Leveraging Technology to Promote Financial Inclusion

Nume Ekeghe writes on the efforts by key stakeholders in the economy to enhance financial inclusion

Nigeria has over the years been able to improve the level of financial inclusion in the country, although it still has a long way to go if it is to achieve its new vision of 95 per cent inclusion by 2024. The drive for financial inclusion is premised on the fact that access to financial services is key in the inclusive economic growth of any nation.

Thus access making financial services accessible is fast becoming a key area of concern to policymakers for the well-known reason that it has far-reaching economic implications. In achieving this, Nigeria had in 2012 launched the National Financial Inclusion Strategy (NFIS), which is targeted at shoring up the level of inclusion from 36.3 per cent to 80 per cent in 2020.

According to 2018 data from Enhancing Financial Innovation and Access (EFInA), 38.1million of Nigeria’s 106million (18years and above) adults or 36 percent of Nigerians remain completely financially excluded.

While the target of 80 per cent by 2020 may have been missed, a recent survey by Augusto & Co on Consumer Digital Banking, only 34per cent of the respondents said they had experienced the service of digital banks. Only 17per cent of respondents above the age of 55 are aware of their services, while for people aged 41-54, the awareness rate stood at 31per cent. 

With the current level of 64 per cent as stated by the Deputy Governor of the Central Bank of Nigeria, Aisha Ahmad, recently, there is a better chance of the country meeting its desired goal of 95 per cent by 2024 which is just two years away, if the financial sector leverages on the benefits of technology.

Technology has been a major driver of innovation and growth in most sectors and the financial industry is not immune to it. Players in the financial industry have argued that to achieve the NFIS target for inclusive economic growth, the financial sector must strongly leverage technology (mobile and digital channels) to promote financial inclusion and enhance access to financial services for the unbanked and underserved segments of the population.

The MD/CEO of Heritage Bank, Ifie Sekibo, while affirming that banks cannot push financial inclusion unless they also push secured technology inclusion, had noted that the bank has continued to leverage on technology to revitalize the industry via deploying its huge resources and vast networks to deepen financial inclusion in the country for inclusive economic growth

According to him, Heritage Bank has continued to entrench financial inclusion across board via creating access to accounts and other financial products, savings, mobile money systems and payment systems that provide opportunities for financially excluded Nigerians and Micro, Small and Medium Enterprises.

 API Sandbox for Innovation 

One of the ways that banks have been able to use technology to improve service is through application programming interface (API) sandbox, which helps accelerate the ideas of technology entrepreneurs to build innovative and commercially viable products. Sekibo stated that Heritage Bank had provided a suite of financial and non-financial APIs targeted to meet the needs of FinTech, Tech SMEs, and Communities through its HB API Sandbox & Banking as a service via One Pipe.

“Our APIs grants Tech Companies, third-party developers, and non-Fintech companies access to multiple payments and financial services required by their customers. Following the launch of HB’s API Sandbox, the Bank partnered with API aggregator Companies to extend the Bank’s API services to a wider audience, layering their value-added services to deliver our BaaS platform. 

“Banking as a Service (BaaS/Open Banking) is an end-to-end business process that allows FinTech and other third-party service providers to offer core financial services to their customers by integrating with the Bank via our readily available APIs. This is a billed service that also provides relevant data insight required to pursue aggressive retail accounts acquisition by leveraging the aggregator robust retail prospect pipeline” he stated.

Popularising the Digital Banking Space

In driving financial inclusion through a robust, innovative, and advanced digital banking solution, Sekibo said the bank had recently launched the ‘Octiplus’, which is a bank-agnostic, all-in-one digital banking application, which grants users access to a bouquet of financial, lifestyle and social networking features with the added convenience of converging card-based payments within one application irrespective of the issuing Nigerian bank. 

Sekibo stated that, “with Octiplus, we are redefining the concept of digital banking for the discerning mobile user, as the app is equipped with several exciting features that reiterate the bank’s commitment to expand its digital architecture and modernize its interactions with the banking public, irrespective of your preferred financial institution.”

Catering for the Unbanked 

One of the challenges of achieving financial inclusion is the inability of some to meet the required level of identification. As the CBN had lowered the entry requirement to allow new entrants into the system, Sekibo said the bank had introduced its flagship CBN KYC Tier 1 savings account to cater for the unbanked. According to him, it is a level 1 entry into savings account category in Nigeria, in which an individual can open without having the mandatory requirements/documents to open a standard or regular account in Nigeria.

“This is one way of ensuring that all citizens of Nigeria are financially included since the account can be opened with or without a smart phone at the bank or online. In essence, this type of savings account doesn’t require any utility bills, or even an ID to open.

“Most people who fall under this category usually do not see the need to open an account because they find it easier to save whatever money they have in their houses. This category of people want to avoid bulky manual account opening process and have a better time management. This product is very precise and requires minimum account opening documentation; also it can be done at the comfort of one’s home,” he said.

Payment Gateway, Virtual Accounts to meet Online Lifestyle

Also as more people are living in the virtual world, the bank said it created Heritage CheckOut, which is a fully integrated payment processing platform with infrastructure for digital payments across Africa.

Olusola Longe-Okenimkpe, Divisional Head, E-Business & Collections disclosed that the platform provides an underlying technology platform that allows businesses to receive and issue payments from anywhere in the world, with robust in-built fraud management, compliance, and security applications. 

She also defined Virtual Accounts as series of off-balance accounts whose total balance mirrors the balance in pool account. According to Olusola, pool account is linked to all the virtual accounts and the balance in the pool account mirrors the total balance in the virtual accounts.

Asides this, she said the bank ensures seamless transaction using HB transfer code. “The transfer code *745# of Heritage bank guarantees seamless usages and reduces the stress of going to the branch of Heritage bank to make payment. Just like other banks, you can use Heritage bank mobile banking code which is *745# to check your account balance, transfer money to Heritage bank or other banks, pay for utility bills and cable TV subscription, pay for church’s services everywhere you are using your mobile phone.”

Catching them Young

The bank also introduced HB Bud account, which is a savings account for children and the younger demographic aimed at hosting financial literacy and inclusion. The account can be opened in trust for a child by the parent/guardian who will be the primary account holder with the responsibility of running this account until their child attains adulthood and can solely operate their own accounts or possibly move to other age-appropriate products.

This product was initially launched in 2014 as a unique proposition to cater mostly to the educational needs of children and young adults who are preparing and saving up for further education and, as well, deepen brand visibility and increase the bank’s market share. However, some operational exigencies and regulatory framework have necessitated the modification and adjustment of this product to serve the customers optimally. Children and teens from 0 to 18yrs are the target market. 

The features are unique as outlined: Access to cash-backed loan by parent/guardian/sponsor for school fees/education loan. You can access up to 70 per cent of your balance held with the Bank as cash backed loan. The customer must have run the BUD account for a minimum of six months to access the cash backed loan; ease of saving through standing order instructions; access to exclusive events; free participation in the BUD MINI career mentoring and coaching sessions once a year and opportunity to act as a Heritage Bank Executive Committee member for one day.

Inclusion of creative industry

YNSPYRE Account is a product targeted specifically at the creative economy populated by not only youths in video and film, and music. It goes much more than that as it involves people in technology, the creative industry and gaming as part of the creative industry.

Addressing the press about the initiative in gaming as a creative endeavour, Dike Dimiri, Heritage Bank Regional Executive, Lagos, and South West explained that the involvement of the bank is to identify income-earning opportunities for some people in the economy. 

According to him, “HB has designed a product that identifies and finds a mechanism that guides Nigerians in gaming or e-sports. The bank is set to revolutionize e-sports by bringing it to an acceptable level attained by football, lawn tennis and other crowd pulling games.”

Heritage Bank is fast changing the narratives of the banking landscape through the adoption of more secured technology (product and channels) for seamless services that guarantee the larger part of the population is involved in economic activities as well as being financially included.

For this to be effective, Sekibo affirmed that the population must access financial services and products which ensure that households and businesses irrespective of income levels have access to and can effectively use the appropriate financial facilities they need to improve their lives and further their savings and investments.