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Nigerian bank agent networks reduce fraud risk by partnering cloud-based banking providers

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On 5 April 2019, the Nigerian bank agent network Kudi announced its $5m investment in their expansion to grow and offer more financial services to underserved Africans. In the past two years, Kudi has built a network of more than 4,500 merchants that process over $30 million in payments each month.

To successfully expand and manage a network of agents throughout rural communities in Nigeria, leaders of financial institutions are recommended to equip their branches and agents with reliable cloud-based technology. Implementing a cloud-based platform to manage a network of agents is a scalable and elastic IT solution that requires minimal capital investment – involving no on-premise servers, data centres or hardware.

Despite regulatory efforts to prevent fraud, between January and June of 2018, Nigerian banks recorded 20,768 cases totalling N19.77 billion. The Central Bank of Nigeria (CBN) reported fraudulent ATM withdrawals, illegal funds transfer, pilfering of cash and theft as primary causes of fraud.

Real-time data about all lending activities and transactions from agent networks enables leaders to prevent fraud within their financial institutions. With cloud-based digital technology, leaders of financial institutions can monitor and nurture a large network of agents efficiently from the head office, with only an internet connection and laptop or smartphone.

When financial institutions do not have access to real-time data, opportunity for fraud to occur is greater. Since transactions that happen via delivery channels are integrated with the financial institution’s core banking system of choice, the risk of fraud to occur is reduced thanks to increased transparency.

Oradian’s cloud-based core banking platform, Instafin, was designed specifically for financial institutions to have access to real-time data about all their operations and agents. Instafin provides automatic and continuous report consolidation from the entire network. This means that all client data is ready and available in real-time and enables constant monitoring of business performance.

Using Instafin, financial institutions are not required to interrupt their business operations for End-of-the-Day (EOD) or End-of-the-Month (EOM) processing, which also reduces the risk of human error and fraudulent activities.

“Oradian allows us to spend less time in the branches monitoring and we can now view all operations of LARDI from the head office. Oradian’s technical team is always available when called upon, they have been very supportive and have proven to be vast in managing the software efficiently,” said Florence Omofonmwan, Head of LARDI, a subsidiary of LAPO in Benin City.

“In times past, when fraud occurred, the damage would have already been done. Then, we were just going to salvage what had been destroyed. But with Instafin, because of data being available, you can monitor any branch that you see is not performing. That gives you an alert that there’s something wrong and it helps our internal audit to use it as a tool for auditing,” stated Titi Yakubu, Executive Director at Development Exchange Centre (DEC) in Bauchi.

To use business intelligence to financial institutions’ advantage, decision-makers in Nigeria need to make cloud technology with the capability of integrating with bank agents a pillar of their operations. Monitoring banking systems in real-time will play a pivotal role in reducing Nigeria’s high rates of fraud.

 

ENDURANCE OKAFOR

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