By Prince Osuagwu

In December 2018, the Central Bank of Nigeria, CBN, announced its plans to launch a national Microfinance Bank, MFB in collaboration with the Bankers’ Committee and the 774 local Nigerian Postal Services offices.

Governor, Central Bank of Nigeria (CBN), Mr Godwin Emefiele

The presence of new countrywide MFB and recent mergers between existing banks are steadily increasing competition for Nigerian MFBs.

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To continue growing in their markets, MFBs are implementing new technology to deliver their services to more individuals in remote, hard-to-reach communities through agency banking and delivery channels.

As part of CBN’s national strategy to reach 80per cent financial inclusion by 2020, the Shared Agent Network Expansion Facility, SANEF, is setting out to improve access to financial services by increasing the number of access points from 50,000 to 500,000. The introduction of an agent network and alternative delivery channels will enable microfinance banks across Nigeria to deliver financial services to more individuals in Nigeria more effectively and efficiently.

To quickly rollout delivery channels and build a network of agents, MFBs are looking to implement flexible cloud-based core banking systems that will enable them to integrate their core business operations with delivery channels and agents.

Delivery channels offer a way for financial institutions to deliver services to their clients. A delivery channel can be through an institution’s branches, through clients’ mobile phones, ATMs, Internet or online portals, call or contact centres etc.

Through agency banking, financial institutions provide financial services to clients through partnerships with other businesses which serve as transaction centres, called agents. These agents, collectively known as agency banking, allow financial institutions’ clients to access the institution’s products and services seamlessly and securely, via third-party providers.

MFBs are leading innovation in Nigeria’s financial services sector by tapping into cloud-based technology, rather than on-premise IT systems that include investment in heavy servers and data centres. Through cloud-based technology, MFBs can integrate their core banking system with delivery channels and agents through an open Application Programming Interface, API, a technical intermediary that enables two applications or software programs to communicate and function as one. This enables MFBs to be more competitive in their markets and build their client base.

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In addition to streamlined integration, cloud-based core banking systems are enabling MFBs to digitise their operations, become more efficient and make informed decisions with real-time data and real-time reporting, consolidated from all their branches.

Making it easy for them is Oradian, the financial inclusion company delivering core banking system through a Software-as-a-Service, SaaS, model in Nigeria.

Oradian makes leading technology become affordable and accessible for not only commercial banks but also the microfinance banks. With a SaaS model, MFBs in Nigeria are accessing global best practice through an affordable annual subscription or ‘pay-as-you-go’ payment model. Rather than making heavy upfront capital investments on on-premise hardware and purchasing software, financial institutions pay an annual subscription to access the software that they need.

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