We are certainly living in unprecedented times. An indicator, which calls for concern, is how the number of Coronavirus cases has increased from 2 to 81 in the span of some weeks in Nigeria and unfortunately, this continues to rise with each passing hour. Many countries are reaching a rather critical infection juncture where things may likely get out of control.
The Nigerian government, especially in Lagos, has begun to implement the “self-quarantine” rule for its residents. Over this past week, churches, mosques and even banks have begun taking precautions against the spread of the virus.
Union Bank announced that it had instructed its employees who can work from home to do just that during this period. Ecobank sent a circular to all vendors not to come to its locations except for essential services and pre-approval.
Even more recently, Access Bank Plc announced that an individual, who visited one of their branches in Lagos on the 16th of March, 2020 was tested positive for the virus, and so the bank urged its customers to take full advantage of their digital platforms instead for all their banking needs.
The chaotic effects of the pandemic make it rather unclear what the Nigerian financial services industry will look like after the crisis is over, especially in banking. Fortunately, banks these days have the digital options that allow their customers to manage the vast majority of banking needs without leaving their homes. Now more than ever, the importance of exploring digital platforms and tools in banking or the lack thereof is increasingly highlighted.
Therefore these questions arise:
- Are Nigerian Fintechs prepared for the worst possible outcome in a global crisis?
- Giving that with any significant market pullback, opportunities will eventually arise amid the disruptions, are they ready to employ all tactics needed to milk these opportunities?
- Is this an opportunity to strive for a future where digital and branchless banking solely driven by technology could change the way we bank?
Globally, there is an indication that the pandemic could hasten all forms of digital banking trends, and bankers are reporting that digital usage is rising alongside the proliferation of the virus. In many cases, it is surging.
Nigeria records a rather significant number of people with a preference for online and mobile banking, however, there is still is a large number of people who depend solely on brick and mortar banks to manage their finances. Could bank agents be the solution for these categories of customers?
To keep up with safety precautions, more Nigerian banks may need to encourage the use of online and mobile platforms and increase their assistance with customers to execute work outside the branch and as well as encourage the activities of their various agents with branchless banking.
It is undeniable that in the past few years, branchless banking, which has relatively become a mantra for Nigeria, has been impactful in facilitating financial inclusion. Inclusion has always been a concern in most countries of the world and even more so in Nigeria due to certain geographic conditions of the country. Over and again, we discuss the challenges to reach out to the underbanked rural areas within the country.
The increasing fear and quarantine measures are bound to keep customers away from bank branches at this time, so the opportunities abound in branchless banking can now be fully explored. The outbreak also makes this a great time to make a move toward a germ- free banking experience. This will facilitate the process of financial inclusion as it allows access to people in remote areas and is preferential to younger generations and most importantly is much more cost-effective.
The truth with everything happening, we might not have much of a choice than to fully adopt technology and digital banking seeing as for the foreseeable future, movements will be limited to its barest possible minimum and rightly so.
There are many upsides to fully adopting digital and branchless banking, and Nigeria has successfully adopted agency banking in this sector but more importantly, these suggestions will help permit the full transformation of our financial services industry especially at a time like this:
- Retail outlets: Remote or not, every neighbourhood has a number of retail stores offering a variety of products but not financial services. There is no time or money for banks to spend on building their own retail presence right now. Exploring these existing retail outlets offers the opportunity to create a familiar service environment for less educated people helping them feel safe rather than intimidated or overwhelmed.
- Trust through technology: In the adoption of branchless banking, as bank-customer interface shifts to a third-party retail environment ensuring trust is paramount. Even in fear, customers need to have confidence in the activities carried out by both bank agents and non-bank agents.
- Mobile phones: Nigerians already have implemented the culture of USSD codes, we, however, need to explore that even more. Ensuring that mobile phone users can enjoy financial services with speed and ease could change the entire user experience.
The barriers to customer adoption have less to do with attitudes about technology (fear of change, unfamiliar user interfaces, security concerns, etc. although that is valid as well) than with communicating precise customer benefits and financial incentives for various business providers.
When you consider the hundred thousand bank agents operating in all forms of mobile money platforms for receiving and making payments in the city of Lagos alone, it shows that the electronic value transfer system can go even further if only experts can be deliberate in their inclusion efforts and that users have a real incentive to use them, now is perfect as there is an urgent need for social distancing and a limit to physical contact that cannot be achieved with the regular banks.