How Microfinance Banks in Nigeria Can Scale With USSD

According to the information shared on the Nigerian Communications Commission website, there were 161, 425,760 active GSM telephone subscribers in the month of July 2018. This means we have more active mobile subscriptions than the 140 million Nigerians alive according to the 2006 National Population Census Population figures. This shows that the larger number of adult Nigerians have access to mobile telephony.

Therefore, it is not surprising that businesses want to make their services available on mobile and connect to their audience. Apart from the fact that there are several active mobile lines in Nigeria, people actually carry them about and these mobiles are connected to every sphere of the owner’s life. It connects them to family, business, religion and so on. In rural areas where there is no access to internet services or the people there cannot afford internet enabled phones, USSD has become the choice digital channel through which businesses interact with their customers.

The *Code# feature enabled on all mobile devices that allow users to connect and interact with a business application over the GSM network makes life easier and perfectly complements mobile apps and websites in digitizing transactions.

One sector that has rapidly adopted this USSD trend is the banking sector, with most commercial banks in Nigeria rolling out their USSD code and running massive advertising campaigns. Some microfinance banks have also joined the USSD rush too, but those are a minor fraction of the existing microfinance banks in Nigeria. This is a surprise, as they are supposedly the grassroots bank who should be more accessible to the ordinary person on the street- the market woman, the illiterate cobbler, the man in the village where internet is only available on the top of trees.

After all, microfinance refers to a set of financial services like loans, savings and insurance made available to poor entrepreneurs and small businesses who would ordinarily not have access to standard commercial bank services.

SCENARIO

This is an illustration of how microfinance banks in Nigeria can scale with USSD.

Alli Ibrahim is the managing director of a Microfinance bank based in Delta state of Nigeria, with branches all over Southern Nigeria, including one in Lagos. The bank had about ten thousand customers. However, in recent times, this number started decreasing rapidly. Profits started to dip too.

He has heard that this is happening because their customers are switching to a bank that has more branches and is easily accessible to the customer. Customers particularly complain that they have to travel to the bank’s branch to do simple things like checking their balance. The business cannot afford to open more branches and employ more people. He needs a more practical solution.

Challenge

The challenge here is how the microfinance bank can reach and serve more customers, anywhere they are, without employing the more capital intensive method of employing more staff. One member of Alli Ibrahim’s staff has recommended that they build mobile applications available on iOS and Android. This will only cater to a minor percentage of their clients and they need a solution with broader coverage.

The HollaTags Solution

The simple solution to Alli Ibrahim’s challenge is to use USSD. It will be available on all mobile networks and accessible on all devices.  Customers can be given the opportunity to check balance, request loans, check transaction history, pay loans and so on. All of these and more can be made possible by HollaTags.

Our expertise covers the development of messaging portals and APIs for communication on mobile via VOICE, SMS, USSD and Mobile Value Added Services. As a licensed NCC Value Added Services operator, we also help with acquisition of short codes and provide connection to all the major telcos in Nigeria, making sure that your USSD code is available to all mobile users.

Is your microfinance bank (or other business) looking to launch a USSD channel for your users, or improve your existing system? Contact us at HollaTags, for USSD, SMS, IVR, Carrier Billing or any other mobile solution you are looking to implement for your business.