Experts tip PSBs as tool to boost financial inclusion

Experts in Nigeria’s banking sector have tipped Payment Service Banks (PSBs), as an initiative that have the potential to usher in innovative payment solutions that can revolutionise the banking and financial services ecosystem, and narrow the financial exclusion gap of the country.

According to them, PSBs would serve as a novel type of institutions, which would leverage on technology and digital strategies to enhance access to financial services for low-income earners, unbanked, and underserved customers.

The experts said the guidelines for the initiative were issued in pursuant to the National Financial Inclusion Strategy (NFIS) launched by the CBN in 2012, aimed at ensuring that more than 80 per cent of bankable adults in Nigeria has access to financial services by 2020.

Speaking at a roundtable, organised by the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos, Director, Payments Service Management Department, Central Bank of Nigeria (CBN), Samuel Okojere, said the initiative would change the face of conventional banking in the country, and provide more channels to carry out financial transactions.

Represented by the Assistant Director, Ademola Adeleke, he said the essence of liberalising the financial services space was not to diminish the Deposit Money Banks (DMB’s) but to foster collaboration and competition for an improved financial services sector.

Okojere maintained that PSBs had been set up with the sole objective of enhancing financial inclusion in rural areas by increasing access to deposit products and payment services to small businesses, low-income households, and other entities through high-volume low-value transactions in a secured technology-driven environment.

His words: “Revenues from transactional banking and retail banking are no longer the exclusive preserve for banks. Traditional roles of banks are now being performed by various technology-enabled providers of services, usually referred to as Fintechs.

“PSBs as Fintechs are specialised banks established to promote financial inclusion and enhance access to financial services for low-income earners and unbanked segments of the society by leveraging on technology.

“Although PSBs are not expected to extend credit, their activity will provide a basis for banks to collaborate and channel credit as may be necessary, to stimulate economic activities at the grassroots through the provision of financial services.

“The more diversified the deposit portfolio of the banking industry, the more resilient the industry. It is expected that as the PSBs commence a business, the overall deposit base of the industry will be further diversified. We hope that more virile banking services will emerge.”

In his remarks, Director, CIBN Centre for Financial Studies, Prof. Olalekan Asikhia, said a considerably large percentage of the Nigerian population was still unbanked, noting that according to the 2018 EFINA Access to Financial Services survey findings, 36.8 per cent of the adult population in the country were financially excluded.

He said that with the growing usage of mobile phones in the country, the PSBs already have a ready market for mobile banking to deploy their services using user-friendly mobile applications, as their major objective is to leverage mobile and digital platforms to enhance financial inclusion in rural areas, especially the underserved parts.

However, Asikhia noted that despite the numerous opportunities and benefits the PSBs are to bring with their introduction, they still face the challenge of onboarding unserved and rural customers who lack access to basic telephone services as they may be a novice to digitised solutions.

He charged banks to seize the growth opportunity in payments by investing in technological innovations, defining new operating models and partnering with FinTech start-ups and other relevant institutions.