Who shall tell our stories?

I have spent the last few months reading, researching, and discussing with many payments industry experts about what the new wave of FinTech and payment innovations mean for the world, Africa, you, and most importantly me.

I’m sorry that I have to use the FinTech jargon. Just like big data, cloud, etc. FinTech as a buzzword is already annoying the heck out of me!

Opinions, just like the sands of the Eleko beach, are many, cheap, and quickly forgettable. However, what is not disputable, is that a lot of innovative things are happening all over the world and it is likely that the financial world as we know it may be gone soon.

Meanwhile, if I ask the average Joe or Jane, as the case may be, about the companies leading these packs, you get fancy names like Atom, WeBank, Ant Financials, Stripe, N26, Monzo, etc. Everyone is talking about BlockChain, Open Banking, PSD2, Trump, etc. So where is Africa?

Before anything else, I need to say that Africa is not a country!

I’ve had the opportunity to talk to many companies doing fantastic things in different countries in Africa, but the average African doesn’t know about them. Yeah, you want to mention M-Pesa? Vodafone invented M-Pesa for Safaricom in Kenya and Vodacom in Tanzania and partly funded by DFID.
While the world is begging the USA to start doing instant interbank transfers, Nigeria and other countries like Zimbabwe have been doing it for centuries, but who knows? Outside of Africa, more people know about UK’s faster payments than Zimbabwe’s ZIPIT. Does ZIPIT means “to keep quiet”?
Tax collection is a mess in Nigeria, but the TSA platform from Remita is sufficiently more advanced than what can found in other countries, but who knows?

mCash, recently launched in Nigeria, promises to upend merchant payments but hardly did the story get beyond the border before it was rudely sent back home.

MyCash is a pure-play digital bank in Zimbabwe running out of a tiny office on a shared infrastructure, but I can bet that you are reading about it here for the first time.

Africans may not have achieved the level of development seen in western countries and Asia, but not everyone has been sitting around climbing iroko trees. However, while we may be furiously developing payment and other technology solutions, hardly do we get the word out.

If we think others will tell our stories, we may have to wait until chickens grow teeth. Letting the world know isn’t just about the beautiful 15 minutes of fame that everyone craves, but more importantly, to encourage our youth that good things are also possible in Africa.

Even though the technology behind M-Pesa may have come from Vodafone, the airtime it got spurred the rapid development of mobile money across Africa, and it is one of the good things exported by Africa to the world.

We need more beautiful stories to be told. But much more, we need storytellers.

mCash would change the future of payments in Nigeria

The Nigeria Inter-Bank Settlement System (NIBSS), along with numerous banks, have launched mCash as an alternative payment system in the populous country in Africa.
mCash rides on USSD and anyone can easily use the code to make payments at large stores, corner shops, etc. The mCash payment system, which is automatically available to over 28 million account holders in Nigeria, can be used with any smart or feature phone.
The Central Bank of Nigeria has been pushing electronic payments in Nigeria for years. The elaborate program, dubbed Cash-less Nigeria, was driven massively in partnership with banks, switches, schemes and other stakeholders. The results have been fantastic as electronic payments in Nigeria is on a tear.
Despite the massive success of the Cash-less Nigeria program, merchant payments using Point of Sales (POS) terminals have not been as successful. Payments at POS terminals have been bedeviled with a lot of issues: High cost of terminals, which has been exacerbated by the devalued Naira. Poor telco data/GPRS infrastructure. Overregulation of participation and fees, which has made the business to be highly unprofitable. The list of issues goes on.
It was no surprise that banks started pulling back. Many at times, merchants desirous of having terminals are not given because they may not have enough transactions to allow the banks breakeven.
Not deterred by these, NIBSS and some banks rallied around to design a new payment system which would latch on to the recent success of the USSD banking in Nigeria.
Rising from the ashes of mobile money in Nigeria, another failed experiment in the quest for a cashless society, banks quickly repurposed their USSD codes to connect directly to bank accounts instead of mobile wallets. As the average Nigerian is already used to using USSD codes to load airtime or select call back tunes, there was an immediate affinity. USSD banking in Nigeria now has more users than all other channels apart from payment cards.
The mCash payment system allows account holders to dial their bank codes or a special general purpose code and then pay any merchant. The paying customers and merchants do not need to be with the same bank. The transactions ride on the existing NIBSS Instant Payment infrastructure. Merchants get settled instantly instead of waiting until the next day as it would be for POS transactions. Banks do not need to create additional back office processes as the payment transactions are treated like regular NIP transfer payments.
Even the merchants love the new system as they would not need to pay interchange or MSC.
This is a new payment system and the jury is still out on how transformational it could be. It has all the potentials of a successful platform: reach, ease of use and cost to merchants.

Is Nigeria ready for digital banks?

There is so much confusion out there about what digital banks are. Bring a thousand self-proclaimed experts and you will probably get two thousand different definitions.
I am confused too, but for today, let’s pretend that I know what I want to say.
A digital bank, sometimes called a direct bank or online-only bank, is a type of bank where there are no branches and interactions with customers are through the internet, and of recent, mobile apps.
There is a distinction between mobile money and digital banks. Mobile money is usually a wallet accessible from mobile phones using SIM Tool Kits (M-Pesa by Safaricom in Kenya) or USSD (M-Pesa by Vodacom in Tanzania). Mobile money is primarily driven towards financial inclusion and the most successful examples are mobile telco led.
Mobile money is limited in features, have less than required interoperability with existing financial payment systems and for these reasons have failed in countries with a sizable chunk of middle-class population. MTN and Vodacom just shuttered their mobile money services in South Africa.
Digital banking is also different from mobile banking in the sense that mobile banking is banking on the mobile phone for accounts which are already opened in a traditional bank. So if you decide to smash your phone in the latest craze of clapping while taking a selfie, you can visit your nearest bank branch to wink at the new teller while taking cash over the counter.
Is Nigeria ready for a digital bank? Let’s analyze this from a simple point of view – what would it take to have a digital bank in Nigeria.
Regulation
Forget about the story of enabling technologies and a shift in demographics: Banking is a highly regulated business which the government has 150% interest in. There is a financial and documentary barrier to having a bank. N25B anyone? That aside, the Central Bank of Nigeria has different classes of banking licenses for which a digital bank type is conspicuously absent. Not to be deterred, some brave individuals are bootstrapping digital with minimal microfinance bank licenses. But having MFB as part of your brand is so meh.
Prospective Customers
Digital banking isn’t financial inclusion. One is driven by capitalism and the other by altruism. Digital banking is narrowly focused on middle-class customers who are tech savvy or comfortable enough to do their transactions away from the banking halls. Trust me, I’m one of them and our Nigerian local association is large enough.
Going to a bank branch in Nigeria is an exercise in self-flagellation. Sending someone else to a branch on your behalf is worse than water boarding. You endure endless traffic, you could get robbed coming back, the tellers don’t smile anymore (they were never smiling), you could age literarily standing in the queues for hours and when you get to the front of the queue, the system is down.
While mobile banking hasn’t been successful in Nigeria, it has been more of the poor back-end of the different banks. In fact, banks have been more inclined to open new branches and chase around for deposits than providing an awesome mobile or web experience.
Trust me, many of us would not miss going to a bank branch!
Trust
At no time in my life has my salary been good enough, so I don’t play with it at all. To hand over my hard-earned money to a digital bank without a branch where I can go make a scene or head-office where I can join others to picket is asking for too much.
I’m not so sure if the average Nigerian trusts an average Nigerian. Trust comes from ubiquity and longevity; a digital bank would need to be in the face of Nigerians for a while before it can be trusted. That would cost a lot of money in marketing – radio jingles, TV adverts, billboards, social media, tie-ins, etc.
During this love session, the digital bank must never ever, ever, ever, ever, make any mistake, if not the trust will deflate like a pricked balloon.
Customer Support
Things would go wrong, not once, not twice but as many times as it could go wrong. When this happens who will provide support? The contact centers of Nigerian companies are notorious for adding to problems and not solving them. Complaining about an emergency is an exercise in futility and even floor managers are impotent and wouldn’t help you.
A digital bank must build customer service into its core. It would be difficult but not impossible. Floor managers must also be able to make decisions.
Cost of transactions
Banking in Nigeria is very regulated much more than a C Compiler (if you get the joke). As Nigeria is still a cash-based economy, a digital bank with no debit card offering is DOD (Dead on Departure). However, giving cards would also be a DOA (Dead on Arrival) as the Central Bank mandates that the first 3 transactions are free for the customers (not the banks). A digital bank can probably never have its own ATM network. How would it fund it when it would cost at least N20M per ATM gallery?
I’m not a pessimist but I can’t figure out how it could be done at this time. Maybe an alliance with large banks? I don’t know any philanthropic bank in Nigeria who is ready for free ATM withdrawals for customers of digital banks.
Technology
Traditional banks are a mishmash of disparate systems held together by badly implemented integrations: Nothing works. Data are held in silos and never talk to each other. It’s a technological hell-fire where badly behaved bits and bytes are sent by the god of science.
These technologies are also insanely expensive and with USD beyond the reach of everyone, building a digital bank on available technologies is a business suicide.
The good news is that digital banks are mostly building their own technology stack (Atom, Starling, Simple, Monzo, Fidor, N26, etc.) and Nigerians have the intellectual chops to build better platforms than even these guys.
Established networks, especially MasterCard, are also lending their weight behind these initiatives to allow digital banks enter into mainstream interoperability.
Features
Traditional Nigerian banks offer everything and probably nothing. However, the average Joe like you and me just want a simple current or savings account, a debit card to go with it. You can throw us some overdraft or personal loan when we go broke. Let’s be able to send and receive money to/from other banks. Let’s be able to take cash from the ATM and when the dollar is available, let’s use our cards abroad.
We want an awesome mobile app. USSD banking is a must else don’t even bother talking to us. The internet app must be great and we don’t want to click until our fingers break just to do anything.
SMS and email alerts are compulsory and should get to us instantly. Don’t also lose our money to fraudsters. When we have transactions to dispute, don’t try to mock our intelligence or stretch our patience beyond limits. Let someone answer our calls and proffer intelligent analysis/solutions to our issues when we dial the Contact Center number.
These are not too much to ask for and I believe any digital bank worth its salt should be able to deliver them.
Conclusion
It has been a rambling long post but barring cost of transactions and technologies, digital banks can dip their toes into the storming river of Nigerian banking.
I think the country is ready now – there would be many casualties at first but over time, these digital natives could become behemoths, and you never know, appear in the top 10 of largest Nigeria banks.
 

Digital "Fluffy" Banking

Digital Banking seems to be the new buzz word these days. I love buzz words; they are necessary distractions in the agonizing world we live in.

But what’s digital banking? Nobody seems to know. Just like those mischievous boys in the bible – customer service we know, value for money we know but what the heck is digital banking?

A thousand definitions exist but basically everything points to a fancier electronic banking services.

Maybe people need to understand what we customers need.

We don’t need pretty names or fancy titles. We don’t care if you are a tier 1 or tier X bank. We don’t care if you are a boutique bank and cater for some fancy niche. We don’t think about innovation. We just want the damned services to work and you not to fleece us while at it. When things go wrong let us know. When our money is missing return it before we squeal. When we visit your branches or call, treat us like royalty.

You want to know what customers really want? Check here.

Damn it! Do you guys get it now? To hell with electronic and digital banking.
My bed has 3 wrong sides and just a good one, which incidentally is the side against the wall. I couldn’t get off from that good side this morning.

WhatsApp will eat MTN’s dinner

I visited WhatsApp, a close friend, last weekend and I saw him preparing for a large party but the interesting bit’s that he’s gonna serve MTN’s dinner to his other many friends.
Ok, that’s some unwitty joke but hey, I hope you caught the drift.
Some events over the last few months have shown me that the next 2 years may be quite scary for MTN and its colleagues. When you are making $2.6B profit a year, you may feel like part of the Greek gods just don’t forget Nokia and Blackberry.
International Calls Made Easy with WhatsApp
I get to do some travels once in a while. Roaming your phone can be a dog of an activity as it could be so expensive. Before you call me cheap, just imagine what N80 per SMS in Ethiopia means to someone who has never been a minister of petroleum. Rebtel has been a good companion over the years but sometimes the call quality can be very bad. At first I thought maybe because it’s VOIP but then calls to other countries were clear and never cut off. Apparently it seems our Telcos route their roaming calls through some Pentium PCs. You can’t be too sure of these things. My visit to some roaming-charge-friendly countries finally convinced me that our Telcos are rats.
Then WhatsApp call came along.
I didn’t know how good it was until when someone called me on it and I forgot that it was a WhatsApp call. It was clear and best of all free! Nowadays it has become my default calling mode whenever I hop on a metal bird out of the madness of Lasgidi
Local Calls Made Easy with WhatsApp
One of my annoying colleagues has an annoying habit of calling me annoyingly on WhatsApp. Until, wait, the calls are clear! I mean as bad as the Nigeria data network is, the calls are as clear as normal calls and best part, absolutely free!
The Hungry Future

  • What if the WhatsApp call catches on like Blackberry in Nigeria and everyone defaults to it?
  • What if WhatsApp creates a local gateway that allows termination of normal voice calls?
  • What if MTN’s voice income bottoms out?

Some Annoying Things about WhatsApp

Back to your desks, brethren!