Financial inclusion remains low in Nigeria as only 46.6 mln own bank accounts~Report
By Oludare Mayowa
Nigeria still lagging behind its peers in Africa in financial penetration, at third position compared with Kenya which is leading in the continent and South Africa which is considered ahead of the country.
According to a report by EfinA, Financial inclusion remains low in Nigeria at 39.7 percent compared with Kenya 82 percent and the average of 43 percent in sub-Saharan Africa.
As of February 21, only 46.6 million population have been enrolled for the Bank Verification Number (BVN), data from the Nigerian Inter-Bank Settlement System (NIBSS) showed.
This, according to analysts, implies a penetration rate of 23 percent when compared to World Bank population estimates of 201 million.
“An inclusive financial sector is characterized by the diversity of financial services providers, the level of competition between them, and the legal and regulatory environments that ensure the integrity of the financial sector and access to financial services for all.
“Evidence worldwide shows that access to financial services contributes both to economic growth and wealth creation and is therefore key to tackling the ‘poverty’ trap in Nigeria.
“It is critical for regulators and policy makers to create an enabling policy environment to actively promote both the demand for and the supply of financial services to the unbanked and under-banked,”. EfinA
The low access to financial services has become the bane of the informal sector as many of them are shut out of the financial service industry due to some constrain.
However, industry sources said the situation may soon change as the Central Bank of Nigeria (CBN) recently launched a guideline on the open banking initiative to promote synergy between conventional banking and Fintech.
Industry leaders believed that the regulatory bank’s guideline could create an interface among banks, Fintechs and third-party service providers to enable them to share data and create standard framework for accessing data among financial institutions.
According to the PWC, Open Banking represents a blanket financial services (FS) term used to describe the use of open technologies by third-party providers (TPPs) to build services and applications around financial institutions.
Expectations are high in the banking industry that with the Open Banking initiative, banks, FinTechs, and other third-party providers can access, exchange and utilize customers’ data in a standard format via the use of Application Processing Interface (APIs) technology.
This, they said could create access for many unbanked across the country and enable transparency, innovation, and competitive banking services in the country.
According to CBN, the new Open Banking framework is specifically for banking and other related financial services such as: Payments and remittance services, Collection and Disbursement services, Deposit-taking, Credit, Personal finance advisory and management, Treasury Management, Credit ratings/scoring, Mortgage, Leasing/Hire purchase and other services as may be determined by the bank.
The new initiative would also provide the opportunity for conventional banks to partner with FinTechs that have the existing technology infrastructure instead of building a new technological infrastructure from the scratch.