FOR Nigeria to attain its set objectives towards enhancing financial inclusion in the country by 2015 and 2020, the nation’s financial institutions may need to review their Know Your Customer (KYC) criteria and embrace ‘agent banking’.
The financial inclusion strategy was scripted by the Central Bank of Nigeria (CBN) to reduce the percentage of adult Nigerians excluded from financial services from 46.3 percent as at 2010 to 20 percent by 2020, to enable more Nigerians have access to financial services, engage in economic activities and contribute to the development of the country.
Also, agent banking refers to the delivery of financial services outside conventional bank branches. It entails the use of non-bank retail outlets that rely on technologies such as point-of-sale (POS) terminals, mobile phones, amongst others.
Experts at Roland Berger, one of the appointed consultants by the CBN for its financial inclusion strategy, noted that, for many Nigerians to be financially included, there may be a need to review requirements for account opening, especially for retail banking customers in rural and periphery areas.
Besides, the experts added that the use of retail agents through ‘agent banking’, a new innovation in which retailers serve as intermediaries between banks and customers, if employed as it is presently done in some developing African countries would aid financial inclusion drive and objectives.
Speaking at a seminar titled: “Bolts and nuts of the Financial Inclusion Strategy of CBN”, Roland Berger consultants, Ochuwa Akhigbe-Ogionwo and Clifford Ondara, explained that insights into the financial inclusion strategy show that Nigeria may need to embrace innovative strategies to drive its financial inclusion objectives.
According to them, key challenges with infrastructure, especially on the part of telecommunications service providers and banks’ software, identification exercise in banks’ KYC exercises, financial literacy and affordability of banks’ products should be addressed to make the inclusion drive achievable.
Report presented by the experts show that, despite being the most populous African nation and having the second largest economy, Nigeria is still a mid-level player in the sub-Saharan banking sector and lags behind some of its peers in Africa with respect to Financial Inclusion.
Explaining the need for the financial inclusion, the experts citing the Central Bank of Nigeria, said: “financial Inclusion is achieved when adults have easy access to a broad range of financial products designed according to their needs and provided at affordable costs. These products include payments, savings, credit, insurance and pensions.”
“The CBN believes that increasing financial inclusion will support its key mandate of conducting monetary policy and ensuring price stability. A 2010 study on Access to Financial Services in Nigeria identifies five major barriers to Financial Inclusion: income, physical access, financial literacy, affordability and eligibility”, they added.
The experts however noted that financial institutions should harness the opportunities created by the Telecommunications service providers through electronic payment platforms as the recent growth of mobile money has allowed millions of people who are otherwise excluded from the formal financial system to perform financial transactions relatively cheaply, securely, and reliably.
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