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Insights
The Future of Open Banking in Nigeria: Predictions from Pngme’s Lagos Team
Pngme is experiencing rapid growth in the region spearheaded by two experienced technologists and in-market experts.
4 years ago

Lagos is the center of a growing technology and fintech industry with between 210–250 active companies, a rich ecosystem of banks, telecom companies, funding partners, research institutions, incubators and most importantly consumers. For this very reason, Pngme is experiencing rapid growth in the region spearheaded by two experienced technologists and in-market experts.

Emeka Madu is Pngme’s Lagos-based Director of Business Development and Adeola Olasewere is Director of Growth. We sat down with them both to get their thoughts on the state of open banking in the region and their predictions for 2021.

Emeka has over 15+ years of experience in digital payment and business development along with an in-depth understanding of the African and Nigerian payments sphere. He joins Pngme from RemitPlus where he advanced their cross-border payments solutions. Adeola has 15+ years of experience at PayJoy, Ericsson and IHS where she worked across product analysis, strategy, sales engagement, customer needs, marketing and project management.

“Pngme’s value to our partners increases as we scale, and we are now building a team with uniquely skilled and experienced individuals to lead our expansion in West Africa,” said Brendan Playford. “We are excited that Emeka and Adeola have joined Pngme, they both bring the knowledge and business experience to lead our growth and help us realise our mission of democratizing access to financial data in Africa”.

Adeola Olasewere: Director of growth

What motivated you to become involved in the financial sector? What were key or defining moments in your career?

I have always been conscious of the critical role the financial sector plays in the economic growth and development of any country. An efficient financial sector allows a country to be globally competitive, so it makes sense that everyone will want to be involved in the financial sector in one way or the other.

The defining moment in my career was when I joined Ericsson as a Consultant over a decade ago. This was during the data explosion and introduction of 3G to Nigeria. There, I began to see the enormous potential that the convergence between Telcos Fintech, and Ecommerce held for financial inclusion and bridging the inequality gap.

Taking up a role with Pngme affords me the opportunity to make significant contributions towards achieving the goal of a more financially connected society. At the moment, no other Fintech startup is driving this initiative in this region, and Pngme provides an excellent platform to realize that dream through its unique products. I believe Pngme is on the cusp of a revolution and I am excited to help the company be a winner

What have been the biggest developments in digital financial services in Nigeria. What technologies have made a noticeable impact?

Mobile money and Digital payments/ transfers have been big in the last few years. In 2017, we saw Wema Bank launching Nigeria’s first fully digital bank, ALAT. With ALAT, Nigerians can open a fully functional account online through the web or the app in five minutes or less. Other banks have since followed the trend.

Big technology firms such as Apple, Facebook, Amazon, Google, and Alibaba have also entered the financial services space, enhancing innovation and competition.

Interestingly, more players from non-banking industries including Ecommerce, Telecommunications and Logistics are increasingly branching into the mobile payment space which has continued to attract FDIs and many fintech startups.

What are the main hurdles towards financial inclusion in the region? The CBN set a goal of 95% financial inclusion, do you think that’s possible?

The major hurdles are macroeconomic in nature. More than 89 million Nigerians struggle with poverty (live on less than $1.90 per day) and have little or no disposable income.

According to the 2018 Financial Inclusion report by EFINA, Nigeria’s unbanked population is about 60.1 million with 71.3% of mobile phone users. From the analysis 63.3% of the population are financially served with 38.7% in the banked category (39.5 million). Urban population in Nigeria is about 52%. This means there is still a huge number of people in rural areas (48%). The above numbers, notwithstanding the macroeconomic indicators, reveal a huge opportunity to bring millions of unbanked Nigerians into the financial system.

In the last few years, the CBN has introduced various initiatives such as the creation of NIRSAL Microfinance Bank to complement the efforts of the CBN towards addressing the needs of Nigerians at the bottom of the pyramid and deepen financial inclusion. They have also granted payment service bank (PSB) licenses to Telcos. This is expected to reach roughly 60 million unbanked adults. Opening the space provides opportunity for non-banking players to develop/deploy financial products/services for the financially excluded.

So, with greater awareness and knowledge, affordability, credit and the right technology, the hurdles to financial inclusion can be scaled. And this is where Pngme comes to play!

What are the biggest barriers to banks and/or other financial institutions adopting technologies like open APIs?

Many institutions have legacy technologies and are developing their custom APIs which do not scale to other implementations. So, it becomes difficult to integrate or track other connections.

Another major challenge to open API in Nigeria is that API development and deployment is not fully standardised which causes integration issues. Five banks could have five separate API models that are incompatible with each other, forcing FinTech’s that wish to work with them to develop unique back-end architecture for each. This drive cost up significantly and undermines the seamless compatibilities of APIs.

Also, the desire to protect their competitive edge from fintech startups who might end up as competitors rather than collaborators. The banks are reinventing themselves to play in the ever-growing mobile payments markets.

Emeka Madu: Business Development

What are the main hurdles towards financial inclusion in the region? The CBN set a goal of 95% financial inclusion, do you think that’s possible?

Yes, that’s possible with the several initiatives that the CBN has been rolling out, such as the Nirsal Microfinance initiatives helping SMEs access business loans. The enabling environment the CBN has provided fintechs in Nigeria has brought about an increase in the number of startups offering different types of financial services to end-users, but while we are seeing improvements in the Nigerian business landscape there is still a huge gap between the consumers who have access to finance from these fintechs and those who do not. Pngme’s technology is bridging this gap in Nigeria by opening up access to individuals and SMEs to easily access much needed finance and benefit from the CBN’s initiatives.

What are the biggest barriers to banks and/or other financial institutions adopting technologies like open APIs?

Many banks in Nigeria use old legacy banking systems that do not support developers and Fintechs who want to build new banking services and products, the banks have to start looking for ways they can tap into the Fintech’s product innovations and view them as partners and not competitors. When it comes to collaborations between fintechs and banks, there are both cultural and technical barriers. While 70% of fintechs think process barriers are an issue, only 52% of banks agree. Additionally, over half of bank and fintech respondents see problems with IT incompatibility between banks’ legacy systems and fintechs’ IT systems. To make open banking partnerships work between these players, a lot more work to be done in both the cultural and technical departments.

Secondly, stronger regulations and standardisation from regulatory bodies will support more adoption of open banking APIs in Nigeria just like what we are seeing today in the UK, Europe and to a large extent in Australia.

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