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Your Phone is Your New Bank Account!


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Nigeria

Your Phone is Your New Bank Account!

By Obinna Chima

 

Life just became easier. With your mobile phone, you may no longer have to go into the banking hall to deposit, withdraw or transfer money. Mobile phone subscribers can open mobile money account to store Electronic Value (EValue) of money easily on their mobile phones, using their mobile number as account number. They can also transfer money to any mobile number – and spend the money directly from their mobile money account to pay for goods and services.


The significant volume of Nigeria’s unbanked population (about 70 per cent, according to estimates) has over the years been a source of concern. This has also been severely constrained by the weak infrastructure in the country.
Although banks have tried to improve on this with the aggressive drive for expansion by opening new branches as well as deploying of Automated Teller Machines (ATM), the country’s huge population of rural dwellers are yet to really feel the impact of all these.


However, the latest introduction of mobile banking by the Central Bank of Nigeria (CBN) is seen as a veritable vehicle to help drive financial inclusion in the country. The apex bank recently licensed 11 mobile money firms in the country.


Since then, Nigeria’s second national carrier, Globacom, has taken advantage of the opportunity created by the payment system by striking a partnership with Afri-pay Limited, a subsidiary of the United Bank for Africa (UBA) Plc, which was among the 11 licensed firms to offer mobile money services in the country.


Glo and Afri-pay last weekend signed a memorandum of understanding (MoU) for the commencement of mobile money service in the country. The MoU, which was signed in Lagos, was to enable UBA’s mobile money product – “U-Mo” – run on Globacom’s platform, “Glo-Text Cash”.


The deal will enable mobile subscribers to open mobile money account to store EValue of money easily on their mobile phones, using their mobile number as account number. They can also transfer money to any mobile number, spend the money directly from their mobile money account to pay for goods and services.


Group Chief Operating Officer, Globacom, Mr. Mohamed Jameel, explained that when the product is launched, people would not have to keep cash in their wallets any longer, saying that mobile phones would now replace the function of the wallet.


Jameel said: “Your mobile phone now becomes your wallet. Glo and UBA have had a good relationship over the years. What is happening today is an extension of the partnership. As far as mobile money is concerned, the product can further be developed such that it can help you do anything you want to do in life. It is going to be an integral part of every Nigerian.”


Managing Director and Chief Executive Officer, Afri-pay, Mr. Yinka Adedeji, said the introduction of mobile money was to create a platform for easy transfer of money and also promote the desire of the CBN to reduce the dominance of cash in the economy.


Adedeji said: “UBA has been in retail banking business for a very long time and we want to leverage on that platform with mobile money. It is not just a money transfer system, it also enables one to save.” Jameel also said that the product could be accessed by all Glo subscribers after registration and dialling *866# or by downloading the menu through a link provided by Afri-pay.


“Existing Glo subscribers and new ones can perform various operations such as cash deposit, withdrawals, and transfer from mobile to mobile; buy airtime credit for self or for others and bill payment. Others are account maintenance such as balance enquiries, last transactions and mini-statement. It will also enable customers to request PIN change. Other lifestyle changing products and remittances will be introduced with time,” he said.


Globacom’s Director of Tele-Banking, Mr. Tunde Kuponiyi, said that the partnership with UBA was to attest to the national carrier’s long-established tradition of leading the telecommunications services for expanding the financial services network through the medium of mobile technology.


He added that UBA’s over 700 branches would serve as agents to take deposits into the mobile account and pay out for any withdrawal or any money sent to anyone through the mobile.


“In addition, Gloworld shops and Glozones spread across the country would also be covered as agents. Agents have been trained in urban and rural areas to serve customers on behalf of UBA/Afri-Pay.  The U-Mo experience is expected to bring about a paradigm shift in common man’s way of life,” Kuponiyi said.


Globacom’s widespread reach is a huge advantage for the new mobile money partnership. With telecoms licences in Nigeria, Ghana, Benin Republic, Cote d’Ivoire, Senegal and lately Gambia, the company is able to give circuits to customer locations and offer seamless services in several countries without engaging third parties. Glo owns the entire end-to-end architecture of Glo 1, including access systems, the national fibre-optic backbone, the international cable systems, international gateways and data centre services. Globacom’s presence in several parts of the country and other countries and its fibre optic networks entail that it can offer last mile and domestic long haul services to Glo 1 customers.


For instance, the 9,800-kilometre long Glo 1 international submarine cable has been integrated with its 10,000 km long pan-Nigeria cable. SAT-3, Suburban and Main One do not own any domestic infrastructure or operator licence in any West African country and can therefore deal primarily on wholesale bases or lease services of last mile providers.


According to the CBN, it opted for the creation of an enabling regulatory environment as a policy path towards achieving availability, acceptance and usage of mobile payment services in the country, after it identified person to person payments (over the mobile phone infrastructure) as a practical strategy for financial inclusion of the un-banked.


The overriding vision, the apex bank explained, was to achieve a nationally utilised and internationally recognised payments system.


“The objectives of the regulatory framework are: Provision of an enabling environment for mobile payment services in reducing cash dominance in the Nigerian economy; specification of minimum technical and business requirements for various participants in the mobile payments services industry in Nigeria,” it said.


According to the guidelines, the core infrastructure in providing a national mobile payment system comprises transaction, clearing and settlement arrangements. These infrastructures, it stated, consisted of service providers, network facilities, information and computer technologies, operating procedures and rules. To achieve finality of payments to all parties, the settlement process for all models need to be defined as well as the rules guiding the various services.


It further pointed out that infrastructure already existed at the national switch and inter-bank settlement system, to facilitate the settlement finality of payment through the CBN Inter- Bank Funds Transfer System (CIFTS) infrastructure.


Analysts at Financial Derivatives Company (FDC) Limited had said that the high level of mobile telecommunications penetration in the country was expected to translate into an increase in bankable Nigerians.
The research and investment advisory firm also noted that mobile money system was infinitely more efficient than the cheque settlement system. It also stated that mobile banking product would lead to a significantly higher velocity of circulation and financial intermediation.

 

 

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Updated 7 Years ago
 

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