The Asian Banker's Future of Finance West Africa. April 2019 1 - PowerPoint PPT Presentation

The Asian Banker's Future of Finance West Africa. April 2019 1

OUTLINES � A brief history of Cashless Banking in Nigeria � Why Cashless Banking? � Challenges of the Cashless Policy � Lessons from Successful Cashless implementation in India � Stakeholders role in Cashless Banking � Contactless Technology � FirstBank recommendations for successful Cashless Banking � Considerations for the Panelists www.firstbanknigeria.com 2

A Brief History of Cashless Banking in Nigeria � In 2012, the Central Bank of Nigeria (CBN) introduced cashless policy to drastically reduce the volume of cash in circulation by adopting electronic payment solution. The aim was to expand, deepen and modernize the payment ecosystem in Nigeria. � The policy commenced in Lagos and Abuja on January 1, 2012, as pilot to evaluate the new payment approach and its capacity to address the high use of cash and illicit cash outflows. � To achieve this, the CBN fixed daily cumulative cash withdrawal limit for individuals to N500,000 and N5million for corporate accounts holders . The second phase of the pilot started in Rivers, Anambra, Abia, Kano State, Ogun and the Federal Capital Territory on July 1, 2013. Nationwide implementation commenced on April 1, 2017. � However, the proposed nationwide implementation of the policy was suspended on April 22, 2017. The objective was to evaluate the impact of the policy across the pilot regions as regards as financial inclusion of the excluded. www.firstbanknigeria.com 3

Why Cashless Banking? Benefits of Cashless banking Government and Banks are Fraud protection Convenient mode of able to control cash flows and (customer’s fund is safe payment relative to cash also manage the economy and secure) effectively transactions Access to Nano / Micro loans www.firstbanknigeria.com 4

Challenges of the Cashless Banking in Nigeria Poor network connectivity and communications Poor network connectivity and communications a Lack of compelling value proposition Lack of compelling value proposition b Security Security c PoS machine and ATM Terminal malfunctions PoS machine and ATM Terminal malfunctions d Prolonged dispute resolutions Prolonged dispute resolutions e High rate of illiteracy High rate of illiteracy f Behavioural, cultural and religious constraints Behavioural, cultural and religious constraints g www.firstbanknigeria.com 5

Lessons from Successful Cashless implementation in India Although, cash is still king in India, the Government has provided enabling environment for banks to provide digital payments to customers. India implemented a wide range of payment channels to serve the various customer segment. The objective was to ease payments of goods and services. Market Segment Mobile Micro Mass Market Segment USSD Cards Wallets ATMs Technology Savvy Internet Mobile AEPS UPI Banking Segment Banking Aadhaar Enabled Unified Payments Interface Payment System www.firstbanknigeria.com 6

Stakeholders role in Cashless Banking Regulator (CBN): Customer-Centric Stakeholders' involvement in the deployment of cashless policy is key Policies to promote cashless to a successful cashless initiative banking Partnership � FinTechs - Innovation, Speedy go-to-market Financial Institutions : � Strict compliance to the cashless policy strategies � Enhanced product offering � Other Stakeholders (e.g. Telcoms) – Provision � Affordable / Accessible Products of financial ecosystem / infrastructural support U s Adoption a g e www.firstbanknigeria.com 7

Contactless Technology � Contactless payment systems include Credit or Debit cards, key fobs, Smart cards, Smartphones that use Radio-Frequency Identification (RFID) or Near Field Communication (NFC) � Payments using Samsung Pay, Apple Pay , Google Pay, Fitbit Pay, Merpay - these modes of payment are becoming popular in most economies especially countries like the UK, India and the US With the growth of contactless payment systems, the spread of mobile technology and the establishment of Open Banking catalyzing faster development of digital payment infrastructure, use of cash is slowing - Vishal Maria , Forbes (Dec. 2018 ) www.firstbanknigeria.com 8

FirstBank recommendations for successful Cashless Banking Partnerships and Collaborations with all stakeholders Customer Education (both BTL and ATL) Improved User Journey and User Experience Stability of digital platforms Effective Dispute Resolution System - to build customer confidence in the payment system Incentives and Promotions to drive continuous usage Security of Payment systems Fit-for-purpose channel (accessible to all customers segments) www.firstbanknigeria.com 9

Considerations for the Panelists Addressing the challenges associated with the successful implementation of cashless policy in Africa, it is important the underlisted areas are taken into consideration: � Discuss on how to collaborate with new players to drive a successful cashless community � Discuss application of cashless payment in Supply-chain finance and Cross-border payments � Discuss on how the collaboration with FinTech will help to create agile, relevant and long-lasting payment solutions � Discuss the relevance of Emerging payment options - the internet of payments and the Internet of Things (IoT) � Discuss how Nigeria and other African countries can benefit from becoming Cashless Economy � Discuss the role of mobile wallet in driving cashless payment and financial inclusion www.firstbanknigeria.com 10

www.firstbanknigeria.com 11