Is Nigeria ready for digital banks?

Digital banks operate entirely online without physical branches, targeting tech-savvy customers. They face challenges in regulation, trust, customer support, transaction costs, and technology in Nigeria. However, with efficient execution, digital banks can revolutionize banking by offering simple, modern services.

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.
 

5 mistakes I made mentoring

Everyone needs a mentor, but being one isn’t always easy. I’ve made my fair share of mistakes along the way, and here are five that have taught me invaluable lessons.

There is no greater joy, for me, than helping others achieve their career potentials. I’ve few things that really make me happy; mentoring is right there at the top. Followed by beans cooked in red oil. And then èbà with èfó rirò.

Just like my mentees, the mentoring journey has taught me quite a number of interesting things which I think would be nice to share with others who may want to annoy their younger friends and colleagues in the name of mentoring.

The joy of coaching others doesn’t mean it comes easy to me and those I mentor.  In fact, I could be very exasperating while trying to help others: I’ve heard phrases like “Na by force?”, “Na fight?”, “E don do!”

I’ve made a gazillion mistakes helping others achieve their dreams but the following 5 stand out remarkably.

My aspiration is not yours
When I was younger I wanted to be everything – from piloting a plane, to going to the moon and every random career in between. I finally found myself studying engineering in the university, which I barely excelled at, and eventually ended up a banker.

Guess what? I wanted all my mentees to work in banks. I extolled how banking is a nice career, how you could move up and own half of Banana Island.
Utter rubbish!

Luckily, I learned quickly that as a mentor, my job is to help my mentees achieve or exceed their life’s goals and aspirations. Instead of shoehorning my own myopic career ideas into their already jaded brains, I started listening to them, discussing their ambitions and helping them move towards that.

Professional career is everything
I used to look down on people who wanted to do things that don’t fit into my narrow view of professional careers. How stupid I was!

Luckily nobody has been hurt yet as I never had the chance to force people talented in non-professional inclination into suits and ties. Imagine the damage I could have done to Usain Bolt if his mum was my cousin? He would probably be slaving his backside at some law firm now.

I’ve since understood that success comes in different flavors and at the beginning those who don’t want to be professionals may look different from me but it doesn’t mean they don’t know what they want to do.

Careers and family are zero sum
A colleague told a friend of mine that she thought I was cold to her because she wanted to get married. That wasn’t the reason but it showed how bad my view about family and career used to be.

To have an outstanding career, something has to give, but mine was on the extreme side.

It took a long time for me to come around to the fact that you can have a good family life and an outstanding career. It is going to be tough but tough things are what successful people do.

Competing with mentees
Sometimes I set goals for my mentees and I to achieve and most times I beat them hands down. It never had the right effect.

Mentees look up to me for strength not as competition and when they lose it had demoralizing effect on them.

I’ve since learned to coach, support, encourage and sometimes give a little kick to the back side but I would never again compete with my mentees. Next time I should take on competition of my own size.

Giving up easily
There is nothing as annoying as giving your time and effort to move a mentee ahead and he’s not measuring up: He’s taking time to slack off or doesn’t appreciate the effort. The natural thing for me was to think they weren’t serious or deserving of my time so I promptly bumped them off.

How wrong of me! Yes, it is still annoying, but I’ve since learned that Rome wasn’t built in a day. No kid growing up has ever stopped walking just because of occasional tumbles. So, I’ve learned to chill a bit and give as many second chances as I can muster. After all I used to be annoying too and others took second bets on me.

The upside to mistakes
Knowing nobody is perfect is the biggest step towards Nirvana and this has helped me more in life than anything else. Instead of killing myself from doing the wrong thing, I simply learned from it and moved on.

Making the same mistakes over and over again is a different story entirely – you may need a trip to Yaba Left to find out why your gear is stuck at 2. Like my old boss, Joshy, would say – mistakes are allowed, errors are unforgivable – whatever that means!

Finding good in a bad economy

Despite Nigeria’s current economic struggles, opportunities exist. Real estate is more affordable, export businesses can thrive, and the software and fintech sectors offer global potential. Investing now may yield future rewards.

It’s hard to see a silver lining in the awful economic cloud currently flogging Nigeria’s backside.
But as an unrepentant and obsessive optimist, I’m sure there would be something good to come of this. If history is anything to go by, quite a number people start their journeys to success when things go titsup.

Real Estate
Things are really cheap now, especially for my cousins abroad. In fact cost of houses are going down while dollars exchange rate is going in the other direction. So if you live outside Nigeria and you couldn’t afford to get your own place in Lagos or elsewhere previously, this is the time to do it.

Export
Some people have been doing export for a while but I think the time is ripe for Nigeria to go into export frenzy. We all know how to copy, let’s over copy and paste this!
Nigeria is full of abundance of everything except FX. For example, hide and skin from the north are processed for export to those making shoes and fancy bags. We have cashew, timber, shea butter, etc. It’s easy to get into the game.
Finding customers may be a bit tough so that’s a job you need to do. Quality is also an important factor, always supply what has been requested.

Software and FinTech
This is the big one. In the last 2 years, I have worked with incredibly smart people; some are colleagues while many are vendors. This bunch of smart guys are building fantastic software and services that can be used anywhere in the world.
While their Nigerian customers are finding it hard to pay because of the economy, they can easily sell their services to those outside the country. The quality of their web applications and mobile apps would compete favorably on the global scale considering that their cost would be lower.
In fact, if I ran a global organization I would have my software team in Lagos, as their cost would be lower while getting same or even better quality.

Buying companies for pennies
Investors know that cash flow, ROE and ROI are kings. The rest is semantics.
If you checked the NSE of recent you would have laughed your boxers off. Big names are trading for next to nothing. They don’t even qualify to be called penny stock anymore, we should call them free stock.
Now this appeals to long term or Nigerians in diaspora investors who would want to hang around for the long haul. Reality is that we would get out of this funk so the best time to position for the future is now.
While I’m very optimistic that Nigeria would get out of this funk, I also know that’s dependent on the country to think its way out of the mess. If it doesn’t start with Buhari and others, it could start with me and you.
Maybe I ain’t in the best position to say this; I took the easy way out.

Learning to learn

Learning keeps the brain active and enhances life quality. Despite its importance, many neglect it. Continuous learning is crucial for career growth and personal fulfillment. Knowledge is indeed power.

It’s well known that the brain is like a muscle – the more you learn the better you become. In fact studies have shown that being intellectually active correlates with longer and more fulfilling life. Learning stretches the brain more than anything else.
I would have thought that a lot of people know this but sometimes it amazes me why many think it’s cool to be ignorant.
Let me break this down.

Nobody’s born with all knowledge but learning to learn is, arguably, the most important skill in life. Any knowledge or skill you have this evening is probably going to end up obsolete tomorrow morning but as long as you continue to explore and you are curious, you probably going to end up fine. That is, if you don’t eat the fruit of good and evil knowledge; Adam didn’t heed that warning as he was just too curious.
How then should you handle a friend who asks you about things he could have checked out on the internet – I mean, Google doesn’t require subscriptions?
Why is it hard for older people and sometimes senior professional leaders to learn new things? Why do people think it’s beyond them to just pick up a book and read?
Why can’t we just go the extra mile to enhance our careers by learning new skills instead of blaming everyone for how long we have been stagnant?

Knowledge is power
If raw power is of any use, then grave diggers would be richer than Mark Zuckerberg but hey it doesn’t work that way. He had knowledge, used it to make us play Farmville on Facebook and now could provide enough dollars to crash the exchange rate to N100/$. I know he won’t do it though.
Your career and life could change dramatically with learning. You can be fortunate to learn some things easily (like tatafo) but the reality is that you have to read again and again and again to have life impacting knowledge.
This is a late evening rant – I wonder who stepped on my tail this morning!
 

5 things you don’t know about Nigerian ATMs

Just a few years ago, we practically begged people to use ATMs instead of queuing up at the banking counters, but that brought its own set of odd questions. Here are some answers to those random ATM inquiries that have been lingering in your mind.

Just a few years ago, we practically begged people to use ATMs instead of queuing up at the banking counters but at least that has changed. But then the change came with friends, family and other random people asking me random questions why they can’t brew a nice cup of coffee at the ATM.
Some of the oddities are explained here.

#1 Why doesn’t the ATM retract cash?
If you forget to take your cash abroad (places where the snow falls in January) the ATM simply takes it back and then reverses the amount. Sounds convenient and nifty for forgetful souls like me.

Why doesn’t it do that in Nigeria?

Well, it started that way until some dudes figured out that they could take out a bit of the cash and trick the ATM to withdraw everything back, crediting the full amount.

Warri no dey carry last!

#2 Why doesn’t the ATM accept cash?
I remember walking into a NatWest Bank when I was in school and feeling funky with myself, deposited some scraggy notes into the ATM instead of bothering with the dour looking cashier. It went smoothly and I got my credit almost immediately.

Some random banks tried it in Nigeria but the experiment reminded me of Icarus. Icarus thought he could fly, strapped on some wings and jumped. It was his last jump.

Cash accepting ATMs have to count the cash, scan the notes and determine the currency by staring at it. Unfortunately, the cash notes in Nigeria have been to more places than I could safely describe on the Internet without getting my HR to invite me for a serious conversation. NSFW!

The ATMs choked on the cash and the experiments went south. Simply put, we mangle our cash in Nigeria and no ATM made of man has been able to overcome that. A few banks are still struggling with these devices, but I know as long as we still roll up our notes, write things on them like jotters or stuff them inside sostén then cash accepting ATMs will never work.

#3 Why do I have to input my PIN for another transaction even when I haven’t removed my card?
There is something funny that happens in countries like Nigeria where you need lots of notes from the ATMs for even the simplest purchase. In the US, usually maximum withdrawal is $300 and nobody apart from Nigerians take that much cash.

Equivalent of that amount here is N84,000, that depends on who you ask though. Since ATM cannot just open its guts for you to point and select your cash, it can only push out at most 40 notes. So an average transaction in Nigeria needs multiple withdrawals.

What if you forget your card and it doesn’t require PIN for the next transactions? Actually that’s the way it was and suddenly forgetful people, who have taken their cash and gone, are separated from the rest of the money in their accounts by the next dude on the queue.

Their wailing and gnashing of teeth made banks to reconfigure the terminals. The wailing stopped but not the gnashing of teeth.

#4 Why does the ATM have blue background and yellow text by default?
The engineers who configured the first set of ATMs in Nigeria have no taste. Next!

Fortunately some banks have since seen the light and have gone on to do graphical interface designs. Nothing impressive at this time though. One of these days when I have less to do, I may wander around comparing screens.

#5 Who is the girl that talks on the ATM?
I don’t know her! I swear, she ain’t my cousin.

While she loves to say “Thank you for banking with us”, I know she’s saying exactly the same at other banks; she’s probably promiscuous and has no loyalty.

Nota Bene
You can ask me other random question on anything you want to know about ATMs and I will do my best to answer them. I’m not an expert so don’t scream blue murder if I try to pull the wool over your eyes.