‘Nigerian banking sector ahead of peers in payment system’
Seun Bamisile, managing director/CEO, Integrated Cash Management (ICMS) Limited, a finance professional with over 26 years cognate experience in the cash management system, in this interview with Hope Moses-Ashike, speaks on the company’s intervention in cash movement in banks and other issues in the sector. Excerpt.
What you have done to earn the award
First of all, we are trying to build a brand that will stand the test of time, an iconic brand. Before the introduction of ICMS, Banks move their cash with their bullion vans, we find out that it is not secured and constitutes nuisance to the public, we improved the delivery channel, so we introduced armoured vehicles, it brings security and some level of sanity. The drivers of these vehicles are comfortable staying in the traffic. In building the brand, it enables us render services to almost all the banks in Nigeria, we try to build a brand that is iconic, that will stand the test of time.
Impact on your business and the financial system
Let’s start with the business, the award will increase the credibility of what we do, it will increase the acceptance of the people thereby introducing more profit to what we do. About the Economy, one thing you will notice about the Nigeria economy is that the Naira as a brand, is not too strong, why did I say this, Dollar can be spent in different countries but the Naira is not spent across the border because people don’t understand how strong the brand is but with our intervention, the money that goes back into circulation is verified for fitness and counterfeiting, what it does is that it springs up the value of naira over a period of time.
About the ATM when we talk about the ATM, if you look at the density of the ATM in Nigeria, you will see that it is very low, between 2014-2015, there were 14000 ATM in Nigeria, if you compare it with other countries that should be compare with Nigeria, you will see that ratio of ATM to the Nigeria population is very low. The government has done a lot about the deployment of more ATM, first, there was licencing of companies called AIDS, those companies couldn’t attain a kind of size that will suit the economy because the Naira note was not available, there was no ICMS, ICMS will be operating centres that will make cash availability for ATM deployment, because of our intervention, there will be faster velocity of note, the velocity of the naira will change, ICMS will ensure taking away of notes that are not fit and what will be circulated in the economy will be notes that are fit.
Impact of cashless policy on your business
It’s funny, there is no economy in the world that is cashless, the intervention of cashless policy actually increases the quantum of cash in the economy, why do I say this? All cashless transactions end up taking money from the ATM. The cashless opportunity supports our business because there will be availability of notes, come to think of it, why is the cashless policy not working in major markets like Alaba and so on? With our intervention, it’s going to make people dam cash and now make it available in the economy; our intervention supports it at the long run.
Effect of drop in cheque usage on your operations
Yes, it is happening everywhere in the world but it doesn’t, have impact on us. A cheque takes a while before you get value but an online transfer gives you an instant value. Both transactions end up in cash. The days I save you give you an opportunity of accessing more quantum of cash, yes it is true that the use of cheque is dropping because people are beginning to look for better channels their value can be delivered to them. If I can deliver value with a faster channel and you can turn it to convenience, then you will be interested in what I do.
Nigeria financial system after 57 years
Nigeria, is far far behind hers peers, why do I say that? If you take the population of Nigeria and check all the indications, the economy will do better, yes we are trying but we will still do better, if you look at it, there’s no country in the world today or very few countries that the regulators have not completely outsourced some services especially in the area of cash logistics, you will find out in Nigeria, CBN still handles a lot of these things , and what it does is that it doesn’t fill up sufficient capital for people to lay hands on.
One of the greatest cost most of the banks carry today is the cost of cash, the cost of cash with statutory ratio, it is difficult for them to create cash but with our intervention, we have been able to help them manage most of the cash they hold, it’s going to free up more cash for us for the progress of the economy.
Your collaboration with the banks, on extinction of unclean notes
CBN, issued a policy called Clean Note policy, it states that “No financial institution should issue a Naira note without it going through the fitness test”. Any note that doesn’t pass through the fitness standard is not meant to go back to the economy. That is why the Dollars and Pounds look crispy, but what happens to naira is that when the bank collects the note from you, they count for correctness and reissue it but that is not what the CBN intends, there has always been an argument because the currency processing machines are not tolls they are very expensive, the Naira notes doesn’t get to go into the machines until it gets back to CBN. Unfortunately again CBN, has a backlog of those notes, what happens is that in the front head of the economy which is where the bank fails, there’s a lot of reissuance going back to the economy that didn’t go into processing, the bank can not comply, if CBN is not enforcing it, they can enforce it because they are complaining about the capital intensive nature of the currency sorters but with company like ICMS, we will not allow notes that are bad go back into circulation, we have two types of notes, notes that are fit that will go back into circulation and notes that are not fit that goes back to CBN for restructuring.
Payment system in Nigeria
Nigeria is far ahead of her peers in the payment system, Nigeria has done better than even the USA in terms of payment, if you look at the type of ATM we deploy in Nigeria, all ATM have chip, some countries do not even do instant transfer. In the payment space, we are having the opportunity of moving ahead, the only aspect we haven’t done well is in terms of mobile money payments and the reason is because of some of the government policies, as long as those policies start falling in place, the economy will take a full speed.
Companies licenced by the CBN to offer this service
There is just one company licensed and the company’s name is Bankers warehouse, but we have an approval in principle, so we are about to start our own process. For the movement of cash, we are just five companies licence by the CBN.
Other services excluding cash logistics
Cash Logistics is all we do for now.
Future of ICMS
We are looking at opening our cash centres towards the end of the year by God’s grace.
Services to individuals
As an individual if you have a large payment you want from the bank, we can bring it to your location like Casinos, Sheraton, Telecoms and oil services these are all our clients.
Federal approval for your services
We have federal approval to do cash in transit and we also have approval from CBN to do cash in transit, there are five of us licenced. For cash processing, there’s a company licenced to do it, but we have an approval to do it. It is a capital intensive business, for you to do this cash in transit; you have to have a cash capital base of N1billion. For you to do CIT, you must have N3 billion for you to do both of them you must set N4 billion naira aside.
Apart from capital intensiveness, other challenges
It is skill intensive, knowledge intensive and also because it involves cash, you should have minimum requirement like integrity so it is not an all-comers market.
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