By Jonah Nwokpoku
A preliminary research report from an ongoing study on Digital Financial Services, DFS, in Nigeria being undertaken by the Lagos Business School’s Sustainable DFS project has revealed that adoption of DFS in Nigeria remains critically low among the under-banked and the unbanked population.
Presenting the research feedback report during a Business Leaders Dialogue meeting held at Lagos Business School last week, a member of theresearch team, Mr. Ikechukwu Kelikume said the research identified the inhibitors of reaching the under-baked and the unbanked to include: Lack of awareness, unemployment, complexity of financial products and services, access to finance and the proximity to financial service providers.
He also noted that the research also showed that cost of financial services such as bank charges constitute a sigbnificanthindrance to financial inclusion, adding that the unbanked and the under-banked have zero utility adoption of digital financial services.
Explaining the demographics captured in the research process, Kelikume said that the research showed that most of the under-banked and unbanked population are found in the South West, North Central and North West geopolitical zones of Nigeria. The research showed the demographics as mostly female, both employed and unemployed, married and above 35 years of age. The group also had primary and secondary education and all live within the rural areas.
The research feedback which focused on the research analysis of the Nigerian customer, also noted that adoption of mobile money, a very relevant tool in driving financial inclusion and digital financial services, has remained very low despite Nigeria boasting the highest number of mobile money operators in Africa.
This is as the research showed that Nigeria still maintains the smallest number of active mobile money accounts compared to other countries in the continent with significantly marginal mobile money operators.
The research showed countries in emerging markets, such as Bangladesh, Pakistan, Kenya, Tanzania, Rwanda, Cameroon, Zimbabwe Democratic Republic of Congo and Philippines beating Nigeria in active mobile money accounts despite having fewer mobile money operators.
The research therefore recommended targeted awareness campaign focusing on gender, youths and on separate regions of the country, as an antidote to the apathy in digital financial services adoption in the country. It also recommended creating products that are mobile ready, SMS capable with multilingual capabilities, including affordable and low value transactions.
It also noted that DFS operators require proper business models to harness the immense opportunities in the digital financial space. Earlier in a presentation, Executive Director and Co-Founder, Digital Frontiers Institute, Dr. Ignacio Mas while speaking on the global view point of DFS, said digital financial service solutions are still lacking the required traction because they are only useful if there is scale. But to achieve scale, he said, they need to be interoperable and relevant.
According to him, a DFS solution like mobile money should be seen as a money management tool to be deployed in helping people manage their money in order to make payments consistently, instead of serving simply as a channel for intermittent transactions.
Deliberating on the supplier view of the customer, Dr. Olayinka David-West who is the Academic Director and Project Lead, Lagos Business School said banks need to adjust their business models to accommodate trends that will lead to growth in the DFS space.
Participants at the Business Leaders Dialogue session who included operators in the financial services sectors and mobile money operators advocated collaboration among players, leveraging economies of scale by reducing cost of transactions to drive increase in volume of transactions and the need to standardise transaction tools, to boost DFS adoption in the country.