Agency Banking through Mobile is the way to Financial Inclusion in Nigeria

Financial inclusion is a phrase that is commonly thrown around in the financial sector. It has also found its way to tech and is a priority for most of the fintech startups and innovators in the last years both in Nigeria and beyond. Financial inclusion attempts to solve the problems that exclude people from partaking in the financial sector.

A World Bank report estimates about 2 billion adults in the world who don’t have a basic bank account. The report estimates 40 million Nigerian adults. While stakeholders agree that financial inclusion is key to the eradication of poverty and stabilizing economy, achieving the dream of financial inclusion for all has been a rather slow journey. This is not surprising considering that the majority of the unbanked population cannot afford regular banking services. The irony of this situation is obvious. Poverty is to be blamed for the unbanked population. The unbanked population need to be banked for the poverty to be eradicated. One of the reasons for financial inclusion is that the micro-economy in Nigeria is still largely in need of exploration and growth.

Payment solutions erupt by the day in Nigeria and what was once a desolate field now has several players. It is not surprising therefore that we have several mobile money solutions and other fintech services trying to bring banking services to people in rural areas (where the majority of the unbanked population in Nigeria are) through agency banking.

Sure, agency banking products like mobile money have grown in Nigeria, allowing banks penetrate places where they cannot open branches due to lack of infrastructure or because it is not likely to generate an adequate return on investment. Yet, the journey to financial inclusion has been rather slow.

Some of the reasons banks have jumped on the idea of agency banking include:

• Agency banking will help banks expand their customer base. In many instances for banks, it is a game of numbers and agency banking can help achieve this.
• Agency banking allows banks to push the cost of providing banking services to the agents. They do not have to open branches or directly cater to all their customers.
• The process of banking becomes simpler through the agent. Bottlenecks are removed to encourage more people to come on board.
• Agency banking will help achieve a cashless economy or at least improve the culture.
• The banks save on marketing as this is pushed to the agent in areas where the agent is granted a license to operate and represent the bank.

It is interesting that while a lot of adult Nigerians do not own a bank account, a large percentage of these unbanked persons own mobile phones and by extension sim cards. It is not uncommon to see even homeless beggars on the street who carry mobile phones and of course recharge them. It is no surprise, therefore, those mobile phones have served as bank “e-branches” for several banking products that seek to penetrate rural areas and unbanked adults to acquire new customers. Mobile money is a well-discussed phrase in telecommunication, fintech and banking circles.

The mobile is a device with so much potential in shaping a digital world that solves its own problems. One of such problems that tapping the potential of mobile can solve is Financial Inclusion. At HollaTags our expertise covers the development of messaging portals and APIs for communication on mobile via VOICE, SMS, USSD and Mobile Value Added Services. We also help with acquiring shortcodes for mobile Value Added services and integrating these services with mobile network carriers. We are in a position to help organizations in Nigeria looking to build mobile solutions for financial products. Together we can achieve financial inclusion in Nigeria using mobile.

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