware of digital banks. This means that digital banking is unpopular.

The challenge remains that many of the financially undeserved people cannot afford smartphones and are quite digitally illiterate. This is in addition to the lack or scarcity of bank branches and ATMs in rural and peri-urban areas which welcome a majority of unbanked and undeserved people.

Therefore, this large number is excluded from the use of basic financial services. Clearly, it will take more than technology to meet the CBN’s 95% financial inclusion target by 2024.

What is needed is more collaborative efforts between banks and other financial service providers, especially institutions with a network of competent agents spread across the country.

It was recently in the news that Y’ello Digital Financial Services, YDFS, extended its MoMo Agent cardless cash withdrawal service to more than 40 financial institutions. According to reports, the service was previously exclusive to Access Bank users, but has now been extended to customers using First Bank, GTBank, Zenith Bank and other level one banks.

As a result, underserved people can now access cash in their accounts without having to go to an ATM or use an ATM card.

Mobile money service is more inclusive as it allows financial transactions to be carried out using a multifunction phone. The service is one of the most innovative provided by agent networks that have been able to penetrate communities across Nigeria. MTN’s YDFS, for example, has more than 300,000 agents, as a report by Stears reveals.

By the way, the dispute in the Nigerian financial sector is a major distraction from the direction in which the country’s financial industry is heading.

What industry leaders should strive to achieve now is to collaborate with relevant organizations and empower innovation as it continues to advance Nigeria’s goal of financial inclusion.

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