Nigeria: Payments System - De-Risking Inclusion Rate

The renewed campaign on financial inclusion in the country may have yielded positive results as the current rate of adoption has moved up by 6.8 per cent to 60.5 per cent.

By the record, about 56.6 million of Nigeria's adult population are now into one form of financial services relationship or the other, with about 36.9 million others, representing 39.5 per cent being the current exclusion rate.

The Head of Financial Inclusion Secretariat at the Central Bank of Nigeria (CBN), Mrs. Temitope Akin-Fadeyi, said the National Financial Inclusion Strategy, linked to payments system, savings, loans, insurance and pensions schemes, targeted the channels through which these were delivered to customers in banks' branches, Automated Teller Machines, micro finance banks, Point of Sales and mobile money agents.

Akin-Fadeyi, while delivering a paper titled: "e-Banking and Financial Inclusion", however noted that to sustain the current results, financial institutions must be ever creative.

According to her, banks must develop in-depth understanding of customers' needs; be flexible; resource availability and system security/integration; ensure multiple integrated channels; e-channel specific marketing; and good customer services.

She disclosed that the country stands to benefit from electronic payments to about $900 million by 2020, by way of reduced leakage of funds, better access to financial services and lower transaction costs.

The Director of Research Department, Nigeria Deposit Insurance Corporation (NDIC), Dr. J. A. Afolabi, said with the increasing adoption of Mobile Payment System in the country, there was need to evolve strategies that would cater to risks associated with it.

Mobile payment system, which refers to services operated under financial regulation through the use of a mobile device, has become attractive way to promote financial inclusion given the extensive presence in the population and the global reach. For example, it can now serve as a virtual bank card, Point of Sales, Automated Teller Machine and Internet banking terminal.

"Mobile phones or devices are recognized as the single most transformative solution for economic development by providing access to capital and information to the world's unbanked at a very reasonable cost.

"The growing number of mobile money operators and subscribers in the country now presented new challenges, part of which includes the safety and security of the depositors' funds in the digital and new virtual environment. This necessitated the need for enhanced regulations, as well as protection of subscribers under the scheme," Afolabi said.

He pointed out that deposit insurance is vital in mobile payment system to assure subscribers that their deposits are safe and available at all times.


Noting that one of the critical objectives of NDIC is the protection of large number of unsophisticated depositors, he advocated for a sound and reliable banking system, that is backed by the deposit insurance system and accessible to all.

Meanwhile, the NDIC director restated the corporation's resolve to strengthen the provisions of the Pass-Through Deposit Insurance coverage, which is specifically designed for subscribers of the mobile money operators, domiciled in the Trust (pool) accounts in banks.

"When funds are deposited by a custodian on behalf of one or more actual owners of the funds, the NDIC will insure the funds as if the actual owners had established the deposit in the insured bank. It is the coverage that guarantees the funds of subscribers of mobile money operators in the deposit money banks in the event of failure," he added.

But speaking from the perspective of investigation of frauds arising from the evolving e-banking in the country, Ibrahim Shazali of the Bank Fraud Section of the Economic and Financial Crimes Commission (EFCC), said Nigerian banks, like their global counterparts, experience cyber frauds, though more of external than internal.

According to him, the increasing adoption of e-banking with its variants, is a pointer to the urgency required in developing rigorous standards for the monitoring and security of electronic banking transactions.


"With an average of N80 billion worth of daily transactions, it would be very remiss of Nigerian banks and authorities not to anticipate and adequately prepare for the huge risks accompanying it," he said.

Delivering his paper on "Investigating Electronic Transactions in Nigerian Banks: A Forensic Auditors Perspective," he expressed worry over assessed susceptibility of Nigerian banks to electronic attacks and lack of the necessary legal protection to deter and prosecute offenders.

"Inspite of this alarming, rapidly growing figures, the lack of a well-defined legal context for prosecuting cyber crimes and financial fraud related to electronic platforms resulted in a pitiful apprehension success rate in 2014.

"Nigeria, as a developing country, is particularly exposed as we are an emerging economy experiencing rapid economic growth while simultaneously dealing with underdeveloped Information Technology (IT) and legal infrastructure," he said.

Citing statistics from the Nigeria Inter-Bank Settlement System, he pointed out that there was an increase in the total of actual losses from the e-channels from N485 million in 2013 to N6.2 billion in 2014, representing 1, 178 per cent increase.

He called for compliance to the Bank Verification Number project by banks' customers and further strengthening of other Know-Your-Customer initiatives.