Article by OLIVIA NNOROM
The Central Bank of Nigeria (CBN’s) Naira Redesign policy exposed a lot of things about the banking system in Nigeria. For one, the Financial Technology (FinTech) startups appeared more prepared than the traditional banks.
There were a lot of debates how the traditional banks disappointed their customers the time they needed help the most.
The Automated Teller Machines (ATMs) were not dispensing cash, the banking apps broke down and using the Internet banking channels became a herculean task. Some argued that these traditional banks lost their capable hands, especially the IT staff to the ‘japa syndome’ that hit almost every sector. There are unanswered questions: How come the FinTechs performed better? Do they have better working environment that made them retain most of their technical staff? If they lost staff to the ‘japa’ thing, does it mean they have better recruitment process to almost immediately replace them, train and integrate the new ones into the system? If the FinTechs invested in better technology, they are better funded than the traditional banks that declare billions as profit annually?
These might sound as layman’s questionnaire, but looking at it, before the FinTech companies like OPay, PalmPay, Sofri, etc., began to gain traction in Nigeria, the traditional banking system and indeed, the finance industry already complemented their services with technology.
Such technologies, like the introduction of credit cards in the 1950s, which evolved into internet banking in the 1990s, and contactless payment technology at the turn of the millennium.
Despite the obvious knowledge of the endless possibilities in technology, one may wonder how Fintech startups have been able to use almost the same technology to pose ‘disruptive’ threats to these legacy banks.
FinTech companies have been highly successful in targeting customer pain points including mobility, accessibility, inclusion, ease, responsive customer service, that traditional banks ignored for far too long.
From phone apps to cashless commerce and beyond, digital disruption is the new normal for consumers. It’s changing what banks do, creating a prime opportunity for technology to reshape the finance industry.
Changes in digitization, customer expectations and behaviour, lower entry barriers blur industry lines, and in-turn increase in demand for fintech innovations, Innovative technologies are working hard to understand customers’ needs more intimately.
On the brighter side
It may seem as though traditional banks are rising up to the challenge, as they continue to incorporate necessary digital banking services into their system.
This is evident in how the banking system in Nigeria is gradually moving away from transactions “across the counter” to the fingertips of the customers with the adoption of modern technology.
In the spirit of digital implementation, various banks have established solutions that will not just bridge the customer service gap, but also provide financial accessibility, inclusion and ease for both individual and organisational customers.
On 11th January 2022, UBA launched LEO, an AI enabled easier banking experience (Chatbot); that enables the bank’s customers to make use of their social media accounts to carry out key banking transactions. This comes as a solution developed with people’s lifestyles in mind.
With Leo, customers are able to open new accounts, receive instant transaction notifications, check their balances on the go, carry out money transfers and airtime top-up, pay for Uber, as well as perform transactions including payment of bills, data top-up, mini-statements, loan applications, cheque confirmation, account freezing, among others on different social media platforms on their mobile phones.
The app has since then undergone different levels of upgrade that has kept it at the top as Africa’s most successful AI chatbot, a proof that UBA truly means business.
First bank is another Legacy bank that has positioned itself for meaningful digital growth with customer satisfaction in mind.
The bank has developed a couple of programmes including; SME connect, birthed out of the need to bridge the gap and connect SMEs to resources, products and services that will enable them to overcome the challenges of poor business structures, lack of infrastructure, poor market penetration, limited access to information and professional services, inconsistent government policies amongst others.
This project encompasses a link to the seven strategic pillars including; connect to infrastructure, connect to talent, capacity building, connect to policy and regulation, connect to resources, connect to market as well as connect to finance, which the Bank considered essential for the sustainability and growth of SMEs.
SMEs can also have access to free business advisory services through the business diagnostic tool where they can showcase their products and services at no cost at all, interact with their customers and other SMEs alike, Connect to free capacity building workshops, seminars and webinars and get regular updates on policies and regulations impacting SMEs. It is also possible to request a business coach on the portal and get up to 34% discount.
The uniqueness of the platform lies in the fact that these offerings are either free or substantially discounted.
Africa FinTech Foundry (AFF) is an Access Bank all-inclusive initiative that aims to nurture, fund, and accelerate the growth of digitally led industry agnostic start-ups in Africa, through its mentoring and accelerator programs by rapidly monitoring their growth and maturity to deliver specific business solutions and enable financial services to be more available to the financially excluded across the continent.
Also tapping into new technology, in May 2017, Wema bank Plc launched ALAT, the first fully digital bank in Nigeria, to drive transformation and redefine experiential banking in Nigeria’s banking sector. With ALAT, customers can open an account and manage their money without ever going to a branch.
This award-winning app also grants customers access to exclusive group and personal savings, a free debit card, lifestyle benefits and up to 4% annual interest.
In the first year of its launch, the app gained over 250,000 customers who were responsible for the well over NGN 1.6 billion ($4.48m) deposits.
In 2018, the bank closed in the N1 billion ($2.78m) mark in terms of deposits into savings accounts.
The innovations continued as Nigeria’s leading financial institution, Zenith Bank Plc, introduced an Artificial Intelligence (AI) powered Chatbot on WhatsApp named ZiVA (Zenith Intelligent Virtual Assistant), which enables customers to perform financial transactions and enjoy real-time customer service from their mobile phones.
With this capability to respond to chats/queries anchored on the existing WhatsApp platform, customers will be able to open new accounts, receive instant transaction notifications, check their balances on the go, transfer funds and top up airtime.
They will also be able to confirm cheques, pay bills, apply for loans, block their accounts, and request mini statements, amongst other banking services.
Although there are obvious efforts from legacy banks, there is a growing need to do more.
In the first quarter of 2023, Nigeria had a situation of cash scarcity that not just exposed the limitations of traditional banks but also further highlighted the urgent need for an effective digital banking system.
Beyond matching their FinTech Rivals, traditional banks should also see this as a responsibility towards its customers.