Tag: CBN

Crashing the Cost of Banking: The Bitter Sweet Experience

The Central Bank (of Nigeria, if you really want to know) has been at the fore-front of financial inclusion, and oh, at the forefront of cashless economy.

Obviously they decided to mash the two together.

Kudos can be given to CBN for forcefully yanking our sorry backside from comfortable banking to make things really cashless. Considering that government and regulators are not known for speed or innovation, this is extremely commendable.

So, the CBN started the cashless thingy, did a million road shows and I guess the people we hardly see, the real banking customers, complained about the cost of everything. CBN came back and said, “From December 17, 2012, thou shalt not demand for N100 when your customers use other banks ATMs again!”

What?

You see, the N100 from ATM is almost synonymous with N20 collected by Askaris. You can’t dodge it. But then it cost money, I mean real money – mostly in Benjamins, to make the ATMs and other e-things work. Nothing goes for nothing.

The NCC came around and said, “From February 2013, thou shalt not collect more than N4 from SMS sent within Nigeria.” That is going to hit the pretty backside of SMS alerts. That itself is a story for another day.

Well, the CBN is not done yet – there wouldn’t be any minimum balance any minimum balance anymore. By this time, bankers are looking around bewildered.

Ok, so where do this all lead to? Simple English: Financial Inclusion.
The reality is, the cost of banking could be a barrier to quite a number of customers. Better put, most customers. Take the annoyances – COT, minimum opening balance, minimum balance, ATM fees, transfer fees, bla bla. Customers simply run for the gates. By crashing the fees, CBN is making sure no one has a real excuse for not having an account.

I can see this game evolving over time – I expect that CBN might banish some other fees, put a max on interest that can be charged on loans, a minimum percentage that must be lent to SME (wait, what happened to that 10% of PBT to be invested in SMEs?). Some even think the days of COT are numbered.

The take from everyone is this – in the short term, there would be a dip in revenue but with rapidly growing number of customers flocking to the banks and e-channels, the revenue and potentials will pick-up. This happened in telecoms, I hope and sincerely pray it happens in banking.

Lagos Cashless Initiative; Strapped to a Whimpering Rocket

The Cashless Initiative should rocket the economy of Nigeria to greater heights.

That was the plan.

Picture the Nigerian economy precariously strapped to the back of a badass rocket standing ramrod straight in the sweltering sun. Yes, the sun in Lagos is something else.

Then the CBN Governor steps forward gallantly to light the rocket with a lighted match (or is it cigarette lighter – now isn’t that dangerous?) expecting a loud boom, a shudder then after the smoke clears the rocket has taken us to nirvana. Ok. That didn’t happen. The rocket whimpered, rose a bit and crashed back with a thud, a thousand pieces of pewter Naira coins scattered in all directions; a lorry load of disappointment plastered on its metal face. Now Sanusi would know how ladies tied to one minute men feel. Utter dejection in the face of needed performance of a life-time.

Allegory aside, everyone knows that cashless initiative is going to be driven largely by POS (not what you think it is – it is Point of sales terminal). POS needs connectivity. Connectivity is only possible with mobile data. That is standard in Nigeria. Anyone who talks of wired broadband for something like POS should be strapped to a gurney at Aro.

That brings us to state of mobile data in Nigeria. This is a market that is practically begging to be exploited and yet the Telcos are not better than POS (the other one). Heard that NIBSS got into bed with MTN and Glo for POS connectivity but all I have gotten are screams of anger by frustrated card holders because POS don’t work well with POS (other one one) connectivity.

Truth is either the Telcos are greedy, myopic or both. A greedy Telco is smart, at least driven by greed to make profit. A myopic Telco could be saved if the CEO could run down to the optician around the corner. But a greedy myopic Telco is an abomination. Heard that there are over 2.5 million Blackberry ping away in Nigeria yet each of them sends at least 10 swear words to their mobile provider each day. Imagine the millions of debit and prepaid cards in Nigeria swiping away and yet the POS wouldn’t work.

What can be done? Maybe the Banks or the POS providers should come together to have a jaw-jaw with NCC (the folks that hand out telecom licenses) to create a company dedicated to providing mobile/wireless connectivity for financial terminals (think ATMs and POS – the real POS not the other one). The company wouldn’t run voice or be commercial and we can free ourselves from the one-minute rockets. At least that is what banks did to create NIBSS, ValuCard and InterSwitch.

Bankers can be quite resourceful when money is to be made.
2 months later, Sanusi is back again. Walks gingerly to the rocket and presses a button after counting down. The rocket let out wailing scream and it lunches Nigeria into the stratosphere of cashless society.