How FMBN’s new banking solution will improve housing delivery

The nation’s apex mortgage bank has announced a technology-driven system that would help optimise its operations, writes John Ikyaave, a housing policy analyst. He said it would boost affordable housing delivery in the country.

After decades of unsuccessful efforts to modernize its operations and business processes to meet global banking standards, it is remarkable that the Federal Mortgage Bank of Nigeria (FMBN) has finally broken the technology migration jinx and is now set to go fully digital.

And it took the last month of the year 2020 to kick-start this historic process. On December 3, Mr. Babatunde Fashola SAN, the Minister of Works and Housing announced the approval of the Federal Executive Council (FEC) for the FMBN to procure and deploy a core banking software application at the cost of N487.39 million from Messrs. Fintrak Software Solution

The implementation of the banking system would be significant and far-reaching. Once operational, it would help the FMBN to create an integrated technology-driven platform to activate its operations. On the back of the digital service provisioning eco-system, the bank would then tackle the many systemic challenges that it has had to contend with over the years due to the largely manual nature of its operations.

Top on the list is fixing the longstanding inability of the bank to update, in real-time, subscribers’ monthly contributions to the National Housing Fund (NHF) Scheme. As manager of the NHF scheme, a pool of funds comprising 2.5 per cent of subscribers’ monthly salaries is deployed towards the delivery of affordable housing.

FMBN has drawn much flak from workers, stakeholders, and the general public regarding its handling of the scheme. Much of this is because of the multi-stakeholder structure of the NHF operations. Ideally, employers in the public and private sectors are expected to deduct 2.5per cent of the monthly income of workers who are registered with the NHF scheme and remit same to the bank.

Subscriber complaints and investigations over the years have shown that many employers are dutiful and prompt in shaving off the 2.5per cent of worker’s monthly salaries but sluggish and unwilling to remit the same to the FMBN.

There have been several cases of workers, who after years of working and seeing the monthly deductions from their paychecks, are heartbroken to discover that only a paltry sum had been credited to their accounts with the National Housing Fund because their employer had either failed to remit or remitted only a portion of what was deducted

These have resulted in instances of subscribers complaining that deductions made by their employers from their salaries are not reflected in their NHF accounts due to non-remittances by their employers to FMBN as well as the inability to promptly access details and information on the status of subscriber’s accounts.

The good news is that these issues would be history once the software is fully functional. The FinTrak subscriber management component of the application is specifically designed to fix them to ensure a smooth subscriber and customer experience for all workers that contribute to the NHF Scheme.

This means seamless back-end integration with employers in a way that makes deductions from workers’ salaries and remittances to the FMBN more transparent to all stakeholders. NHF subscribers will now get real-time alerts on all transactions on their NHF accounts and stay informed on the status of their accounts.

Another equally important issue that is vital to the operations of the FMBN that the core banking system would help to redress is the time it takes for subscribers to access credit from the bank and in the process upgrading the overall customer experience of NHF subscribers.

Before 2017, when the Ahmed Dangiwa-led management of the bank took office, it used to take as much as twelve months or more before eligible NHF loan applications were fully processed, approved, and disbursed to applicants to enable them to purchase their homes. Much of the delays were caused by the manual process of documenting and performing due diligence on loan applications that defined the relationship with Primary Mortgage Banks (PMBs), which FMBN, operating as a wholesale back-end mortgage finance institution, uses as fronts to lend to NHF subscribers.

These are some of the systemic issues that the FinTrak Credit Risk Management System, an integral component of the core banking system, is designed to resolve. The FMBN management projects that the software application would streamline the multi-layered mortgage loan process steps and eventually crash the time it takes NHF subscribers to access credit to less than two weeks when implemented. This implies faster mortgage loan application processing and disbursements as well as enhanced customer satisfaction and experience.

Besides that, the attainment of a two-week turnaround time for processing mortgage loan applications would be an outstanding addition to the progress already made by the Dangiwa-led management in this direction over the past three years.

Besides improving turnaround time, the FinTrak Credit Risk Management System by eliminating laborious manual documentation in the credit application and processing brings several other operational improvements to FMBN operations. This includes aiding digital credit scoring and appraisal for improved accuracy; improving the visibility of NHF subscribers’ credit performance in the records of PMBs; as well as ensuring early warning to the banks where the likelihood of delinquency is observed on specific subscriber loans.

Overall, the fact of the Federal Government’s approval and imminent deployment of the Core Banking Solution at the FMBN is historic. For the first time, the nation’s apex mortgage bank is set to have a world-class technology-driven system that would help optimise its operations and ensure a smooth customer experience for all workers that contribute to the NHF Scheme. This is a big boost for affordable housing delivery in the country.

Ikyaave wrote from Abuja

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