Is USSD the Future of Banking?

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Nume Ekeghe ponders whether USSD technology can survive the test of time

More and more, technology continues to dictate the manner in which we deal with money. From the totally disruptive character of Bitcoin tech to the inclusive and convenient offerings of internet banking, traditional banking is quietly being condemned to the pages of history.

One interesting aspect of this technological revolution is the application of Unstructured Supplementary Service Data (USSD), a Global System for Mobile (GSM) communication technology that is used to send text between a mobile phone and an application programme in a network, in Nigeria.

USSD, which is similar to Short Message Service (SMS), has become a popular way in which Nigerians make banking transactions.

According to a General Manager at Myriad Group, a technology company, Fabien Delanaud, USSD is menu-driven, and therefore much more interactive than SMS, in pull or push mode (ability to push a menu to a mobile phone).

USSD notifications and menu can dramatically improve the user’s experience, giving you the ability to quickly and cost-effectively send essential and useful alerts to engage in interaction and send important information.
Whilst SMS has been used and abused, and often subject to spam and associated regulations, USSD is free from these issues.

One of the banks in Nigeria driving this technology is FirstBank, with its *894# service.
The USSD service, according to a report from the bank, makes banking services available across all GSM networks, on any type of handset or device, whether it is iphone, android, blackberry and even simple feature phone famously referred to in Nigerian lingo as ‘kpalasa’. It requires no internet service connection and can be used in remote locations across Nigeria. This USSD service is delivered on the customers’ registered phone numbers linked to their FirstBank accounts.

With this, the mobile phone has become a mobile branch and customers can activate this service easily. First Bank customers only have to go through three steps before they can transfer money to FirstBank and other banks in Nigeria; buy airtime for themselves and their loved ones; check account balance on their phones, and do lots more wherever they are.

“FirstBank has always been at the forefront of seamless banking transaction in a convenient and secured manner and is committed to ensure its customers are fully served with the USSD service,” Group Head, Marketing and Corporate Communications, FirstBank, Folake Ani-Mumuney, said.
But, the question is, does USSD has the staying power to completely revolutionise the banking sector without caving under the pressure of new technologies?

In Nigeria, mobile banking actually started with mobile apps, as many banks attempted to join the app revolution started by Silicon Valley and started rolling out products on Blackberry, Android and iOS devices.
But the adoption rate was low, since the percentage of smart-phone users in the country was still puny, compared to the gargantuan size of the market.
The banks invested a lot of money in these apps, but the results were not spectacular, with some smart-phone users staying away due to security reasons.

Then, USSD came into the picture. It was an instant hit, as it was as easy as sending a text, which most mobile users were familiar with.
From early 2016, virtually all major commercial banks in the country started rolling out USSD banking services, providing customers with specific short codes to transfer funds, buy airtime, pay for services, check account balances and perform other banking transactions, both large and small.

From there, many began to see the service as the future of banking in the country.
The future survival of USSD technology might depend on the institutions backing it.
With more than 12 million customer accounts, FirstBank has over 750 branches providing a comprehensive range of retail and corporate financial services. The bank has international presence through its subsidiaries, FBN Bank (UK) Limited in London and Paris, FBNBank in the Republic of Congo, Ghana, The Gambia, Guinea, Sierra-Leone and Senegal, as well as its Representative Offices in Johannesburg, Beijing and Abu Dhabi.

Since its establishment in 1894, FirstBank has consistently built relationships with customers focusing on the fundamentals of good corporate governance, strong liquidity, optimized risk management and leadership.
Over the years, the bank has led the financing of private investment in infrastructure development in the Nigerian economy by playing key roles in the federal government’s privatisation and commercialisation schemes.

With its global reach, FirstBank provides prospective investors wishing to explore the vast business opportunities that are available in Nigeria, an internationally competitive world-class brand and a credible financial partner.

Another point to note is that USSD is very important within emerging economies, where the cost to access data services is increasing. Despite the growth of smart-phone penetration and 3G/4G coverage, the cost of data access is a very key factor in deciding how information is consumed.

Here, USSD has no limitations. So long as a phone can make a call and send a text, then the technology is good to go. Sometimes, simple and lean win.
Meanwhile, the continued reliability on USSD will enable mobile service providers and financial institutions more opportunities to satisfy new market segments, add more value to customer, as well as meet underserved customer needs.