Omodele Adigun
Since last October when the Central Bank of Nigeria (CBN) rolled out guidelines for the take-off of the Payment Service Banks (PSBs), stakeholders in the sector have been pinching themselves to bid farewell to the era of unorthodox money saving methods at the grassroots.
“No more saving under the pillow! No more saving in your child’s piggybank !”, they seem to be saying.
CBN, while releasing the guidelines, says “the PSBs are to leverage on mobile and digital channels to enhance financial inclusion and stimulate economic activities at the grassroots through the provision of financial services. They are expected to deploy ATMs in some of these areas; deploy Point of Sale (PoS) devices and be at liberty to operate through banking agents.
Hailing the move, Ifie Sekibo, the Managing Director of Heritage Bank Limited, called them an enabler for the financial inclusion to bring as many people as possible into the formal platform.
His words: “It is important that we have such other organisations that help the lower side of our economy. We have people who put money under their beds; leave money in their stores; fire comes and burns both the stores, the money, their investments and they are back to square one. We need to eliminate all that.
“We need to bring as many people as possible into the formal platform so that we can measure them. Today, we don’t have good measurement for how much money is in circulation in Nigeria because we don’t even know. But if we can get these new institutions join us to expand the financial inclusion space, we believe it is better for everybody and it is better for the economy.”
Allaying the fear of looming rivalry between the lenders and PSBs, he stated: “They are not lending banks. They are essentially going to assist us. For us, it is an enabler for the financial inclusion we are all talking about. It is not necessarily competition. Yes, it is competition to the extent that we would compete with them in the financial inclusion space.
“Our agency banking product would compete with their payment platform. Now, we have a very good payment platform. Most of us, our payment platforms have developed much more than they could be able to even compete with.”
Speaking in the same vein, his counterpart at Ecobank Nigeria, Patrick Akinwuntan, described the idea as a bold step on the part of the apex bank and a commitment to bring financial services to every household.
Hear him: “In the area of financial inclusion, the development of PSBs will actually reduce the overall cost of participation because more capital will be pooled to the sector and the scalability of the sector is still there. We have less than 60 per cent of the population fully banked. If you talk about active financial participation, the percentage would be less than 30 per cent because we have various levels. We have the banked; we have the under-banked and then we have the unbanked. If you add the under-banked and the unbanked, we would be closer to 70 per cent. So the opportunity is there for more scale participants.”
Speaking on the coming of PSBs’ triggering competition, he said: “For us at Ecobank, we collaborate with Fintech and the participants in the economy. It is true that it could be viewed as increased competition, but competition in itself is not negative. We have demonstrated this in various countries; in Ghana, in Cote d’Ivoire, in Benin, in Togo, in Liberia, in Kenya, in Rwanda, in Uganda and in Cameroon; that we have the ability to collaborate well with telcos that have participated in the space.
“In Ghana, we partnered with MTN to even provide treasury bills, investment opportunities to individuals straight from the mobile phone. At the end of the day, participants need a strong bank as the final repository. We look forward to collaborating with participants in this space.
“We have the ability to work on our own but we also understand the value of collaborating. And we will embrace collaboration in the evolving market space that we are looking forward to in Nigeria. Because that aligns with our commitment at Ecobank, we will participate positively in furthering that agenda.”
The apex bank states that PSBs are to operate mostly in rural areas and unbanked locations, targeting financially excluded persons, with not less than 25 per cent financial service touch points in such rural areas as defined by CBN from time to time.
According to CBN, the key objective of setting up PSBs is to enhance financial inclusion by increasing access to deposit products and payment/remittance services to small businesses, low-income households and other financially excluded entities through high-volume low-value transactions in a secured technology-driven environment.
The new banks are to also enter into direct partnership with card scheme operators but such cards shall not be eligible for foreign currency transactions.
The National Financial Inclusion Strategy (NFIS), which supports PSBs, seeks to ensure that over 80 per cent of the bankable adults in the country have access to financial services by 2020. The CBN, in collaboration with stakeholders, launched the NFIS on October 23, 2012 with a view to reducing the exclusion rate to 20 per cent by 2020.