‘Banks can’t achieve 95% financial inclusion goal without secure technology’

Ifie Sekibo, Managing Director/Chief Executive Officer of Heritage Bank Plc, believes investment in smart technology is never enough. In an interview with GEOFF IYATSE, he speaks on a backlog of challenges that delayed the financial inclusion drive and how banks can bridge the gap and bring millions of the unbanked into the financial space using modern technology.

How critical is financial inclusion to the country’s economic growth and how would you assess the efforts of banks to bridge the gap so far?
Financial inclusion has assumed a greater level of importance due to its perceived relevance as a catalyst economic growth. For this critical reason, capturing the unbanked and underserved segments of the population into the financial system and making financial services accessible is fast becoming a key area of concern to policymakers. Banks, today, have a greater role to play. The journey so far has been bumpy, though a lot has been achieved by the Central Bank of Nigeria(CBN) since the commencement of the National Financial Inclusion Strategy (NFIS) in 2012.

The main goal of the NFIS is to ensure that 80 per cent of Nigerian adults are financially included by 2020. Before this, the formal use of financial services by the adult population stood at 36.3per cent in 2010. To achieve the 2020 goal, the Central Bank introduced strategies to spike innovation in the financial services sector by 2017. One top achievement was that the CBN had given over 20 licences to mobile money operators, which have grown to 21 as of the last count.

But the pending challenges are still lingering. These were revealed by the Enhancing Financial Innovation and Access (EFInA) in its 2018 data, which showed that 38.1 million of Nigeria’s 106 million (18years and above) adults or 36 per cent of Nigerians remained completely financially excluded.

Also, Augusto & Co on Consumer Digital Banking disclosed that only 34 per cent of the respondents to its survey said they had experienced the service of digital banks. Only 17 per cent of respondents above the age of 55 were aware of their services while the awareness rate stood at 31 per cent for people aged 41-54. This speaks to the need to deepen the financial inclusion drive if Nigeria is to attain the NFIS target and accelerated economic growth.

The 2020 financial inclusion target wasn’t attained. How fast should the industry run to change the narrative and achieve better results in the coming years?
The Central Bank may have missed the 2020 target of 80 per cent for financial inclusion, but it stands a better chance of meeting the target of 95 per cent by 2024. Banks need to take this seriously and come all out to support the system towards achieving the set goals. To achieve the NFIS inclusive economic growth target, the financial sector must strongly leverage technology (mobile and digital channels) to promote financial inclusion and enhance access to financial services for the unbanked and underserved segments. Banks cannot drive financial inclusion unless they also push secured technology inclusion. For us in Heritage Bank, we have continued to leverage technology to revitalise the financial inclusion drive in the industry. We have been deploying huge resources and our vast networks to deepen financial inclusion in the country for inclusive economic growth.

Without secured tools, some of the bottlenecks may remain and the system won’t gain public trust and confidence. What are banks doing about this?
Banks cannot drive financial inclusion unless they also push secured technology inclusion. For Heritage Bank, we have continued to entrench financial inclusion across the board via creating access to accounts and other financial products, savings, mobile money systems and payment systems that provide opportunities for financially-excluded Nigerians and micro, small and medium enterprises (MSMEs) in the most secure manner. Banks operating in the financial space that have not come to terms with the need for a more secure technology should wake up. The keyword is innovation. We need to be more innovative to support inclusive financial services.

Some people think FinTech and banks should complement each other rather than compete in the digital ecosystem. How has this journey been?
We have done well in this regard and we are still doing more. For instance, Heritage Bank had to launch an API Sandbox to accelerate the ideas of technology entrepreneurship to build innovative and commercially viable products that were birthed through HB LAB. The platform provides a suite of financial and non-financial APIs targeted to meet the needs of FinTech, tech SMEs and communities. Our APIs give tech companies, third-party developers, and non-FinTech companies access to multiple payments and financial services required by their customers.

Following the launch of HB’s API Sandbox, the Bank partnered API aggregator companies to extend the services to a wider audience, layering their value-added services to deliver our BaaS platform. Banking as a Service (BaaS/Open Banking) is an end-to-end business process that allows FinTech and other third-party service providers to offer core financial services to their customers by integrating with the Bank via our readily-available APIs. This is a billed service that also provides relevant data insight required to pursue aggressive retail account acquisition by leveraging the aggregator’s robust retail pipelines.

Apart from the general offerings, how has your bank redefined the digital banking space?
Every organisation wants to produce and maintain leading-edge products but getting the right innovative products is critical and complex.
That means you need to have on the ground the right team and tools to achieve your specific goals. In this regard, Heritage Bank is driving financial inclusion through a robust, innovative and advanced digital banking solution called ‘Octiplus’. Octiplus is a bank-agnostic, all-in-one digital banking application, which grants users access to a bouquet of financial, lifestyle and social networking features with the added convenience of converging card-based payments within one application irrespective of the issuing bank. With Octiplus, we are redefining the concept of digital banking for the discerning mobile users, as the app is equipped with several exciting features that reiterate the bank’s commitment to expand its digital architecture and modernise its interactions with the banking public, irrespective of one’s preferred financial institution.

Octiplus promises an intelligent Omni-channel experience, which augments the usual transactional features including bills payment, funds transfer and airtime recharge with its unique ability to facilitate person-to-person/group interactions, which encourages small businesses and a thriving ‘side hustle’ for young professionals. The app is now available for download on the Google and iOS App stores.

On what channels are the younger generations included and how much of their adventuring spirit are you able to accommodate?
Businesses often struggle to reach their customers despite having products that effectively provide innovative solutions to customers’ needs. When your product meets the needs of different market segments, it will be seamless to reach everyone, including the younger demographic.

HB Bud account is one tailored-made product that meets this category. It is a savings account for children and the younger demographic aimed at introducing financial literacy and inclusion. The account can be opened in trust for a child by the parent/guardian who will be the primary account holder with the responsibility of running it until their child attains adulthood and can solely operate an account or possibly move to other age-appropriate products. This product was initially launched in 2014 as a unique proposition to cater mostly to the educational needs of children and young adults who are preparing and saving for further education as well as deepen brand visibility and increase the bank’s market share.

However, some operational exigencies and regulatory frameworks have necessitated the modification and adjustment of this product to serve the customers optimally. Children and teens from zero to 18 years are the target market. The features are unique as outlined: access to cash-backed loans by parent/guardian/sponsor for school fees/education loan. You can access up to 70 per cent of your balance held with the Bank as a cash-backed loan. The customer must have run the BUD account for a minimum of six months to access the cash-backed loan. It has ease of saving through standing-order instructions, access to exclusive events, free participation in BUD MINI career mentoring and coaching sessions and the opportunity to act as a Heritage Bank Executive Committee member for one day.

How have the bank’s products advanced the cause of financial inclusion?
The HB Starter Product, our flagship CBN’s know your customer (KYC) tier one savings account is to cater to the unbanked. It is a level one entry into the savings account category in Nigeria, in which an individual can open an account without having the mandatory requirements/documents to open a standard or regular account in Nigeria. This is one way of ensuring that all citizens are financially-included since the account can be opened with or without a smartphone at the bank or online. In essence, this type of savings account doesn’t require any utility bills or even an ID to open.

Most people who fall under this category usually do not see the need to open an account because they are used to the culture of keeping their money in their houses. This category of people wants to avoid the complicated manual account opening process and have better time management. This product is very precise and requires minimum account opening documentation, also it can be done in the comfort of one’s home. Customers can, in addition, be assisted by the bank’s relationship managers and sales teams. They can also visit our website to initiate a new account opening process from the start and receive their account numbers at the end of the process.

There are products targeted at individuals across all market segments. We have HB Individual Current Account Product, which is a checking account for all individuals across market segments above the age of 18 years. This account has been made seamless with unique features for individuals’ access to loan products, a minimum balance of N0.00 and no Commission On Turnover(COT) on all transactions.

Cross-border payments infrastructure has become a talking point, especially with the implementation of the African Continental Free Trade Area (AfCFTA) agreement. What are the banks doing individually to catch up with this to give Nigeria an edge in the African market?
Through the customisation of the payment gateway, Heritage Bank has a unique product known as the CheckOut, which is a fully integrated payment processing platform with infrastructure for digital payments across Africa.
The platform provides an underlying technology platform that allows businesses to receive and issue payments from anywhere in the world, with robust inbuilt fraud management, compliance and security applications.

Is the sector reaching out to social impact sectors such as SMEs and education?
A lot of banks have products that cater to certain sectors. For example, Heritage Bank’s Business Account is a cost-effective current account that provides a flexible,
affordable and transparent pricing grid based on the debit monthly turnover covenant. The product is targeted at all SMEs and the retail sector.

To also capture individuals in the educational sector into the financial inclusion space, Heritage Bank unveiled the Alumni Banking Service and Acada Portal Solution, which are internet-based solutions that seamlessly integrate the school’s portal and alumni platforms. It benefits the different stakeholders and complements efforts in attaining the best global practices in school management. Alumni Banking service is an educational provision by Heritage Bank that seeks to help secondary and tertiary educational institutions create modern alumni systems that contribute to their financial stability just like great alumni do in leading global schools.

We also have a product called YNSPYRE Account to reach out to operators of the creative economy, which is populated by youths. It goes beyond music and videos to address the needs of those in technology and gaming as well.

The involvement of the Heritage Bank is to identify income-earning opportunities for some people in the economy. HB has designed a product that identifies and finds a mechanism that guides Nigerians in gaming or e-sports.

The bank is set to revolutionise e-sports by bringing it to an acceptable level attained by football, lawn tennis and other crowd pulling games. Heritage Bank is fast changing the narratives of the banking landscape through the adoption of more secured technology (product and channels) for seamless services that guarantee the larger part of the population is involved in economic activities as well as being financially included.