Whatsapp banking is bad news

A few weeks ago, Access Bank, First Bank, UBA, and ABSA in South Africa came to the market to inform everyone they would be rolling out Whatsapp banking in a few weeks. The announcements came with so much fanfare I thought a new king of Africa was being announced.

Access Bank’s body dey catch. They launched their Whatsapp banking yesterday to consternation of the other banks who weren’t ready.

Did it resonate with me? Absolutely yes!

Whatsapp is so prevalent in Africa you could call it SMS of the not-so-poor people. A recent survey in South Africa showed that 100% of everyone who has a smartphone has Whatsapp installed even though the average person has just five apps installed. I assume, pretentiously, that the same metrics is valid for Nigeria. Correct me if I’m wrong.

Ask yourself (you have a smartphone if you are reading this, if you don’t then I owe you free lunch), when last did a friend send you an SMS?

Instead, SMS has been relegated to transaction messages from banks, updates from billers, telcos, and a few ATM spammers. If you got a personal message as an SMS, it’s probably from some of those losers who call themselves Apple fanbois; they don’t know that Whatsapp eats iMessage for dinner every day.

Whatsapp banking makes solid sense in different ways.

One, it’s not spamming. I don’t get a message from my bank unless I register for it in the first instance. Nigerian banks can spam for West Africa!

Two, it’s an interactive two-way street, or that’s the way Facebook envisions it as I am not so sure that Nigerian banks are ready to listen to the diatribes of we angry customers as we spew every day like a volcanic lava.

Three, it cannot be spoofed. Or let me put it this way, it cannot be hijacked easily. Even if your SIM is cloned, as long as you have internet, you continue to receive messages on your phone, and if you are smart enough to protect it with a PIN, even if your SIM gets hijacked by Evans the Kidnapper, your PIN would be required to get your messages to your phone.

Four, SMS is notoriously unsafe. It’s in the plain on Telco servers such that even the blindest of them all is reading your SMS messages and cramming your USSD banking PIN now.

So Whatsapp is absolutely fantastic.

Maybe not so fast.

If Whatsapp messaging catches on with the bankers, who will be sending Whatsapp messages for free, then the bulk SMS providers like Infobip, IP Integrated and Clickatell are in serious trouble. Rumor has it that they collectively send about 500 million messages a month between them. But then Clickatell may not cry like others. They are the API back-ends for the banks that have signified their intention to get to the market.

Of course, the telcos are in trouble as well but they at have an upside: increasing data usage. MTN’s data use grew about 68% since last year, and they recently ponied up N200B for data expansion some few weeks ago.

Smart lenders like Paylater, Kwikcash, and QuickCheck, who read your text messages (oh my, those salacious messages!!) to have an insight into your willingness to payback, will have an incredible nasty time scaling to Whatsapp as SMS boxes will dry up. But I guess, they can take care of themselves.

While bank customers clap, and the lenders and VAS providers bawl, armchair pundits, like me, can only speculate about the next bank on the Whatsapp banking rat race.

Three reasons why current accounts are for dinosaurs

When I started working as a new hire, one of the things shoved down my long throat was my salary account, which was a current account. I didn’t know my left from my right as the account was free to use so all the complaints of charges that customers were screaming about were like cold water pouring off the back of a randy drake.

I wasn’t alone; as having a current account is a right of passage for anyone starting work at structured (more formal) organizations. You go through finding references, and they dashed you a chequebook, with which you can always make withdrawals of the pittance you are paid.

But as banking evolved in Nigeria and everyone got on the electronic channels, things changed dramatically to a point where it is now a gross foolishness to keep your current account.

Going back to what bank account products were meant to be, current accounts, called checking account in the US, are designed to be used for the everyday transactions, allow you to give cheques to friends, billers, and loan sharks, to draw money from your accounts, etc. Because of this, the stringent requirements needed to have a current account include getting two other current account holders to provide references for you; a letter from your employer to show that you earn something, no matter how little. For these services, Nigerian banks charge commission on turnover (N5 per N1,000), which recently transformed itself into account maintenance charge (N1 per N1,000). Outside Nigeria, banks charge a flat monthly fee to run your current account which could be waived if you maintain a minimum amount.

Savings accounts, on the other hand, were designed for savings. You need minimal documentation for this (identification), and you earn interests on whatever amount you leave hanging around each month. However, if you withdraw from it too often, you don’t get to receive any interest.

Nigerian banks being alaseju, are very good at collecting their charges. In fairness to banks, these charges are fair, but because banks do a poor job of communicating with customers, the charges look spurious and annoying.

Throw in the trouble of getting two random uncles to be your reference, inability to put together all the documents the banks want, and the annoyance of seeing your money disappear month after month, Nigerians made a nice detour from current accounts. The numbers speak loudly: of the 111M accounts, 24M are current while 83M are savings account.

The savings account has been so bastardized but is now serendipitously solving the problems of everyday Nigeria. You don’t need to wonder while wandering to know that current accounts’ usefulness has gone with the winds. A regular savings account come with a card for ATM, POS and web transactions. Savings accounts are also strapped with mobile, internet and USSD banking, you can do interbank transfers, pay your bills and buy airtime.

So, what do you lose? You can’t give cheques, but nobody gives two flying horse legs about cheques anymore. In fact, the CBN itself has waged war against cheques up to a level that its use is restricted to those with antediluvian attitude and my friends who borrow money from consumer credit companies (you know yourselves!). You also can’t walk into LG and Samsung to take on new TVs hoping to pay small small. For that inconvenience, you are free from many charges including but not limited to 0.1% account maintenance fee, search fee, stamp duty fee of N50 for every deposit over N1,000.

So for all these pain of current accounts, only a masochist would enjoy having one. And the three reasons? Read from the top again :-).

A rant about the evolution of telephony in Nigeria

A long time ago, when chicken had teeth, the whole of Nigeria (not half of it, the whole!) had 400,000 lines for 80 million people. Of course, only the rich had these phones. Everyone went to the business center to make calls and do Yahoo faxes. Or you climb a tree and shout yourself hoarse if you want to talk to someone near.

Then NITEL, the government parastatal, decided to do analog mobile telephones. It cost three arms and ten legs. Only the thieves, the politicians, and cocaine pushers got them. The first time I held an analog Motorola Startac in my hand, I felt like God’s nephew. It was a status symbol for the successful Ibo traders (naught-nine-naught).

Then, the private Telcos brought in their technology. Notwithstanding, Multilink, Intercellular, Starcomms, and others felt telephone was for the rich boys. They cost N150,000 to get one. A few senior executives got these lines to call their girlfriends on the phone (that was before we started calling them side-chicks). The rest of Nigerians were left to shout at each other just to talk.

At this time, just before Abacha bit the apple or kicked the bucket, he handed over GSM licenses to everyone except my uncle. Both Celia Motophone and Mr. Adenuga setup 30,000-line exchanges. Apparently, the target wasn’t the common man. The phone services never saw the light of the day.

Sometimes just after my sister was cleaning the plates used for the 2001 New Year party, the President of the Federal Republic of Nigeria got upset, instructed the technocrat leading the NCC, the nation’s watchdog guarding the national electromagnetic asset, to auction some frequencies for $285M a pop. MTN and Econet Wireless raised Benjamins from everyone and got themselves some licenses. Hey, something is gonna happen?

In August 2001, MTN and Econet Wireless launched their brand new but mightily creaky networks. SIM cards were sold for N20,000 a pop, and you can call a few friends for N50 per minute. Again, only the rich could buy SIMs and phones. Wait, won’t these guys learn some lessons from history?

Luckily, guys at MTN and Econet leased some wisdom and crashed the cost of getting a new SIM. MTN did BOGOF (not what you think it is) and it was buddie buddie time at Econet. At this incredible time, everyone had a phone, but calling was still an unforgivable N50 per minute. Someone discovered flashing, and madness ensues.

Everyone had a phone, the poor people flash the rich to call them back, just like “collect call” in the US. If you don’t know what flashing means, ask your uncle. If you have any, ask your “uncle.”

The whole country begged, rolled on the ground, threatened, even sacrificed goats so that MTN and Econet could charge per second, but they said it was technically impossible; God didn’t like it; heaven will crash; blah; blah and damn blah. After a while, they lost all excuses but N50 per minute calls remained.

Somewhere on the horizon, sometimes in August 2003, a green bull galloped into the Nigerian China shop, and hell was let loose. Glo brought per second call billing and within a few days, MTN and Econet (they changed names more times than I have changed jobs) came out with per second billing as well.

Many Nigerians, including yours sincerely, swore for MTN and Econet (or was it Vmobile?).

For the first time, Nigerians found their voices, and since then, with calls getting cheaper by the day, nobody has had peace. Flashing died a withering slow and agonizing death. Even your Maiguards will call you and stay on the phone for 45 minutes at a time.

Now, it seems the end of the beginning has passed.

You see, the Internet has become so cheap and Whatsapp so pervasive that only psychopaths send SMS and nobody calls again. Everything is now done on Whatsapp. ARPU, the means by which finance guys in telecoms skewer themselves, have been steadily declining over the past five years.

17 years is a short time for what the country has done for telephony. I doff my hat. But will the same happen for power, payments, and financial inclusion?

Only Free Interbank Transfers Can Fix Financial Inclusion in Nigeria

Financial inclusion is a buzzword, but it’s also a real issue for third-world countries. Many things have been thrown at it, including the kitchen sink. As far as Nigeria is concerned, nothing seems to be working. Nevertheless, I believe that significantly reducing the cost of transactions, up to the point of free transfers, will break the exclusion barrier all through the invocation of the Network Effect.

The Network Effect, also known as Metcalf’s Law, says that the value of a network grows as the square of the number of its users increase. In simple English; when there are many people in a network, there is always someone you want to do aproko with.

Why am I so confident that this is possible? Well, I have the evolution of mobile telephony in Nigeria as a reliable basis.

Before MTN and Econet transformed mobile telephony in Nigeria, you would have imagined that we all used witchcraft to talk to ourselves. Apparently, we did! Or how would you describe 400K active lines for a nation of 126M disconnected souls?

However, what most people don’t know is that just before the GSM licenses were awarded, Nigeria had 6 GSM licenses issued by Obasanjo, and before then, 33 GSM licenses were given by the Dark Goggled General.

Many licenses and nobody was talking. The GSM providers felt telephones were for the middle-class and HNWI (High Net Worth Individuals, the fancy name for people who have hammered). Maybe that was true, but unfortunately, Nigeria never had many of the rich guys. The GSM providers failed spectacularly.

So, when MTN and Econet, the new kids of the block of 2001, started their operations, they came to the market with N20,000 SIM cards; only the middle-class and uber rich could get them. Apparently, some of them failed their networking classes and didn’t know about Metcalfe’s law. I’m happy there were remedial classes: MTN promptly introduced BOGOF and Econet brought Buddie to the masses. The market exploded; I finally got my SIM and phone, my friends got theirs, and we trade stories about girls. Nigeria was never the same again!

Just like telephony where you call those within your social and business circles to peddle rumors, close business deals, track errant staff, or check on your grandmother; transfer of money is also a social and business construct.

In the days when telephony was expensive and not for the poor, according to General David Mark, Nigerians thronged business centers to make local calls and cybercafes for international calls. For the trivial gist, they talk to their neighbors. Today, for the essential transactions such as transfers and bill payments that cost N50 a pop, they use their mobile apps and USSD codes. For small purchases of N10 to N1,000, they fish out dirty Naira notes from corners we can’t talk about to give their maiguards, bike men, Garri sellers, etc.

Why? Because it doesn’t make sense to use N50 to transfer N200.

My fancy friends in the e-trade argue about financial literacy, money stuffed in mattresses, etc. What they have not been able to explain to me is that even with poor literacy in Nigeria, how does everyone know how to use mobile phones: punch in airtime credit, dial numbers, and read digits of those calling them? Because when technology is demystified and pervasive, the knowledge becomes commonplace.

Ask yourself, when last did a new phone come with a manual even though it’s significantly more powerful than the dead-ass Motorola Talkabout of the early 2000s?

Back to cheap transfers, when the Central Bank of Nigeria crashed the cost of transfers from N100 to N50, the monthly transfers exploded from the measly 7M a month in 2016 to 58M in May 2018. The average transaction size dropped from N320K to N112K. In 2001, it cost N50 per minute to call; most people didn’t bother to call anyone. When the networks crashed the cost to Kobos per second, calls exploded.

Dropping interbank transfer to N5 for bank customers would do more magic than anyone could imagine. Not only that, making transfers of an amount less than N1,000 free means that the flow of money to the excluded would be free. When it is free to send money to my shoe shiner, he would learn how to receive it and also send it to others as well. After all, if he knows how to check his airtime balance, he will know how to check his wallet or account balance. And he would be able to send to his friends and his young wife in the village; all for free.

Bankers are scared because they think of the margins that would be wiped out. But, the addressable market is so huge, probably 100 times more, than what we have today. Instead of the 58M monthly transfers we are happy about, we could be talking about 5B transfers a month. Most of these would come from the N20 to N500 transfers that are small, trivial and extremely habit forming for even the least educated, as long as they have a phone and fingers to punch the keys.

Nigerian Banks of all shades, the CBN, international Development Finance Institutions (think WHO, DFID), Bill Gates, etc. have spent years and a lifetime trying to make Financial Inclusion work in Nigeria but the efforts haven’t yielded tangible fruits. Why not try making transactions cheaper? After all, nothing beats free.

I hate shopping online. But for a different reason

Just like every other man, shopping in store is the very worst punishment, just next after going to hell. In fact, it can be worse than going to hell if you must do that with a woman. Much worse if you have to do that with your daughter. It’s not hard to figure out: women love good things and must check them out; men want to save money so they need to get out of the store, ASAP!

Would you think shopping online should be a panacea? That would be correct as long as you ain’t a Nigerian. Shopping online in Nigeria is hard as it’s fraught with so many problems not limited to lack of trust (will they chop my money or will the items I ordered be the one that shows up?), delayed delivery (will my emergency items come after a year), or failed payments (damn, did I just get debited and it says transaction failed?).

But then, many times when the items are low risk, or I feel particularly adventurous, I still take the plunge to shop.

Searching for items to buy isn’t even that bad. Search for anything and Jumia or Konga probably have one. It’s when you want to shop that the wahala starts. You will need to create a user profile, add different addresses for delivery, etc. At these moments, I usually give up and say, darn it! Can’t be bothered.

Friction at the point of payment is a big problem for every ecommerce venture. Those who check their analytics know that the cliff is at this junction.

By the way, this isn’t a Nigerian problem but something that is plaguing merchants all over the world. However, with Amazon capturing about 44% of all ecommerce in the US in 2017, it means almost half of all shoppers have keyed in their details on Amazon once and for all and probably now have frictionless shopping. In fact, Amazon patented the 1-click shopping experience.

Different attempts have been made to simplify but this hasn’t helped anyone. So what could be done?

I have an idea but let’s come back to that later.

Years ago, every website needed to implement its own user credentials. This was painful for the websites and even much more arduous for the users. But at the same time, social media was growing like wild vines and even my mother’s grandmother was on it. Then Google and Facebook came up with social login which allows websites to authenticate users with their Google and Facebook ID. Of course, Twitter and LinkedIn did same, but it never had the type of traction that Google and Facebook had.

When your user base is over 2 billion, you are a planet to yourself. Darling, Let’s book a SpaceX ride to Planet Google (SpaceX doesn’t fly to Facebook anymore because of data breach asteroids).

What if a similar concept could be applied to shopping online? You would say that one could login to Jumia and Konga with your Google and Facebook ID but that only works for the authentication. The real pain is having to enter your addresses and card information over and over and over again.

Let’s think local for a moment. Imagine a service which Konga, Jumia, Gloo, Payporte, etc. could integrate but that allows shoppers to keep their profiles, addresses, cards, etc. so that once a customer registers once, the information is available for all ecommerce sites that support it. And supporting it could be as simple as one line of code for popular shopping engines such as Shopify, WordPress, Magento, etc.

It could be designed such that it doesn’t take away from the brand of the ecommerce company (they care about this a lot) but customers will have complete control on what is shared, who it is shared with and see the history of activities.

This would be a 1-click experience for hapless men like me.

Sitting comfortably in my armchair, I think this will significantly remove friction from shopping and should be very advantageous for smaller players who don’t have the clout of Jumia and Konga but unfortunately, experiences a steeper cliff than others.