Yemisi Izuora
Experts in the Information Technology and Financial Sectors, have identified the deployment of adequate digital resources as key to facilitating Nigeria’s objective of achieving cashless policy.
The speakers at the Consumer Awareness And Financial Enlightenment Initiative, CAFEi, Webinar series with the theme; “Going Digital the New Normal for Financial Transaction”, agreed that the future of the financial system is cashless through digital tools.
CAFEi, a non-profit organization focused on Research, Enlightenment, Advocacy for Consumer Protection, has also resolved to engage in massive digital financial literacy campaign that will educate customers and the general public in this regard.
The webinar discourse commenced with welcome address by the President of CAFEi, Otunba (Mrs.) ‘Debola Osibogun.
The principal objective of the organisation is to aid consumers in making informed decisions on goods and services in all facets of life, including the banking and finance sector. In the light of the new normal, the organisation is also set to protect consumer rights post-COVID-19.
The webinar involved three panelists which include, Dr. Segun Aina, President, Africa Fintech Networks and Advisory Council Member, CAFEi, Professor Yinka David-West, Academic Director, Lagos Business School and Mr. Haruna Mustapha, Director, Consumer Protection Department, Central Bank of Nigeria.
Dr. Wura Abiola, MD/CEO, Management Transformation Limited and Advisory Council Member, CAFEi was the Programme Moderator.
The following key issues emerged from the session as well as the intervention by the participants through the question and answer session.
1. The emergence of internet and smart mobile phones contributed significantly to innovations in digital financial services.
2. Internet banking, mobile banking via USSD, NIPS, NEFT, agent banking via POS, Artificial Intelligence and Data Analytic are among the digital tools available to financial institutions and their customers.
3. Digital lending has improved significantly as a result of deployment of data analytics and artificial intelligence tools which help financial institutions to profile consumers and make loan accessible to customers within the shortest time possible without formal collateral. Artificial intelligence has also helped financial institutions to offer customized financial services to customers.
4. Evidence has shown that there is a low default rate in digital lending comparable to conventional banking loans.
5. Adoption of artificial intelligence and data analytics has facilitated the design of customized financial services in banking and insurance which matched the customers’ profiles in terms of age, lifestyle and other socio-demographic attributes of the customers.
6. CBN drive to achieve financial inclusion goals made agent banking more relevant in offering financial services to rural dwellers.
7. Payment system remains the most active digital financial platforms.
8. Digital financial services serve as preventive measure in the light of COVID-19 by reducing cash handling.
9. A study conducted in 2018 by Lagos Business School on customer segmentation revealed that vulnerable consumers constitute about 12% of Nigeria population with peculiar attributes of economic status that ranges from lower middle class to poor, religious, and predominantly rural with limited education. They have lowest aspirations for the future and less able to consider themselves less dependable. Most importantly, they are vulnerable to economic shocks and have limited to digital skills.
10. The surge of customers in banking halls immediately after relaxation of the lockdown shows the low level of adoption of digital financial services by Nigerians. This is a true of reflection of why some customers find it difficult to trust digital banking and also due to increasing volume of fraud on digital platforms.
11. Onboarding financial services on digital platforms requires process integration that encompasses end-to-end digital service delivery.
12. Central Bank of Nigeria is resolute in its mandate of promoting sound financial system and to engender public confidence in financial services.
13. Digital financial services is desirable but it is expected to be inclusive by enabling every Nigerian to digitally transact.
14. Cybersecurity constitutes a major challenge to digital financial services globally, as an estimated sum of $3 trillion was lost in previous years and a projection of $6 trillion will be lost by year 2030.
15. The structure of Nigeria economy is dominated by informal sector with contribution above 60% to Gross Domestic Product, while most transactions in this segment are cash-based. It is critical to create awareness about digital financial services in this sector.
16. It is imperative to segment customers, products and staff of financial institutions in order to be able to customize services in line with customer needs.
17. There is need for collaboration across all stakeholders in building inclusive financial ecosystem that supports all Nigerians.
18. It is important to address the issue of trust to build confidence in the use of digital financial services. This requires the enforcement of CBN regulations.
19. In order to mobilize savings via digital platforms, financial institutions should design products and services that appeal to this segment of customers.
The conference in its resolution challenged Financial institutions to be holistic in their drive for digital financial services by integrating low-income earners into digital platforms. The digital equivalent of cash should be acceptable across board, especially in the payment system.
Participants were of the opinion that relevant technology tools should be adopted and adapted in line with Nigeria’s peculiarities in term of languages to meet the needs of Nigerians. Build a system to integrate the current customers into digital financial services in order to avoid limiting the number of Nigerians that can access these digital platforms.
They said institutions need to integrate customer experience and user interface in designing their product and services. Co-creation of financial products and services by the customers, financial service providers and other stakeholders will deliver more effective solutions and that financial institutions should take responsibility for self-regulation thereby preventing customers from escalating disputes to regulators. This will boost customer confidence and trust in the usage of digital platforms.
Also, CAFEi in collaboration with Nigeria Communication Commission will advocate for the reduction in the cost of data usage with the aim of making digital financial services affordable.
The session urged CAFEi to support in boosting awareness in protecting consumers rights. They observed that though the Central Bank of Nigeria, CBN, as regulator, has rolled out several policies in protecting consumers’ right, there is a low level of awareness and CAFEi is committed to working with the Central Bank of Nigeria in this regard.
“Consumer right needs to be protected in respect of the underlying risks in digital financial services as most users are not aware of the implications. CAFEi and Central Bank of Nigeria have a role to play in creating awareness in this regard.
“CAFEi has resolved to work with Central Bank of Nigeria on financial education via radio jingles, advertisements and infograhics for mass digital financial enlightenment.” the conference said.
They challenged the CBN to renew its efforts in the enforcement of the regulations and policies designed to protect users of banks’ services and also in order to achieve the financial inclusion target of 2020 and beyond, the government with the collaboration of Nigeria Communication Commission and telecommunication companies should raise infrastructural funds by Telcos to increase the number people having access to the internet and create opportunity for the people to generate income.
The conference noted that everyone has responsibility in self-regulation and self-learning. Customers need to be conscious and protect themselves from fraudulent activities, as fraudsters are more digital savvy and some victims are tracked through their activities on social media platforms.