The Chief Executive Officer of CR2, Mr. Martin Dolan, speaks to Amaka Eze on the firm’s supporting initiative to the Central Bank of Nigeria’s cashless policy, by unveiling a secured self-service banking channel into the country to provide users with card less access to ATM
Secure Self-service Banking
The banking landscape in Nigeria has been subjected to significant changes in the past years. Notably, the Central Bank of Nigeria, (CBN) has launched the Cashless Lagos Project to reduce cash handling costs and combat related fraud activity in the system.
To support the CBN initiative, CR2, the leading global provider in self-service banking software solutions in partnership with Global InfoSwift Nigeria has unveiled a secured self-service banking channel in the country that would provide users with card less access to ATM.
One of our major works is to help the unbanked. A recent South American study showed that about $1.5 trillion held by the unbanked are kept under their mattress across ten countries in South America. I am sure that it will not be too different in Nigeria. People save for their funerals. They keep hide their monies inside boxes under their bed for whatever reason.
If that money makes its way into the economy and into the banking system, then the bank can take a trillion dollars and can loan it out for more productive purposes.
If it’s in a thin box, it’s not useful for anybody and it’s not productive. So enabling people have the virtual account at a very low cost is what we do. The whole idea is to effectively make it easy for banks to acquire customers at low cost, and not charging those customers money that can’t afford it in the first place for transactions. For the unbanked, their transactions will be based on secure self-service.
How the Secure Self-service Works
The self-service actually allows customers with no card and no bank account literally use the ATM to send and withdraw money at their convenience. Simply put, it is more like a local western money transfer via the ATM.
Say for instance I want to send you money and I didn’t know whether you have an account or not, I can send you the money and you will get a text message from my bank saying I sent you money, once you reply to the message it will send you a onetime password, with which you can go to the ATM and select card-less transaction. You will be asked for your mobile number and the onetime password or pin we just gave you and you will get your money.
Also, if an organisation wants to pay a staff members who do not have bank accounts, there is an easier way to do it; described as an electronic check. What happens to a paper check today when you write to staff members, they stand in the bank queue, fill up the branch and face all kinds of stress whereas when you give them an electronic check they can go to the ATM 24/7 and withdraw their money at their convenient. It benefits the bank branch and benefits the person who receives the money.
Self-service Banking Would Ride on Existing ATMs
This is a great question because all ATMs supplied today come with what drives the screen as a powerful PC. We have a significantly bigger PC inside the ATM. So we take that same PC and we unleash the power to drive 50 transactions and to interact with other channels like the internet and mobile, and to make it more secure. Basically, what we do is to take a standard ATM and unleash the potential that is driven by technological advantage to exploit devices that doesn’t happen today in most ATM.
We actually write our own software for the ATM and we have made sure that software talks to our central controller in a very powerful way. We make that much bigger so you can send richer data, which support more transactions, more advertisements and a totally different local view.
Card-less Transactions Won’t Phase out ATM Cards
We are not trying to phase out the cards. What we are saying is today you have Chip & PIN cards in Nigeria. Chip cards are expensive to produce. If you want to provide service to the unbanked, some of them can’t afford the charges for card; it may be too expensive for them. Thus we need an alternative. So we would use the card for customers who can afford them to process transactions, but for customers who wouldn’t necessarily be able to afford the cost of the card, we can provide card less access to the ATM. So we are supplementing the card, rather than replacing it.
Addressing Security Challenges
That is a very good question because the Know Your Costumer (KYC) issue is a big issue. From my point of view, that is the biggest problem. I have been studying the whole idea of mobile banking for a long time. I have interviewed people from banking in South Africa and Nigeria recently, and the biggest challenge associated with mobile banking is getting to know the customer in the first place. What we do is, we enable the customer receive the payment, so long as it stays below the limits that the Central Banks specified for the KYC. But the whole idea is to make the barrier to entry very low to encourage people enter the system, and once they get in, they will later get confidence to give their credentials.
The Network challenges are infrastructural challenge found within the country. But a lot of banks are beginning to understand the critical importance of these devices, and so what most of them are putting into use the mobile system as a backup to the normal connections they have. So the combination of using the mobile connection with the existing connection is really a good one.
I think the first step is to come and show the banks what is possible. The second stage is to probably go and show the system specifically to the CBN because they are taking a lead role in the whole modernisation of the banking system and the cashless policy thing too, so we think that if we can communicate with the central bank, their leadership position in the market will make it more known to the general population. I think banks are often very careful not to do something that the central banks are not in support of.
Secure self-service banking, the secure part is very important to self-service because what we see today is that fraudsters are full time on trying to crack the security and some of them are very clever, so it’s a very important aspect of the solution.
But the big issue that we address in a market place like this is that we see that what’s happening is that banks are trying to get transactions more convenient to their customers and what we are finding is that migrating the transaction out of the branch to some other device is becoming a challenge because your standard ATM only has nine transactions and so a branch does 50 transactions, thus you can migrate 50 transactions to a device.
In Europe we talk about migrating the people to the internet, but the central bank recently gave me some very interesting statistics, more than 95 per cent of the transactions done today in Nigeria are on the ATM. This is probably unique knowing that ATM have high usage, it offers a good opportunity for banks to migrate transactions because what you saw this afternoon is that instead of nine transactions we have made 50 transactions available on the ATM because we specialised in Africa as a market.
We understand that internet banking is indeed available to everybody, it’s available to the minority, so what we have effectively done is make the ATM the internet for markets like Africa and that is their most secure network, because you are assessing with a secure card and pin so that is the context of what we are trying to do here.