The Diamond Y'ello Account (DYA) offers Diamond Bank’s customers a safe and easy means of opening and operating accounts from the convenience of their MTN Mobile phones, without the hassles of tedious documentation requirements (all registered MTN customers are automatically eligible) or the difficulty of finding or getting to bank branches, as the product is easily accessible through the bank’s network of Agents.
CBN is not committed to financial inclusion
Recently, a national newspaper asked a CBN official why the it bet on the bank-led Mobile Money Payment (MMP) model against a growing body of evidence that shows the effective role of MNOs as capable entities to lead the partnership with banks.
Reportedly, the CBN official answered: “If you want me to tell you the truth, there are two ways to answer that question. I can tell you the truth and I can tell you the politically correct answer. The politically correct answer is that they do not need to get involved in MMP, but the truth is that the telcos have close to 90 million customers while banks only have 15 million. If you give them the power to do this, then you must have inadvertently given them the national economy.”
It is inconceivable for any progressive financial regulator that is committed to reducing “the percentage of adult Nigerians that are excluded from financial services from the current 46.3% (39.2 million adult Nigerians) to 20% by the year 2020 to choose a platform that has 15 million people over one that has over 90 million people?
CBN as a protectionist regulator
The question the journalist did not ask the CBN official was whether the CBN was established to protect the interest of incumbent banks that have banked only 14 per cent of Nigerians in over 100 years of operations or to extend financial services to under-served Nigerians?
Rather than build more walls, what CBN needs do is to imbibe positive examples of enabling approaches and regulations that result in market development. They need to learn from the most progressive peers, and share with them more information about the operational aspects of mobile money as well as the risk mitigation measures put in place by the providers.
CBN must also understand that erecting walls cannot save the banks from the rampaging technology companies who are daily changing the frontiers of financial services. According to Head of Financial Services, PwC Nigeria, Gabriel Ukpeh, in a new report by PricewaterhouseCoopers, between 2025 and 2030, a market economy without banks of the traditional kind might exist.
For the banks, these threats are coming from one big source: technology. Already, some technology platforms such as Remita, eTranzact, Quickteller and Paga have become the payment platforms of choice. These platforms offered what the bank could not give: convenience.
The report said the barriers for non-banks to provide ‘core’ banking services had continued to decline. However, banks retain some substantial advantages to help them to prevent this from happening: their brands and reputations remain powerful, shored up by familiarity, experience and regulation.
Banks still have advantages and alternative providers suffer from a lack of trust. However, to be part of the future, banks need to invest heavily, rediscover and reassert their core role in society. The response of the Equity Bank of Kenya to M-Pesa incursion into its core financial services is a good example that Nigerian banks should study rather than concentrating efforts in lobbying regulators to stop telcos from providing financial services.
Technology firms, telcos are building cities around the wall
Technology firms and telcos have shown clearly that they could innovate around the CBN’s hostile mobile payments regulatory framework. Contrary to the expectations of the apex bank, some deposit money banks are reaching out to telcos and technology companies for partnerships in the provision of mobile money services. A very good example is the collaboration of Diamond Bank plc, MTN Nigeria and Computer Warehouse Group plc on birthing Diamond Y’ello Account.
The telcos have also found the insurance regulator a more willing and liberal partner in the provision of Insurance, Cornerstone Insurance and Mansard have partnered with telcos of their choice to launch mobile insurance services.
CREDIT: http://www.financialtechnologyafrica.com/
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