CBN tasks payment system providers on tech innovation for financial inclusion

The Central Bank of Nigeria (CBN) has called on financial institutions and payment services providers to explore new business model, rapid technological innovations to expand banking and other financial services to the excluded.

The adult population financially excluded stood at 39.5 percent as of December 2014, while 36.3 percent are banked, according to Enhancing Financial Innovation and Access (EFInA) survey.

In 2012, Nigeria launched a National Financial Inclusion Strategy to reduce the percentage of adult Nigerians excluded from financial services from 46.3 percent in 2010 to 20 percent in 2020.

Consequently, the CBN also challenged the financial institutions and payment services providers to ensure adequate protection of consumers of financial inclusion, as well as to manage costs and striving to lower them across the value-chain.

Temitope Akin-Fadeyi, head, financial inclusion secretariat, CBN, made the call while making presentation on ‘E-Banking and Financial Inclusion,’ at the ongoing workshop for business editors and Finance correspondents Association of Nigeria (FICAN) organised by the Nigeria Deposit Insurance Corporation (NDIC) in Ilorin, Kwara State.

She also called on the Federal Government and other stakeholders to create and sustain enabling environment for innovative technologies to cater to the unbanked.

Specifically, she called the government to harmonise identity scheme, enhance financial capability of citizens and to among others expand digital channels for financial services.

On the part of financial services consumers, Akin-Fadeyi, encouraged them to embrace cashless Nigeria, imbibe savings culture, know their rights as consumers of financial inclusion and be financially literate and capable.

“e-banking is key to financial inclusion as it encourages innovation in delivery of financial products/services to otherwise financially excluded population,” she said.

The Financial Inclusion Strategy outlines targets for various strands including payment, savings, loans, insurance and pension.

For e-banking technologies to be successful, she said financial institutions must consider critical factors such as understanding customers needs, organizational flexibility, and availability of resources, systems security among others.

Akin-Fadeyi noted some key policy guidelines and frameworks developed by the CBN to provide an enabling environment for financial inclusion including transformation of existing Know Your Customer regulations into simplified risk based framework to eliminate cumbersome account opening requirements for customers.

The benefits of electronic payments in Nigeria are estimated to be $900 million by 2020 as a result of reduced leakage of funds, better access to financial services and lower transaction costs.

However, she disclosed that in the last five years there has been growth in the e-banking channels. Specifically, the value of transactions through the Point of Sales (PoS) grew by 550 percent from N28 billion in 2012 to N312 billion in 2014.