Nairametrics| Wema Bank, a tier 2 lender has quietly launched Nigeria’s first digital bank, Alat. Alat is built to run without needing physical presence at a bank. Admirable as this effort is, the bank may end up being the pioneer, without reaping the benefits. With its current set up, possibilities of the bank succeeding are quite slim.
Access to its services are through the app and website, both of which require access to the internet. While Nigeria has a higher internet penetration than many countries in Africa at 53%, internet services in the Nigeria are quite poor. A significant amount of the population still relies basic phones. Some of the most successful mobile banking products currently in the country, rely on USSD banking to counter these challenges. There are no provisions like this in the app, perhaps not to cannibalize existing customers of its parent Wema Bank.
Alat also requires that a Bank Verification Number (BVN) is provided before a bank account can be open. This means that only individuals who have a BVN will be able to open an account. Such individuals may be unwilling to move from their current banks. The BVN requirement will thus prevent individuals without a BVN from banking with Alat.
Documents required for opening a bank account include a photo of a federal ID, a utility bill and a passport photograph. This also requires one having internet access and a camera phone.
Funding an Alat account requires either a direct deposit at any Wema Bank branch, or transfer with another bank’s debit card. This again means one must visit the bank, or use debit cards of another bank to fund the account. Wema bank being a tier two bank and just regaining a national banking license a few years ago, has a limited branch spread.
The bank will need to generate interests for shareholders. The bank has promised depositors 10% subject to terms and conditions. While better than the 3% offered by banks, it is lower than the current inflation rate of almost 18%. To do this it would have to ramp up deposit mobilization and lending loans. SunTrust Bank, Nigeria’s first fully financial technology (Fintech) bank, in 2016 its first full year of operations made gross earnings of N1.3 billion and a profit before tax of N343 million. It is yet unclear if Wema bank has plans to spin off the bank in the future, or retain 100% ownership.