Nigeria Banking Update

Mobile Banking refers to provision of banking and financial services with the help of mobile telecommunication devices.The scope of offered services may include facilities to conduct bank and stock market transactions, to administer accounts and to access customized information.

M-Banking in Nigeria or in some instances SMS Banking etc. is term used for performing balance checks, account transactions, payments and others transaction services via a mobile devices. Some mobile Banking applications in Nigeria use preprogrammed configurations settings.Mobile Banking in Nigeria started from the transaction based activities whereby Bank customers are Notified via sms when transactions are conducted on their account or via Atm.This is a one way event and only for informational purposes only.GT Bank was on of the earliest Banks to provision this service to customers.That was the early days on Mobile Banking in Nigeria.

Nigerian Banks are now deploying full fledge banking via the Mobile Phones with array of services which were only possible in the Banking Halls before. Zenith Bank, UBA , GTBank, Diamond and Intercontinental Banks are the fore runners of this innovation.Despite the watch and see attitude that some very leading Banks are taking about Mobile Banking in Nigeria, mobile remains the only and most available feasible means to provide mass market alternative to Branch Banking in Nigeria. The internet has only a penetration rate of 6 percent in a population of 140 million but mobile technology is close to 50 percent penetration with prospects for growth.Mobile devices are the most promising way to reach the masses and to create a tie-in among current customers, due to their ability to provide services anytime, anywhere, high rate of penetration and potential to grow.

Deployment of 3G in coming months will also enable Banks to offer more robust Mobile Banking technologies.Key challenges in developing a sophisticated mobile banking application are Interoperability.The single reason for is the manner in which mobile phone applications evolved over time, device manufacturers focused on particular standard and and this led to a proliferation of applications .The Financial Regulator CBN should look in this issue at this early stage so that Mobile Banking ecosystem can be robust with National standard that cuts across all Banks. Bank specific Mobile Banking platforms is akin to having each bank deploying its own ATM Technology which other bank customers cannot access.

Interoperability can also help to evolve a standard that will enable low end phones which are currently excluded, to do Mobile Banking. Some countries like India and South Africa are already using some standards like R-World and USSD.Application distribution for Mobile Banking is another area where some Banks are facing Challenges. While some forward looking Banks are overhauling their gateways and reducing their reliance on Mobile Operators settings to enable customer’s phones, Some Banks are actually asking that Customers come with regular Operator settings which in many instances might not be correct configurations settings..Operator settings are not really meant for critical operations since most of the settings are used for entertainment based activities. Nigerian Banks that are looking at competing at this sector must look beyond operators settings which might not be correct, delayed in arrival,may not come at all and not regularly updated. Some Mobile operators do update like every three months while some do not at all.

For wap and Gprs based Mobile Banking applications, mobile network coverage will also be an issue.As part of their marketing strategies, one will expect that by now, customers do not need to visit local Branches to download Banking applications. Over-the-Air (OTA) Settings should be readily available online and some innovations can even come to play by Banks deploying Bluetooth application machines in Shopping malls and some strategic places where customers can visit and download Mobile Banking applications for free or for a fee..This will increase the addressable market of the Banks offering Mobile Banking exponentially in Nigeria.

by Emmanuel Okoegwaleemmanuel

THE Central Bank of Nigeria (CBN) restated its stance on preventing foreign banks from acquiring Nigeria's largest banks or allowing them to own more than 10 per cent equity in such choice banks.It however said,foreign banks with investment interests in Nigeria were free to apply for a licence to establish banks provided they were prepared to operate within the stipulated banking regulations.

The apex bank said the clarification had become necessary with recent commentaries in the media in respect of insinuations recently by the Mayor of London, Mr. Alderman Lewis, during his visit to Nigeria last month that the Nigerian government was not opening up its banks for foreign competition. But the CBN Head of Corporate Affairs, Mr. Festus Odoko, who issued a statement yesterday, faulted the London Mayor's submission.

According to the CBN, the policy introduced last year by the apex bank was in part to protect the Nigerian economy from being hijacked by foreigners and secondly to encourage the establishment of foreign banks in the country.

The position of the CBN has been that foreign banks and/or investors are allowed to establish banking business in Nigeria, provided they meet the current minimum capital requirement of N25 billion and other applicable regulatory requirements for banking licences as prescribed by the CBN.Such foreign individuals or institutional investors could also invest in existing Nigerian banks. There is, however, a condition that no single foreign individual/institutional investor should acquire more than the share of the single largest Nigerian individual/institutional investor in any bank, provided the aggregate shareholding of the foreign investors do not exceed 10 per cent of the total capital of the bank.

Also, foreign banks could acquire or merge with a local bank existing in Nigeria.Such a foreign bank, however, according to the CBN policy, must have operated in Nigeria for at least five years and established branches in at least two-thirds of states of Nigeria (excluding the state capital), provided the foreign bank/investors' shareholding arising from the merger/acquisition should not exceed 40 per cent of the total capital of the resultant entity.

The policy also states that the existing shareholding structure of Nigerian banks in which there are foreign interests in excess of 10 per cent might subsist but such foreign interest should not exceed the current level. The CBN concluded that she is acting in the interest of all stakeholders, particularly in view of the critical link between ownership and control of commercial banks and economic development.

Recent experience shows that foreign banks have been reluctant to expand branches across the country and operate only in few metropolitan cities. Again, the structure of their loan portfolio indicates concentration in favour of multinationals.