Regulators, Banks, Telcos Mull Insurance Cover for USSD Transactions  

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By Obinna Chima

Following an upsurge in the number of bank customers that perform transactions through the Unstructured Supplementary Service Data (USSD) technology, the Nigeria Interbank Settlement System Plc (NIBSS) has said that it is working with the Central Bank of Nigeria, the telecommunication companies as well as some banks to provide insurance for transactions done via this solution.

The Managing Director, NIBSS, Mr. Adebisi Shonubi disclosed this in an interview.

The USSD is a technology unique to GSM (Global System for Mobile Communication). It is a capability built into the GSM standard phones to support fund transfer among customers. A lot of banks in Nigeria have keyed into this innovation as means to decongest their banking halls and also give convenience to their customers.

Barring any unforeseen circumstance, the insurance policy on USSD transactions would be finalised next month. Presently, four banks have expressed their willingness to sign onto the policy, while just one among the three telcos in the country indicated its readiness to embrace it.

Shonubi, however declined to disclose the identities of the four banks and the telco.

“We are hoping that by next month it would come on stream. We are waiting for the CBN to give its final consent. We have four banks that have been tested and are willing to go. We have three telcos and one is ready to go. By next month, we would start the pilot phase.

“So, it is one of the things that we expect over the next few weeks. It is an initiative between all the telecommunication companies, all the banks and NIBSS, to standardise and have a common USSD messaging platform. So, it doesn’t matter the bank customer you are, you can use a standard code or your bank code.

“At the same time, if we have it working and have the modality right, it is something that can be extended to other financial institutions, so that mobile services to microfinance banks that do not have the means, can be available to their customers,” he said.

The NIBSS boss said the move would make the use of USSD as simple as possible and help minimise risks.

“We have gone to the insurance industry and they are willing to underwrite the risks. Hopefully, we would soon start the idea of insurance cover for financial transactions. Why are they willing to underwrite the risks? Everybody who uses it has a bank account and every bank account, has a Bank Verification Number (BVN).

“From a platform point of view, the USSD is not as secured as some of the other channels. However, you must always balance your utility risk with what you are trying to achieve. And sometimes, you do not eliminate all the risks. You identify the risks and you underwrite the risks. I don’t think we have done enough at looking at insurance in transactions. You cannot eliminate the risks totally,” he explained.

According to him, the USSD was set up for convenience. He stressed, for bank customers to adopt digital banking and in order to attract more people into the banking system, it has to be USSD.

“The way banks started doing it was with their customers because they know them and they have their phone numbers. They started by selling airtime, until they were comfortable and started allowing fund transfer, but with set limits. So, they have been moving the boundaries slowing.

“In truth, a customer can do sim swap. Banks tried to make online transfers safer by giving their customer token, whose values changes.

“For all the concerns, all the fears and all the risks, it has to be USSD. So, the question you should be asking is how do we minimise the risks and underwrite the risks that crystallises. And that is what we are trying to do,” he said.