Managing Director and Chief Executive, Itex Integrated Services Limited, Mr. Ernest Uduje, spoke with Emma Okonji about the company’s expansion plan, designed to sustain business growth. Excerpts:
In spite of the efforts by the Central Bank of Nigeria (CBN) to drive cashless economy, Nigeria is still regarded as a cash-based economy. As a FinTech company that plays in the technology space, what could be responsible for this?
Nigeria is still regarded as a cash-based economy because of the huge volume of cash that is still in circulation, even though several Nigerians do online and mobile financial transactions, as well as the use of Automated Teller Machines (ATMs) and Point of Sales (PoS) terminals for financial transactions. From inception, Nigeria has been a cash-based economy, where every transaction is done with the exchange of physical cash, but that narrative is changing gradually, with the introduction of cashless economy by the CBN. The adoption of cashless has been slow, which is a major reason why many Nigerians still prefer to carry cash around for their financial transactions. Again, we need more infrastructure that will complement the existing infrastructure so that people in rural communities can have a feel of cashless economy. So we need to get the solutions that work for as as Nigerians and as Africans to help drive cashless and close the financial inclusion gap.
There has been some form of collaboration between banks and FinTech players, which was not the case in the past. What is driving this new development and how will it help in enhancing cashless economy and digital financial inclusion in the country?
Initially there was lack of understanding about the roles of FinTech in the financial service industry, but as technology evolves, the roles of FinTech are becoming clearer to the financial players, especially the banks, hence the new collaboration between banks and FinTechs, based on trust and business growth. Now the banks and the financial sector regulator are beginning to appreciate the roles of FinTech and the trust level has grown tremendously. The truth is that a lot of financial transactions and innovation that are going on in the banking industry, were generated and developed by the FinTechs, and the banks cannot do without FinTechs in this era of technology advancement, where technology is demystifying some financial transactions that were hitherto seen as the exclusive rights of the bank staff alone. Today people can sit in the comfort of their homes and do financial transactions, using their mobile devices without going to the physical bank building and that has reduced human traffic in the banking halls and also reduced time spent in banking halls. This is just the beginning, because there are several innovative solutions and products that are coming out from FinTechs and the bank customers will benefit more from the innovations that are yet to come.
Itex just announced its expansion plan after years of operating below the radar. What must have motivated this expansion plan, and how will it benefit customers?
Yes, we have been quiet in our operations for some time now because we were working hard on our expansion plan, which we have just announced. We needed time to plan and get our plans right hence we have been quiet for some time, but now that we are ready with our big plan, we can no longer remain quite but sell our plan to our customers who will largely benefit from the expansion plan. We are expanding our business within Nigeria and across Africa, and we have a lot of products that will drive businesses and sustain them over time.
What are some of the products in your new business plan that will grow and sustain businesses?
We have products for the financial technology space, especially for the unbanked that will further drive financial inclusion. We have solutions for settlement systems, web acquiring systems, merchants acquisition, among others. Some of our expanded service offerings from payment channels include PayVice, Terminal Application Management System (TAMS), Internet Payment Gateway, Afrimart and other bespoke services.
The Itex POS terminal application software is highly robust, with extreme flexibilities that allows for customised transactions (both traditional and digital) required by merchants or acquirers. Itex has an extensive client portfolio spanning 19 African countries, with more than 67,000 PoS terminals deployed to merchants, commercial banks, agent network, transnational corporations and governments across Africa.
The PayVice is a value-added service, which includes an electronic wallet system that enables funds transfers, utility, transport and logistics bill payments. Our PayVice also enables QR Code payments.
Based on the Itex expanded products and services. What are the sustainability strategy to remain relevant in business, in the face of competition?
Our sustainability strategy is in our quality of service, speed in service delivery and innovativeness. Our goal is to make traditional payment system relevant for the customers and also demystify the use of new technologies. For instance, when the QR Code payment system came out, we ensured that we embedded them in the existing payment channels, which enables customers to still use the old traditional payment channels, rather than building a new technology architecture and system that will work with the QR Code payment system.
What are some of the innovations championed by Itex in recent times, vis-a-vis the evolution of new technologies?
The first technology innovation we had was with the TAMS platform, which enabled us to unboard merchants, in spite of the challenges of doing business in the country. Another innovation we carried out, was with PayVice, which enabled us to drive agency banking network and ensure that financial transactions were carried out on the agency banking networks, were hitch-free. We also had a number of innovations with the B2B businesses, using our Afrimart solution.
Authentication and authorisation of financial transactions have been an issue with agency banking. How is Itex addressing the challenge?
We have done quite well to ease authentication and authorisation of financial transactions with agency banking by providing a platform that makes financial transaction records available to the merchants and the customer. For every single financial transaction, the system generates a printout of the translation, and in some cases, there are bank alerts sent directly from the banks. This ensures proof of transactions. But none the less, some merchants would want to take undue advantage to operate differently, but we have put a robust system in place to address the issue of authentication and authorisation of every single transaction. If the transaction sales through, the system notifies both the merchant and the customer, and if for any reason, the transaction fails, the system also notifies the merchant and customer and also reverse the payment. So our robust system takes care of all the payment and reconciliation issues, just as it is done in banking.
As a FinTech company, what are some of the identified challenges that are hindering agency banking in Nigeria?
The major challenges are infrastructure and basic knowledge in information technology. Poor infrastructure has been identified as a major challenge and the government needs to build robust infrastructure that will enhance technology development in the country. The people need to have basic knowledge of evolving technologies that are driving businesses and this is important for business growth and continuity. Itex, for instance, is involved in training and retraining of merchants, developers and customers in the area of agency banking and product development to further drive financial inclusion in Nigeria.
The federal government is key about job creation in the public and private sectors of the Nigerian economy. How has Itex been able to create jobs in the Nigerian market, going by the new forms of technology evolution?
At the moment we have over 1,500 agents on our platform, but that was a shortfall from our target of meeting the 5,000 mark by the end of the year, as a result of the changes in our operational structure as a business, coupled with the tough business environment we had this year. But we are looking at meeting the 5,000 agent target by the first quarter of next year, and we plan to increase the number to 10,000 by the end of 2019. For these agents, we are creating jobs and source of livelihood for them and their families.
Looking at the explosion of digital payment system in the financial sector, what in your views are the values that digital payment brings?
The value of digital payment is massive and encouraging. For instance, it has helped in reducing the cost of printing of notes, since money will be determined through figures and people will begin to play with figures when carrying out financial transactions. It has also reduce the risk of carrying cash around, because we have heard of cases of robbery and cash carted away from individuals at the point of physical cash transaction. Again, we used to have bullion vans for cash movement from one bank to another, but all that have reduced and government is spending less in printing of notes and in transfer of such printed notes to various banks. Digital payment has brought about speed of payment and financial transactions, as against what it used to be in the past, where it takes days and weeks for some financial transactions to be successfully completed.
There has been a cold war between telecommunications operators and the banks, over the operation of mobile money. While the banks feel it should be bank-led, the telecoms operators think it should be telco-led. What is your take on this controversy?
Mobile money can be bank-led or teleco-led but what matters is the success of the system. In some regions of the world, it is bank-led, while in other regions it is telco-led, but in Nigeria, it has been bank-led, since its inception.But I am glad that the CBN is bringing in the telcos into the scene by the recent pronouncement on mobile licensing that is open to telcos and I can see that most telcos have applied for the licence and they have been licensed by the CBN to be part of the system. What this means is that we will see more penetration in agency banking and mobile money operations in Nigeria. But again Nigeria is a different market from other markets and we hope that the new development will further drive cashless in Nigeria.