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| It's
Card War in Nigeria |
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| Nigerian
banks are indeed in very fierce competition spurred by the shift to
building a cashless economy. Card, this four-letter word, seems to
be driving this competition and it is growing by the day. ROMMY IMAH
examines this trend in this report… |
Never
in the history of banking in Nigeria has transactions been this
exciting. Innovative and exciting developments have continued to
unfold in Nigeria's banking environment since the Soludo inspired
banking consolidation a couple of years ago. But of all these innovations,
the paradigm shift to Card as a payment system, is to say the least,
the most exciting.
Because people travel far and wide
these days, new things are learnt and the desire to have them work
in this part of the world cannot be ruled out. This therefore, appears
to be the reason why the average Nigerian bank customer is daily
getting sophisticated and as such, demands from the banks, services
that are obtainable in developed economies of the world. The banks
on the other hand, appear to be mindful of this development as their
survival depends on the satisfaction of the customer.
Towards this end, virtually all the
24 consolidated banks in Nigeria have all deployed various types
of card payment systems to ease banking transactions for their customers
thus gradually moving the country towards a card culture, which
has taken a global phenomenon. But it is not as if this business
model was introduced in Nigeria just yesterday.
The card payment system in Nigeria's
banking industry is believed to have passed through some phases.
In the late 80s and the mid 90s for example, the proprietary ATM
Card and the Electronic Purse Payment systems were introduced. However,
it was not until the coming together of banks through ValuCard Nigeria
for the establishment of a Smartcard based electronic purse known
as ValuCard that the card payment system became popular in the country.
Today, in addition to ValuCard, there
are several other card schemes that have been introduced by Nigerian
banks mostly multi-issuer and acquirer card schemes. Today too,
there is the Nigerian debit card otherwise known as the ATM Card. |
All
of these have to a greater extent boosted the retail banking business
among Nigerian banks.
Competition among banks and other ebusiness agencies in Nigeria
like Interswitch, eTranzact, ValuCard and MasterCard, is getting
stiffer by the day. In fact, the growth of the debit card scheme
for instance, has been quite phenomenal considering the fact that
from less than 50, 000 transactions in Interswitch's first month
of operation, about 17 million transactions per month is now being
recorded within three years.
Analysts insist that the revolution
going on now in the banking industry can only be compared to what
is happening in Nigeria's telecom sector. “The future of banking
industry in Nigeria shall be that in which the card will be the
key to the relationship between bank and customer, offering more
financial options and more features than we can imagine today. Most
banks in Nigeria have realized this and are investing quite substantial
sum in the business”, according to Akinsola Akinfemiwa, managing
director of Skye Bank Plc.
Little wonder the Nigerian banking
environment is today filled with cards of various categories all
aimed at making the business of banking more convenient for the
bank customer. Today, most Nigerian bank customers hardly visit
the bank for physical transactions as many of them now carry out
their transactions online with the cards playing prominent roles.
Under Skyebank's SkyeCard initiative,
which constitutes of suites of electronic banking cards designed
to meet the needs of the bank's various customers, there are cards
like the SkyeCard Debit, the SkyeCard Credit, CashCard, CampusCard
and TeensCard. There is also the Skye ValuCard and Skye Vpay.
Whereas for Oceanic Bank Plc, there is the Debit and the Credit
Card services, Guaranty Trust Bank (GTB) has the CashPlus Card,
the GTB V-Pay and the GTBank MasterCard.
For Access Bank, it is a case of multiple
cards, one access. The bank is playing in the highly competitive
Nigerian banking market with three different cards namely, Access
mpower (Credit Card), the Debit Card as well as the V-Pay.
Zenith Bank is in the market with all
manner of cards including the Zenith ChargeCard (its MasterCard
version), the Debit Cards that include the easycard, the eTranzact
card and the Vpay Card, the Gift Card and the WebSurfer Card. Also
in its card basket are other card services like the Nigeria Immigration
Service (NIS) card, the Federal Capital Territory Authority (FCTA)
Card, the Silverbird Card, and the Zenon Diesel Direct.
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Spring Bank, there is the Virtual Money Card that makes use of global
ATMs worldwide and the Internet. It is also an electronic purse denominated
in Dollars. There is also the Interswitch Debi Card.Interswitch Debit
Card, which provides an alternative payment method to cash when making
purchases. FirstInland Bank is playing in the market with its Black
Card, a multifaceted card solution that allows cash withdrawals from
any ATM machine and can also be used on Point of Sale Terminals (POS).
With this, a customer can conveniently transfer money to any other
Black Card holder or Flash-me-Cash account. |
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Under
Intercontinental Bank's Intercontinental Direct, there is a
basketful of cards including the Pre-paid MasterCard, ValuCard,
Instant Cash (Interswitch Card) and the V-pay.In fact,its PIN-protected
prepaid re-loadable payment card (the first of its kind) was
designed to encourage |
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existing
customers and even prospective ones that cannot meet up with requirements
for traditional credit cards. For other banks like UBA, Unity Bank
Plc; First Bank, Bank PHB, EcoBank, Sterling Bank, Guaranty Trust
Bank and Union Bank, each has one card or the other in the very vibrant
Nigerian banking market. In fact, some of the banks have created Card
Services Department as separate unit in their e-business sections.
Interestingly, Nigeria is gradually becoming a cashless economy. Besides,
with the massive deployment of cards, banks now enjoy increased reach,
multi-application availability, increment in bottom-line figures,
low.
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| Let
banks show presence in rural areas |
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Head,
Electronic/Rutail Banking of Bank PHB, Usoro Anthony Usoro tells
IFEANYI OSUEKE and SOLA OGUNSANLU about the bank's retail banking
services and the state of the industry in Nigeria… |
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So
what are some of the e-banking services that you provide?
We have quite a number of products, from our Internet banking to
mobile banking, to our debit, ATM to our Point of Sale Terminal
and the edu-portal solution, which is targeted at schools. We also
have salary administration solutions that have large corporate and
government to manage their bureau and process of paying salaries
to their workers.
We have huge gamut of products; what
we basically tried to do is to look for customers' needs and look
for products that will satisfy that need in carrying out their banking
transaction.
For Internet banking precisely, you can do fund transfer, track
your transactions and so many other things. Another product is our
transaction education service, where you get real time education
for all the transactions in your account by either SMS or e-mail.
How do you deploy your ATM machines? |
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We
tried to restrict our business to banking. We have vendors who
are responsible for acquisitions, services and deployment. What
we do is vendor management, managing the vendors who deploy
the machines. However, we have a small team that would carry
out basic first and second level supports but beyond that, the
vendors take over. On the issue of security that you mentioned,
this cannot be guaranteed but it can be enhanced.
ATM is currently using magnetic strip and magnetic strip is
by the pin.What that means is that you would not just go and
swipe on the |
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Point
of Sale Terminal or ATM and get value; you need the pin and personal
identification number known to the customer alone. That is one level
of security, there are other levels especially to guide against
cases of repudiation where a customer carried out a transaction
only to come back and tell you that it was not his transaction.
What about
the issue of going to ATM machine only to discover that there is
no money?
We have been able to manage the cash level on our machine by doing
cash forecast. We evaluate based on time and trend pattern, the
kind of transaction that happens in a particular place and we are
able to stuff up to guide against stocking out of cash. But in a
worst case scenario and it rarely happens, where cash in an ATM
is completely exhausted there are always other ATMs within the proximity
that you can look up to.
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How
does people in the villages benefit from the use of ATM is
an expensive business; every businessman naturally would want
go from the area of high concentration. So we are taking it
from top and we are getting it down; like the telcos; they
started from the urban and moved to the rural as they go along
and that is what we are doing. Our deployment plan is such
that we would cover every part of this country.
Do
you have any relationship with ATMC and Interswitch?
We are members of both ATMC and Interswitch and what it means
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that
our cardholder can use any Interswitch network and any ATM machine
that has been deployed by ATMC. Remember that when you compare the
number of owners of bank account, which is a step to being able
to use ATM card, to number of telecom users, you discover that few
Nigerians actually own bank account. That is why the banks are becoming
aggressive on retail banking; we are trying as much as possible
to bank as many individuals as possible. But it is a bit easy for
the telecommunication companies to have more customers because the
process of acquiring a bank customer and a telco customer is a bit
different.
You can buy a Sim card on the road
but because we have to go through basic KYC (know your customer)
process, it is a bit slower and meticulous. Yes we realize that
there is gap; I think the telcols are talking about 40 million customers,
that is a wide margin but we are getting there. |
Do
you think that Nigeria is actually ready for this kind of
banking model?
I think Nigeria is really ripe for it and it shows in the
number of people that have embraced it. If you look at 3 to
4 years ago, the number of transactions that was recorded
was very minimal. Almost everybody today that has an account
uses ATM card and they use it massively.
About challenges, I think we
have gone past the initial teething stage; the problem then
was network and that has improved greatly. The recent challenge,
which to a large extent we have also addressed, is the issue
of power. Anybody deploying ATM today must think about alternative
power source because when there is no power supply, there
is a problem because you would not put a generating set there.
A lot of banks are now thinking
of the inverter. I think if power has been |
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steadier
it would help the process of deploying the machine without securing
the additional cost of providing alternative power supply for it.
Can you
throw more light on edu-banking?
Educational portal is a solution targeted at tertiary institutions
that allow the student and the school to fully automate the process
of administration, right from the registration of students to the
process of payment and even the release of result. The bank works
with the school. It affords the students the opportunity to go online,
register for their courses and with the debit card; they can pay
their fee without physically going to the school or going to the
offices to queue. |
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Do
you think the government can do anything to enhance the practice
of e-banking?
I think the government can borrow from what the South Africa
government did. They mandated that every bank should have a
presence in every community and that is why today if you go
to South Africa, almost every small community has some level
of bank presence. So, one is legislation but one huge obstacle
especially for those who want to have bank account is the fact
that they have to meet the KYC (know your customer) obligation. |
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The
e- banking run on software, do you subscribe to foreign or local
brand of software?
It is a combination of local and foreign brands depending on what
you are looking at. If it is the software that drags the ATM, they
are mostly got from abroad. Same thing applies to your card management
system. But for simple things like software that drags the mobile
banking, you can simply get that from good local company that develops
software.
Would
you say Bank PHB has a reasonable size of the e-banking market?
For e-banking, what we tried to do is to ensure that at least two
or three products that have been sold to that customer are actively
used. A Customer of e-banking should have a debit card, he should
gather his Internet banking or mobile banking and to that extent,
I think that we are doing pretty well. |
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