Using Technology to Solve Banking, Societal Problems

Banking and technology are becoming inseparable. Far-sighted lenders are driving growth and customer services with technology. The 2019 Financial Technology (Fintech) Summit organised by FirstBank of Nigeria Limited was an opportunity for the bank to emphasise the need for technology in e-business, digital offering, agent banking, wholesale/ transaction banking, retail/consumer lending and Small and Medium Enterprises (SMEs) productivity, writes COLLINS NWEZE.

BANKING is fast becoming what you do and not where you go to. Brick and mortar banking is giving way to digital banking where transactions are completed in seconds, saving costs and providing convenience to bank customers. Consumers are looking for simple technology-driven solutions customised to meet their everyday needs.

Financial Technology (Fintech) companies are also partnering with banks to help consumers in bill payments, retail payments, airtime purchases and engage in Unstructured Supplementary Service Data (USSD) transactions.

The payment platforms also collect payment from all spectrums of the population – whether banked or unbanked. With more options available to users of financial services, the competition for platforms to conduct transactions continues to widen. This explains why FirstBank of Nigeria Limited said it would continue to collaborate with Fintech as technology is key to ensuring efficient service delivery in the banking industry.

Its Chief Executive Officer, Dr. Adesola Adeduntan, disclosed this at the third edition of the lender’s annual Fintech Summit in Lagos.

He noted that as a Tier 1 lender, which celebrated its 125th anniversary last March, the bank had been able to maintain its leadership position in the industry by leveraging technology to offer innovative solutions through its product offerings.

According to him, the theme of this year’s summit, “Banking + Tech = Solving Real Problems,” reflects the reality that technology can be applied to add value in all spheres of life. He pointed out that despite the remarkable progress recorded by Nigerian banks through the use technology, there is still a lot to be done in that regard.

Adeduntan said FirstBank remained committed to putting its customers first with excellent financial services and devising new ways of effectively meeting customers’ financial needs.

“Customer experience and innovation are key in our approach to satisfying our customers. As a leading banking services solutions provider, FirstBank has continued to set the pace in the financial services industry, coming up with new initiatives to provide financial products and services with greater speed, accountability and efficiency. Evidently, Financial technology is causing positive disruption in the financial services industry. The impact of technology in lifestyle business and other areas of today’s customer is huge. We are therefore following global trends in collaborating with Fintechs and other big technology companies on several transformational initiatives to be able to satisfy our customers’ needs,” Adeduntan stated.

He said the purpose of the FirstBank Fintech Summit is to converge thought leaders in the Fintech space to champion discourse around financial technology and proffer solutions that will shape the future of banking. He said key areas of interest to the bank, amongst others, are propositions around e-business and digital offering, agent banking, wholesale or transaction banking, retail and Consumer Lending and SME Productivity.

First Bank’s Group Executive, e-Business & Retail Product, Chuma Ezirim, said the bank now had over 18 million customers’ accounts.

Ezirim, whose presentation was entitled, “Digital Financial Services – The Nigeria Market Size,” told the gathering that the bank processes over 500,000 transactions worth N23 billion daily.

He said 8.5 million customers were on the bank’s Unstructured Supplementary Service Data (USSD) channels, noting that FirstBank would continue to maintain its leadership in product and service delivery.

Ezirim said FirstBank had issued over 10 million cards, representing about 25 per cent of card transactions in the country. He noted that the country’s mobile application size stood at 13 million, agent banking 41 million and USSD 35 million.

According to him, the bank will continue to leverage technology in service delivery to boost financial inclusion, to achieve 95 per cent target by 2020.

Ezirim said that FirstBank would continue to make banking easier for its customers, and ensure they had access to financial services at the comfort of their homes.

He said that the bank would continue to expand its products and services to ensure presence in every nook and cranny of the country. The bank, according to him, has dominant presence in the 754 local governments in the 36 states, with a target to cover all parts of the country.

Group Executive, Technology Services, First Bank of Nigeria Limited, Callistus Obetta, said Fintech has made positive disruptions in banking and other financial services; and institutions would do well to take advantage of it.

“FirstBank is taking giant strides in the digital space. In a short time, we have become the foremost financial inclusion solution provider with over 36,000 agents in all states of the federation. We have done over N2 trillion in transaction value from inception to date. The FirstBank Agent Banking Network is currently doing over N8 billion daily. This is helping us reduce poverty in the country. Our Firstmobile application has become the foremost mobile banking application in the country with over three million users doing over 14 million transactions monthly. We have been able to achieve this feat due to our embrace of Technology. We will continue to adopt the best technology and collaborate with the best partners to deliver value to our customers,” he said.

The bank described innovation as solving human problems with tolls and processes and banking as a human innovation addressing human problems. It also emphasized how transactions can be done anywhere, real time online.

Locally and internationally, banks have continued to invest in technology. Also, JP Morgan invests over $10 billion annually in technology and innovation to drive positive change and constant breakthroughs.  For instance, Bank of America, with deposit and balance sheet size standing at $1.38 trillion and $2.35 trillion respectively has also made huge investments in technology.

Citibank is also bringing the technologies to emerging market. Its   customers can apply for their credit cards online, submit their documents, and wait for few minutes to get their card issuance application approved online rather than having to queue in branches.

More Regulation for Fintechs

CBN Governor Godwin Emefiele agrees that the rising influence of Fintechs in financial services had facilitated expanding access to financial services to hard-to-reach populations and small businesses at low cost and risk.

Emefiele  said so far, over $2 billion was spent annually on the acquisition of hardware and software solutions in Nigeria. This, he added, will ensure that  Nigeria addresses  emerging opportunities and challenges in the digital era.

He said the CBN and the Bankers Committee had also decided to work towards the establishment of an Information Communication Technology (ICT) training centre, which will also include an Information Technology hub.

He added that the CBN would be reviewing the regulatory framework for Fintech operations to protect customers using their payment platforms.

The apex bank also said it has taken steps to increase the regulation of Fintechs. CBN Deputy Governor, Financial System Stability, Mrs. Aishah Ahmad, disclosed this during a session on, “Cybersecurity Exercises: Experience from Sub-Saharan Africa,” at the just concluded International Monetary Fund / World Bank Annual Meetings in Washington D.C.

“We don’t want to stifle innovation, so we want more companies to come up and assist, because Fintechs do a lot in furthering the financial inclusion objectives of the central bank. The CBN is working very hard in that respect and we are open to all organisations that are willing to come on board,” she said.

Earlier on, she said  the world was experiencing a digital revolution which is  supporting risk identification,  regulatory compliance and  enhancing sectoral performance.

She  said digital innovations ranging from self-service technologies like cell phones, online and mobile banking, Artificial Intelligence, big data, blockchain technology, distributed ledgers, among others, have greatly challenged orthodox systems and helped improve the operational efficiency of financial institutions as they respond to customer demands for more innovative services. According to her, digitalisation is affecting everything finance while its impact is transformative.

She said digitisation offers the promise of credit facilitation, faster, cheaper, more transparent and user-friendly financial services and raises the prospect of expanding financial inclusion, especially in developing countries such as Nigeria.

Other stakeholders speak

An Executive of the Research and Policy Department, Nigeria Deposit Insurance Corporation (NDIC), Kabir Katata, said digitisation has changed financial services landscape.

To him, Fintechs are latching on clear evidence that consumer behaviour and expectations of service and experience are changing.

He said: “Multiple technologies poised to drive the next wave of financial services are converging in maturity. FinTech threatens to disrupt financial markets with the banks taking the threats like the loss of control, the emergence of a non-regulated environment, market fragmentation, and loss of revenue—very seriously.”

Katata said while many banks have been able to retain their customers through traditional channels and digital service offerings, recent shifts are threatening the customer base of banks yet to key into it. Even long-term banking relationship at traditional banks, he added, is susceptible to disruption.

On regulating the Fintech industry, Acting Director-General, Securities & Exchange Commission (SEC), Uduk Mary Joseph, said the Fintech market needed to be ahead of regulation. She said regulators will always watch to see loopholes in the industry operation and intervene through laws and guidelines for the sector.

Culled from The Nation