The banking industry owns a long history with the primary aim of meeting the commercial needs of the colonial government. This industry is regulated by the Apex bank (Central Bank of Nigeria) whose operation offshoot 16 months prior to 1960 independence. The Bank is saddled with the responsibility to strengthen the industry and promote financial inclusion through its ingenious policies.
It is arguably believed that economic growth rest on the strength of the banking sector through its implementation of guidelines, effective policies and credit facilities which will invariably facilitate sustained economic growth. That relationship between financial intermediation by banks and economic growth cannot be taken for granted.
A consensus among economists that the development of the financial system contributes to economic growth. Financial development creates enabling conditions for growth through either supply-leading or demand-following strategies. The causal relationship between changes/alteration in a country’s financial sector development (FSD) and its rate of economic growth is expected to be sensitive to the country’s stage of economic development.
Analysis of development was projected as well as mergers and acquisitions as seen in the case of Access-Diamond (becoming Africa’s largest retail bank). The CBN revealed that 3 commercial banks failed to meet the minimum liquidity ratio of 30 percent in 2018 and more commercial banks would be issued a license in the case of Titan and Globus in its interest to promote financial inclusion.
Below is the SWOT analysis of the banking sector in Nigeria.
1) Diversified services: the banking industry cuts across some services which include Current and Savings Account (CASA), insurance, loans, and investment.
2) Source of employment and GDP growth driver.
3) Provision of credit facilitates which help businesses to raise fund for its operations in an efficient manner.
1) High Non-Performing Loans (NPLs) resulting in bankruptcy.
2) High-risk level due to its involvement with finances. The volatility in different market/Currencies create problems for the banks in order to work properly across the borders
3) lack of coordination amounting to debt crises and short/long term uncertainties.
1) changing demographics and household wealth leading to increased consumer’s demand to enhance institutional capabilities and service by banks.
2) Advancement in technology leading increase private sector banking through structural and functional changes.
3) the increased agitation to a high level of financial inclusion leading to expansion to rural areas.
1) Competition among Nonbanking financial institutions like insurance and mutual fund companies
2) Instability of the political system
3) The recession which could result in economic crises for businesses
A “Meeting of Minds” Report Identifies Five Main Challenges Facing African Banks
Pierre-Guy Noël, Chief Executive-MCB Group (Source: The Mauritius Commercial Bank Ltd (MCB)
Further to the “Meeting of Minds” workshop, a report probing into discussions has been published this week by Mauritius Commercial Bank (MCB)
PORT LOUIS, Mauritius, December 20, 2019- In October 2019, during the tenth Africa Forward Together (AFT) forum in Mauritius and spearheaded by Mauritius Commercial Bank (MCB), a special workshop aptly called “Meeting of Minds” session leveraged the insight and brainpower of over 35 C-level and senior banking leaders across the African region and beyond.
The aim of this session was to identify and prioritise the main challenges faced by their banks in five distinct but interlinked areas that were purposefully scoped to look beyond numbers:
- Operational Efficiency
- Corporate Sustainability
Further to the “Meeting of Minds” workshop, a report probing into discussions has been published this week by MCB. It identifies five main challenges facing African banks and financial institutions, as follows:
- Lack of technical expertise amidst the increased cybersecurity risk
- KYC issues hampering financial inclusion
- Talent Management, retention and development
- Customers’ education and staff skills gap
- IT & Digitalisation and Transformation Programme – Expertise
On a maximum rating of 9 points, the experts assessed the following:
- Cybersecurity and lack of experience: 7.1
- Inadequate institutional framework is a burden: 7.1
- Talent management: 7
In the editorial of the report, MCB Group CEO, Pierre-Guy Noël speaks of an alignment of African banks and institutions on the key issues they have to face. “Considering the relative heterogeneity of African markets in terms of distinct characteristics and level of maturity in consumer behaviour, there was a remarkable alignment on the challenges facing the region’s financial institutions,” he said. On the main threat posed by cybesecurity, MCB Group CEO observed : “Additionally, there is a lack of appropriate risk assessment and framework that caters for the exigencies arising from the use and adoption of new digital solutions.
The rise of cybersecurity attacks and other cyber frauds were therefore highlighted as the most significant challenge, compounded by the lack of technical expertise and familiarity at senior levels in these fields (…) In parallel across the rest of most institutions, is the significant shortage of technical expertise and know-how in IT, digitalisation and related transformation programmes…”
The lack of KYC and other compliance frameworks “to facilitate the on-boarding of unbanked segments remain a key obstacle for regional banks to further financial inclusion. This challenge emerged in many discussions”, added Mr. Noël, who also stresses upon the challenge of developing solutions from customer segments that are distinct and sometimes unrelated (urban customers with high digital literacy vs rural unbanked segments requiring traditional supports and channels).
Last but not least, sustainable development and the necessity to embed its principles into corporate DNA are also issues highlighted by Mr. Noël. “The alignment of long-term value to stakeholders with corporate sustainability requires a considerable strategic push, a deep adjustment of corporate culture and a more measured risk-management mindset. This adjustment will have to take place sooner than later, because a trusted bank with a wider positive impact is increasingly being upheld as the minimum standard vis-à-vis stakeholders ranging from our own customers and central banks, to providers of lines of credit”.
MCB’s CEO insists on the fact that the insights of the report can help prioritise strategies for the future and promote awareness “that collaboration and partnership within the region has potential to address many of the common challenges facing African banking and financial services today”.
Read the full “Meeting of Minds” report here http://bit.ly/2MfPRy2
InsurTech: Our Technology, Your Insurance App Solution- Coert Knoetze, CEO, Snap-it Cover
Coert Knoetze, Managing Director at Snap-it Cover
InsurTech is the current fourth industrial revolution, digitisation is at the order of the day, computers are communicating without human intervention, autonomous vehicles, microchip implants, machine learning robots, only to mention a few, allare here to stay. We are living the reality of smart factories and a new dawn of technological innovations.
At every conference, every Broker breakfast we attend, every insurance Magazine we open, InsurTech is mentioned. Conferences are being held around the Globe with InsurTech being the buzzword of late. Times are changing fast, even our strategic business Partners are using Apps and doing virtual sales to complement their distribution channels.“Trov” is popping up all over the world, Hollard introduced us to “Naked”, Compass and Bryte went fruitful with “Pineapple” and “Granadilla”, Constantia came up with “Ja-Sure” and what will follow next?
Our own Brokerages will become more proactive and less time will be wasted if we embrace the technology InsurTech is delivering. For the first time your technology will elevate your revenue with relatively very little human input required. But that is on condition you do it well and adopt the correct technology to enhance your expertise. The network of computers is more efficient to share information, capturing our data, than humanly possible. All there to assist the client at his fingertips… The true power of Revolution 4.0 is upon us, whether we like it or not.
A new opportunity has arrived which it truly ground-breaking, a reality check in many ways catering for the expectations of the “new client”. But speed is of the essence, the expression “First come, first served” has never been truer, our landscape has changed forever. How many Insurers are there prepared to support your initiative? It is a short term window of opportunity for Insurers and Brokers alike to use digital platforms and make it part of their value proposition.
Doing so will set them apart from the competition and thus creating a uniqueness in their offer. Theself-explanatory concept of “being out there”from the origin, from the beginning, needs no elaboration.Don’t be oblivious to the challenges, embrace it and optimize the offer with a proactive approach. Make this revolution your own.
At Snap-It we have captured the core of Short Term Insurance, the offer, the service, the support and the “promise we made”. We have learnt from practical involvement, we’ve been taught by our own mistakes and reproduced you the initiative, in one awesome App.
Snap-it is a white label App which can easily be changed and resemble any Broker’s, any Insurer’s look and feel. Your own online App at a fraction of the cost. “Insurance-on-the-Go”, “On-Demand”, does not matter how you refer to it, it is insurance cover for when our client requires it. Your client decides daily, weekly or the traditional monthly insurance to be purchased. Yes “daily”, no more wasting premium where the risk is within your client’s ability to manage.
We ventured on your behalf, combined our experiences, summarised the intention of the competition, requested the input of many and now we are ready to roll out and supply the need. We are there to support you, not only in the supply of this awesome App but also an alternative to the norm, one amazing business opportunity too.
Contact us at [email protected]
Visit Us! Snap-It Cover
EY, Open Banking Nigeria Partner for Financial Services Innovation
Image credit: Financial Times
LAGOS, NIGERIA. 22 July, 2019: Ernst & Young (EY), a global professional services firm, has finalised arrangements with Open Banking Nigeria to develop and advocate for a standard Application Programming Interface (API) for the country’s financial services industry. The partnership will, in addition, transform the management of financial data and extend services to individuals and businesses across Nigeria.
EY, in a statement, disclosed this recently after it inked an agreement with Nigeria’s foremost Open Banking advocate and facilitator, Open Banking Nigeria.
With this agreement, EY joins other leading industry stakeholders to analyse the need of the industry for a common API standard among banks and other financial institutions, support the development of API standards, promote adoption with stakeholders—players and regulators—and enable further innovations in Nigeria’s financial services industry.
The introduction of a unified API across financial institutions creates a foundation upon which data can be effortlessly accessed and securely shared, real-time. It would, among others, empower individual and corporate users of services within the payment ecosystem to instruct their service providers to share their bank balance and transaction information with regulated Account Information Service Providers (AISPs).
This interoperability would result in the development of modern payment services, cost savings for operators and increased innovation while also guaranteeing information security and privacy, which would not cause an uneven playing field for industry players.
According to a statement by Dapo Adewole, Partner, Technology Advisory, at EY: “As part of our commitment to support the building of a better working world, EY Nigeria is working with stakeholders to use open banking to reshape financial services, especially as regulators and governments seek to increase competition and choice.
“We understand that customers also expect more convenience and flexible access to services, driven by broader digital experience and emerging technology. It is our desire to bring this goal to fruition, while working with other player in the industry.”
Welcoming EY Nigeria to Open Banking Nigeria, Ope Adeoye, a trustee at Open Banking Nigeria, noted the firm’s top-notch contributions, along with other stakeholders, would lead to the development of the next generation of API standard for the Nigerian financial services industry.
Already acknowledged as the future of banking on the globe, the adoption of Open Banking in Nigeria would enhance the service offerings of players in the financial services industry, improve customer engagement and build new digital revenue channels. It would also transform the operation of other industries, including telecommunications, power, hospitality, retail, and insurance, seeking to leverage data for the improvement of their operational scope and service offerings to clients.
Credit: Open Banking Nigeria
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