Enhancing Financial Innovation & Access (EFInA), a financial sector development organisation that promotes financial inclusion in Nigeria made some research in 2016 and came up with very interesting stats.
Financial inclusion refers to access and use of financial services for everyone regardless of location, financial status or any disadvantage for that matter. Several organisations, including the government in Nigeria, are committed to promoting financial inclusion.
According to the EFInA research findings, adults who do not have or use deposit money banks, other formal or any informal financial services amount to 41.6% of the adult population in Nigeria as of 2016. These set of people borrow and remit money through family and friends and save their money at home. An additional 9.8% of this population is served informally through savings pools, esusu, moneylenders, recharge cards or transport services. How do we bring these people into the fold and ensure access to financial services for all?
It is agreed that innovation and financial education are major drivers in improving access to financial services in Nigeria. We have curated six specific ways that would facilitate this in Nigeria.
USSD is penetrating several spheres of the financial industry. There is no big mystery as to why. It is accessible technology. Everyone who has a mobile, regardless of type, can access a USSD menu and complete transactions. USSD is not the only universal mobile channel. Interactive Voice Response (IVR) allows humans to communicate with a computer via their dial pad. IVR can be employed to provide financial services to illiterate persons in rural areas. This is particularly efficient because it can be used to break the language barrier. The voice prompts can be made in Hausa, Ijaw, Yoruba and any other language that is spoken in any locality.
HollaTags already helps businesses in the financial sector use mobile technology such as USSD, IVR, SMS and Carrier billing to solve the challenge of easing access to financial services.
According to the EFInA research, North West Nigeria has the highest percentage of financially excluded adults in Nigeria at 70%. The reason for this is not far fetched. Ignorance of financial services is a big culprit. While financial institutions, in a bid to penetrate, provide education, it is important that such education be brand, institution or product neutral.
Building trust is important if you want people to change norms. People should not see financial services as a ploy to make money for the providers and deprive them of their hard earned money. They should be made to see the demerit and merits of using financial services generally and not one provided by a particular institution. To achieve neutral education, the government and non-profit organisations are key players.
It is important to remove human agents or reduce their control over financial service processes as much as possible. Mobile money has become quite the rave in this bid to promote access to financial services for everyone. There are a good number of mobile money products in Nigeria seeking to open up the financial services market to more people. It is however important that the process is simplified and made in such a way that agents are not needed to set up accounts. The reason for this is that human agents are prone to misconduct and it would not be unusual to hear that some request unauthorized charges or act in ways that discourage people from using financial services.
A lot of bank customers complain about hidden charges and unexplained deductions from their balance. Distrust of the system is a direct result of such issues. In trying to encourage financial inclusion, charges should be clearly stated and substantially reduced to motivate the financially excluded to become included.
The easiest way to understand a set of people is to interact with them. It will not do to sit in Lagos and develop financial products intended for an audience in a remote Osun village. Field research to understand the unique needs and pain points of the people in these remote villages will make it easier to develop viable products. Study existing models such as esusu and ajo that has already gained acceptance in these communities.
No one wants to deal with persons they don’t trust with their money unless they are really desperate. Corporate Social Responsibility (CSR) activities can help financial institutions build trust in remote communities and rural areas. Non-profit organisations can also help build trust in financial services by using these services to deliver their donations to the community and fostering activities that promote financial inclusion.
Another way to make sure trust is built is to make complaint processes easy and trustworthy. Mobile money, microfinance and other financial inclusion agents should make the complaint process safe for the customer. It is not unusual for illiterate customers to believe that their complaints may bring them negative consequences. They need to be reassured that this is not the case and they can complain safely.
In conclusion, the success of financial inclusion depends on quality financial education, financial products that truly add value, efficient infrastructures, enabling policies and innovative methods such as the use of mobile to create ease, reduce cost and widen reach.
HollaTags provides expert 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 access to financial services for all.