Experts in the financial services sector say innovators that can come up with solutions that will solve real life problems such as improving payment systems, reducing ATM queues, improving cyber security and driving financial inclusion will make a pile of money in 2017.
Concerned about embarrassing queues in front of ATMs and trouble completing Point of Sales (Pos) transactions, banks and Fintechs are looking for ways to deepen investments aimed at bringing digital channels to customers and find ways of improving payments.
Data from the Nigeria Inter-Bank Settlement System Plc puts the number of ATMs in Nigeria at 16,600 units, well below the 60,000 units that are needed, according to the Central Bank of Nigeria (CBN). This means commercial banks have a deficit of 72.33 per cent in ATM reach, a gap that experts say can be filled with innovative e-payment platforms.
“The CBN’s target for ATMs in Nigeria is 60,000 units. This speaks to a need to scale up e-payment system,” says Olubukola Oyeboade, senior financial accountant at Mixta Africa S.A.
Olaseni Alabede, business leader, processing enterprise security solutions, at Mastercard, in a post on LinkedIn, predicts that the digital space is where a lot of the innovation will be experienced in 2017.
The revolution is already underway. Central Bank of Nigeria figures show that more than 37.33 million mobile money transactions with total value of ₦589.34 billion was recorded in October 2016 in Nigeria.
In November last year, The CBN said from May 2017 it would no longer regulate the Merchant Service Charge (MSC) on electronic transactions. MSC is the fee merchants such as supermarkets pay for payment customers make to them through electronic payment channels such as Point of Sales (PoS).
The effect of this policy is that it will ultimately boost payment card issuance, investment in loyalty programmes and the expansion of acquirer network infrastructure across the country.
“Having queues for cash-out at ATMs or at Mobile Agents is not financial inclusion. The last mile of payment in the value chain needs to be catered for. Whoever is able to solve for those little things that people go to the ATMs for will win in 2017,” said Alabede.
Alabede also said that a few companies have ventured into big Financial Inclusion (FI) initiatives, such as setting up FI innovation labs, and partnering with governments to drive FI but the progress they have made is marred by imitation companies without real products or properly defined business models.
Raphal Ossai, product manager (ATM Business) at First Bank, in a response to the post said: “2017 is a year for the digital space. I see more customers embracing digital banking as people become more impatient with the old ways of financial banking.”
Companies that improve user experience, rather than just nice applications and solutions, by removing friction in the payment process, will gain the high networth individuals, the burgeoning middle class and the millennials, as loyal customers says Alabede.
The ability to provide solutions to cyber security will also be an attractive investment prospects in the digital space. According to DMR Cyber Crime Report, the estimated cost of cyber-attacks annually is $400 billion, while the projected cost of attacks in 2019 will be $2.1 trillion.
Professional services firm, PricewaterhouseCoopers, in a recent report, says deepening technological awareness and proficiency in Nigeria and other parts of Africa will create opportunities for businesses to develop affordable devices and data usage plans, along with high quality home-grown content.
The 56-page report titled “Disrupting Africa: Riding the wave of the digital revolution,” states that Africa is embracing technological disruption in a way that sets it apart from other continents.
“What marks out the digital revolution in Africa isn’t the technology that underpins it, so much as the growing affordability, accessibility and, until recently, largely untapped demand that have made its advances so rapid,” said Joel Segal, Chair of PwC’s Africa Business Group.
Africa has recorded growth in mobile phone usage from 174 million in 2007 to 772 million in 2016, a 344 percent growth, while the rest of the world saw a growth rate of 107 percent from 3,192million to 6,605million in 2016.