Banking on Value Added Services and Products for Financial Inclusion

In recent years, the Nigerian financial sector has evolved and become more globally competitive in its service models and delivery, especially in the digitization of retail banking segment. This digitization has been driven by a desire to ease access to financial services and thereby, encourage more people to use them.

Rarely would you find a bank in Nigeria not going through a digital transformation for its many benefit. There have been interesting innovative products from fintech companies; the banks are not left out, expanding market reach through Neo-bank alliances for digital gains. From Paga to Alat, one can easily see the sincerity of purpose and progress made to accommodate financially excluded Nigerians. Early this year, the CBN set fresh target for banks to ensure that every Nigerian adult has access to financial services.

However, the drive to acquire millions of customers through digital channels is gradually becoming a daunting task for product managers. They appear to be bereft of ideas on how to stimulate the prospective customers with incentives that reduce churn and grow user base. While a lot is going on in this space, less is evidently achieved.

The bank executives are finding it hard to know why marketing expenditure does not translate to consistent customer conversion. Perhaps, they have not been told that digital marketing campaigns can deliver millions of impressions, views and clicks but 2-5% customer conversion is considered a success. Most products unintentionally get the attention of already banked customers, resulting in product cannibalisation and overbanked customers with dormant accounts.

To indeed consolidate the gains, the banks need to offer prospective customers more than the core banking service. Strategy to achieving 80% financial inclusion target by 2020 goes beyond simplifying account opening process. Yes, people would like to save money, transfer funds, pay bills; aggregate accounts, get loans and get interest on savings but they need much more.

The CEO of one of Nigeria’s big five banks made a bold statement towards the last quarter of 2017 that the bank is broadening digital marketing initiatives in a bid to acquire 16 million new subscribers in the next three years. This is ambitious when you remember that Facebook, the most patronized social platform in Nigeria, has less than 20 million active Nigerian subscribers. Digital Marketing campaigns would achieve a pintsize result for a product that barely scratches the surface of meeting expectations.

It is time to look into value-added services and products (VASPs) that can deliver business gains from Nigeria’s comparative advantages; those non-core products that can be made available at little or no cost to promote the bank’s primary business. This will create first of its kind convergence, reduces the cost of banking, increases customer satisfaction, eliminates complexity through abstraction, simplifies the experience and convert customers to brand evangelists.

To achieve this, product strategists must rethink what they see as VASPs. While some players will argue that the delivery of a gamut of core banking services on digital channels (online, mobile app, USSD and SMS) constitute VASPs, the question worth asking is why do we still have less than 40 million unique bank customers in a country with over 148 million mobile phone subscribers?

Bank executives need to leverage data, the right data, from a single source of truth on digital products. It appears there are many untruths in circulation about the true strength of digital marketing in customer acquisition. Digital marketing data if aggregated and modelled can reveal valuable unknown unknowns and the known unknowns but significant insights reside outside existing product data and digital marketing domain.  Meaningful lessons should be learnt from Yes Bank, India, being re-positioned as the technology company in the business of banking, and Amazon, with its mastery of self-disruption.

 The newly signed MoU between NCC and CBN is expected to foster telco-bank relationship and ultimately birth innovative VASPs. The Financial Service Industry (FSI) executives must now rethink and re-imagine banking beyond provision of financial services; discover insights beyond existing product data. Strategy, not technology drives digital transformation.

FSI firms need to be reminded that fulfilling customers’ needs got them to where they are. Delivering additional value in innovative products and services that meet the growing, evolving and diverse expectations of prospective customers will take them to the next level of success.

‘Wale Oyepeju is a digital transformation consultant and founder of Koye-Kairos Limited – An ICT Solution and Product Management Company based in Lagos, Nigeria.

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