Regulators, Nigerian banks and financial technology (Fintech) firms can collaborate to reduce the cost of electronic transactions that customers bear in order to attract millions of Nigerians that are unbanked. Experts said this at the Techpoint Inspire Conference that held in Lagos on Tuesday, May 29, 2018.
Apart from cheaper cost of transactions, the challenge of inequitable distribution of mobile money agents across the country also needs to be addressed to grow the number of people using financial services. Tackling the two challenges can see the rate of financial inclusiveness rise to 90 percent.
The World Bank defines financial inclusion as that situation where individuals and businesses have access to useful and affordable financial products and services that meet their needs. These financial services could include transactions, payments, savings, credit and insurance, delivered in a responsible way.
One of the experts, Deji Oguntonande, head Fintech GTBank, said during a panel session, that financial inclusion programmes must begin by asking the question, do the people want to be banked? Finding out what the people that are supposedly unbanked want, holds the key to creating products tailored to their specific needs.
“The people that regulators are pushing to go and do it are not the right people. Financial inclusion is not for profit, it requires a lot of money and perhaps could later become profitable,” Oguntonande said.
He also highlighted the major role of the government in driving sustainable financial inclusion growth. The government, according to him, can enforce the use of certain payment services on specific transactions.
“We need to know whether the people who are financially excluded really want to be included,” said Adebanjo Omokehinde, director at Mastercard. “They are spending more money and they think they do not have a problem.”
However, Adedeji Olowe, a partner with Open Banking Nigeria said it will take the reduction of transaction cost to truly compel compliance. For instance, it cost the average Nigerian bank N10 to do an interbank transfer but the customers are charged N100 for such transactions. In that sense, a potential customer that may want to transact N1000 will need to pay 10 percent which does not look attractive.
Julius Wanyaga, head Digital Banking FCMB said Nigeria need to borrow a leaf from Kenya which has dealt with the challenge of distribution.
“Inclusion is about sorting out the distribution problem. The products need to get to the people,” Wanyaga said.
