• Friday, March 29, 2024
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Eyowo is a bank that does not require  a bank account – Amao

Tomi Amao

In this interview with BusinessDay’s Companies & Markets Editor, Lolade Akinmurele and editorial analyst, Segun Adams, co-founder, and CEO of Eyowo, Tomi Amao, talks about a revolutionary bank that seeks to change the face of financial services in Nigeria.

What is Eyowo all about and how does it work?

Eyowo is a revolutionary peer-to-peer payment system that allows people to send and exchange value using their phone numbers.

The reason we use phones is that the majority of individuals have this piece of technology; it is almost ubiquitous and we thought it would be very useful in driving a revolution in areas like financial inclusion, which is aimed at getting everybody on-boarded into the financial system.

So fundamentally Eyowo is like a Bank on your phone number. It provides access to financial services on your phone number.

What is the product offering Eyowo is offering?

Consumers need to exchange value with each other, so what we have built is a peer-to-peer revolutionary system that allows people to send and receive money.

How the platform works is very simple. If I am an Eyowo user and I need to send money to you, I just need to look for your contact on my phone and it is done, without any bank account.

One of the things I have found out is that everybody that I want to pay probably has a phone number and is on my contact list. So I tap your number on my contact list and just click send.

Now what is very magical and revolutionary about what we have built is that you do not need to have heard about the system to receive funds; the money is accessible on your phone and you will get notification from Eyowo that somebody has sent you that particular amount of money. These are ways you can access the funds automatically without you even knowing about the service.

I mean if you look at the old system, you need to state what bank you use and what your account number is. In this case, that has been eradicated. I just type in your phone number send you money and you see it instantly.

Eyowo does the heavy lifting of notifying the recipient and ensuring they have access to the funds.

A very good analogy is Whatsapp; I mean everybody knows Whatsapp but what made it become popular is that you do not have to be on the platform before I can send you a message. Whatsapp does the heavy lifting of notifying you that I sent you a message and getting you on-boarded to access the message.

What Whatsapp has done in messaging, we are doing the same thing with money.

The second is that we provide several services. A good example is savings, I mean if you have money on the platform, you can make it generate more money. So we have got a savings option on the platform and I think arguably the kind of returns on investment we give to our users is quite good.

We also, offer dollar virtual cards because some of our users need to make payments internationally. So we give them a Visa virtual card. Asides that, we have another service we call the cardless ATM withdrawal. If you need to access cash without using a physical plastic card, our platform can allow for such, through codes we send you that can be used at the ATM.

We also, offer our users the ability to pay for bills including airtime to recharge their phones. You can pay for your internet subscription, for your TV subscription.

So we offer the typical banking services but also have services for other categories of users.

Let’s take a merchant as an example. We built what we call Eyowo for Retail, it is taking this revolutionary peer-to-peer payment system described to you and making it available to merchants.

We have realized that in the merchant space there are problems we can solve. If you walk up to any merchant, for example, and you want to pay, you will realize that they have a system that handles cash and another system that handles POS and at the end of the day the merchants have to reconcile the systems manually which is very laborious.

So what we have done is to build a system called Eyowo for Retail which allows merchants accept cash, accept cards and accept Eyowo in a single interface and it does the reconciliation automatically for the business owners.

We have also added inventory on the system to help retailers keep track of their goods or inventory, so as they are selling their goods Eyowo keeps a tab and notifies them immediately they are low on stock.

Eyowo for Retail also has a change management system which is a big issue retailer have.

With Eyowo system, once it detects there is a change to be handed back to the customer, which the retailer may not have as cash, it allows the retailer to send that amount through the customer’s phone number.

So, we are solving and tackling the big issues when it comes to retail.

The next service we built is Eyowo for Business which addresses a lot of the financial problems that SMEs and businesses have.

A good example is payroll; an SME might have to engage the services of a tax consultant who understands the tax system to help with the payroll system.

Eyowo for Business already has the formula built into it that is in line with the Nigerian tax code.

So all you have to do as a business is log into Eyowo for Business put in the gross annual salary of all your employees and Eyowo for Business does the rest, it calculates monthly pensions and taxes and all other deductibles.

It also remits these payments automatically without the SME having to employ extra hands. These are some of the services that we have layered on top of the Eyowo platform.

How accessible is the Eyowo platform and are there charges for using it?

That question speaks to some of what differentiates Eyowo from other fintech platforms. Many fintech platforms have this concept of having an app on a smartphone but we see things completely differently.

When we started the experiment called Eyowo we grouped our users into two classes; what we like to call the smart user or those who have smartphones and those who don’t use smartphones i.e. feature phone users

The USSD was meant to target those who did not have a smartphone. We went around the country to see how people were using the platform, and we discovered something shocking and interesting; many people had created this belief that USSD was a panacea for the non-smartphone users because it can work for any kind of phone. But we found out people had to be literate to use the USSD which is in English.

Trying to write USSD to be in another language is very difficult, so the user still has to read in English which doesn’t solve the problem of people who need financial services but are illiterate.

Another interesting thing we discovered is that illiterate people always need assistance in some way and that got us to build our telephony system.

We observed that regardless of literacy, people know how to place calls on their mobile phones, so we said if at a fundamental level everybody knows how to do that, why not build a service that allows people access financial services by placing calls.

We came up with an interactive voice response service so users can call and have a computer speak to them. The system asks users what language they would like to engage in, whether English, Pidgin, Yoruba, Igbo or Hausa, after which the customer can perform any kind of transaction they want.

However, we found out that the computer telephony system could not address queries exhaustively so we added what we call human telephone banking.

The system switches users to a human operator who takes up the call if the computer cannot understand a customers’ request.

We have a 75-person dedicated call center with people helping users who have issues and need help.

However, we also recognize that we cannot scale the human contact center beyond certain limits because employing many people would increase cost which could affect affordability.

So what we are doing now is that overtime, after our human banking center may have dealt with every kind of possible interaction a human being would want, we are feeding all those calls into our artificial intelligence system so we can train the computer to be able to understand any kind of scenario; learn from how the humans did it and then be able to respond. By doing this we can significantly bring down the cost of our assisted telephony system.

We are constantly looking at how our users are using the platform and delivering services in such a way that we can address how they want to use the platform.

We are not enforcing how technology should be used, we are instead ensuring technology aids how people are using the system.

So we are meeting people at their point of need and not trying to change their behaviour. We are just trying to fit into how they are using technology and I think that’s one of the ways we’re driving the narrative of financial inclusion.

How can users fund their Eyowo account to send money through the platform?

We have several ways and we are always adding more. Right now on the platform, you can add your debit card and then fund through that card.

*737# is quite popular, it is another way to fund. Another way to fund is that you can walk into any bank and deposit into Eyowo.

You would have to fill a deposit form and fill in the name Eyowo as the recipient, put your phone number as recipient and pay the teller and then you get your account funded.

We are about to release our integration to NIBSS Instant Payment (NIP) which would allow anyone on any internet banking platform see Eyowo as one of the banks so anybody can pay from the internet banking platform of any bank and get their Eyowo account funded.

Another way is through our agents who anyone can approach, give cash and a phone number and the account is funded.

So there are many ways, and we’re constantly increasing the ways you can get funds into Eyowo.

What about for non-smartphone users that want to fund their Eyowo account from the comfort of their home?

For those set of customers we have a USSD service or they can place a call to our dedicated number to perform the transaction.

We also, have this voucher system where you can buy Eyowo vouchers from our agents, scratch the voucher, load the pin and your account gets funded.

What are the various licenses under which Eyowo operates?

We own a Microfinance Bank and that allows us to hold deposits. So we have a Microfinance Bank license and that means we are regulated by the Central Bank of Nigeria (CBN). We have our Agreement in Principle (AIP) for the Payment Solution Service Provider (PSSP). So those are licenses that allow us to operate and do the things we do.

How do you get customers to embrace digital banking considering that some people might not feel comfortable with branchless banking?

Some people are not used to digital banking but there are also others who love it, once they see you on the internet they are fine and trust you. However, the class of people who are not very open to digital banking is beginning to fade.

We are not 100 percent digital, we do have physical presence. As an example, we have presence in Marina. But one of the things we’re doing is having our presence in very densely populated areas, especially with users who do not have smartphones. We are setting up in Abia and we are almost done there, and we are currently moving to Port Harcourt to have a location there.

The reason we are doing this is that our research around the country has shown us many of these users need some form of assistance. So we are setting up in those places so users can just walk into any of our locations and access financial services.

 How has the reception of Eyowo been so far. Can you share numbers?

We just recently launched and it is still early days but we are impressed by the numbers because there is room for much more.

Right now we have over 3.2 million unique accounts created on the platform and we have processed over $50 million.

We have over 200 active retailers on the platform and we are still signing more.

In terms of perception, feedback has been great. Because we are a company who love to take feedback, we also have a virtual account management team that actively calls people to find out what their experience is like, how people are using it, what is their take.

We are using the feedback to keep ensuring that we constantly improve our services. Overall, we are impressed with the progress so far made.

How do you guarantee loan at zero percent interest and what measures are in place to ensure it is paid back?

Eyowo has a credit scoring system which is based on the transactions users perform on the platform, how they pay, and their inflow.  The system monitors all of that and creates a credit score.

Now, we offer loan to people who have a very high credit score. What high credit score means for us is a customer’s ability to pay back.

One of the biggest reasons POS transactions fail is insufficient fund and so for us, we can offer our users real-time credit at zero percent for a whole month, and obviously, we expect that the customer pays back and if they do not then interest kicks in. We only allow this facility for people with a high credit rating.

We are more in the financial inclusion space and from what we have seen, the bad debt in this space is not that much. I mean if you look at Telco data in terms of people who borrow airtime, there is trust that many people will payback. However, we have put measures in place to guarantee that our customers pay back.

The fintech space is a very competitive one and recently we have seen several players including the banks join. What is your competitive advantage at Eyowo?

I believe we stand out because of our approach which fundamentally differentiates us from everybody else.

From our telephony system, to our USSD system, app service, and internet service, I believe we are trying to make the process extremely simple.

Importantly we are not a closed system but a very open system that allows other people to integrate seamlessly into the fabric and internal infrastructure we have built.

So if you put all of that into perspective, I think it stands us out and separates us from what everybody else is doing.

The issue of cybersecurity is one of the biggest concerns in today’s digital world. How do you ensure that your system is top-notch in terms of security?

There are two sides to the story. There is the system side and there is the user side.

From the system side, where we operate 100 percent, we have put a lot in place to ensure that we guarantee the security of using our platform.

Every time a user interacts with our platform, the communication from the user up to our server is encrypted a hundred percent to ensure that nobody in the middle can see what is going on.

When the data gets to our systems, we ensure that data is also encrypted and hashed so nobody on our side can see what our users are doing. So it is a hundred percent secure.

We have also ensured that we comply with a lot of international standards that guide how things work. For example, we are Payment Card Industry Data Security Standard (PCI-DSS) certified. That means we comply with how to handle credit information.

More importantly, if you look at all the attacks that have happened recently, not just in Nigeria but globally, there is something very similar across all of them; it is the fact that it was the user who was compromised not necessarily the system. So one of the things we are doing actively is educating our users on how to stay safe on the platform. We are teaching our users things to disclose and things not to disclose.

Education is a big part of how we ensure that our users stay safe.

How widespread is the presence of your agents across the country?

There are two aspects to our agency network. The first part is controlled by us directly with the centers we set up. However, we also have people who subscribe to being our agents which means they own the shop but leverage our systems to deliver banking and financial services.

In terms of our reach, there is still a lot of work to be done but we are also riding on other agency platforms because there are many companies that have set up agency networks. So we ride on their system to ensure we have wide coverage across the country.

What are the challenges players in your industry face and what policies do you think can help?

One of the major issues we have, which has been improving in the last couple of years, is around identity.

The cleanest identity system that we have in the country is the BVN and the last report that came out shows Nigeria only has 40 million records. Comparing our population to the 40 million unique identity records shows we are still far off.

So, I mean the issue is that as a financial services platform you need to be able to identify people. That is an area Nigeria needs to work on because we cannot run a very effective credit system if we cannot identify people.

Eyowo is also playing in that space trying to work with the government and its agencies to improve the identity system in the country because I think it is long overdue.

A second area which I have seen a lot of improvements is in collaboration amongst all the players. I mean the banks, government, and other stakeholders.

If those two things can be improved significantly, then we will make progress.

Do you have any partnership agreement with other organizations on Eyowo?

Yes we do. We could not have delivered Eyowo without partnering with a lot of players in the space. We are currently seeking to have some form of integration with every commercial bank in Nigeria. We have started with a number of them and we are targeting a lot more.

We also, have an existing relationship and partnership with a lot of financial institutions which are not necessarily banks.

In the next half-decade, where do you see Eyowo?

We think technology is evolving fast. So I will not speak as far as half a decade but I can talk about the next one or two years.

Our goal is to empower every single person who needs access to financial services. Based on what we have seen and we have built we believe in the next one to two years, we would have touched a large number of Nigerians in that space. We also foresee strong impact in the retail and business space.