Abuja — If the time frame of the CBN governor Sanusi Lamido, gave the impression of frailty, his sweeping reforms have projected a different story. Notwithstanding the competing views on his house cleansing efforts and banking sector transformation, it is undisputable that the sector was indeed hiding fundamental inefficiencies and corporate governance issues.

Now, the CBN governor appears to be moving into the realms of service delivery initiatives, anchored upon a culture of good corporate governance and systemic stability. According to The Governor the CBN would work hard to bring about the emergence of a competitive banking industry structure, the required infrastructure, improved cost structure of banks (through cost control), reliable and secure payment systems and reduced informal sector and greater financial inclusion'.

Two elements have direct ICT bearing that interest me, even though all the others can be enhanced with appropriate application of ICT's. The first is the issue of secure and reliable payment systems. The second is that of inclusion.

Secure and reliable payment systems are essential for the movement of money within the economy ensuring goods and services are traded quickly and keeping the economy lubricated. Secure payment systems capture electronic and non - electronic forms of payments or monetary disbursement. The one that currently dominates consumer attention is arguably the Automated Teller Machine (ATM) and issues surrounding its availability and security.

CBN reports for 2007 showed N41.28 billion was withdrawn in a six month period in 4,765,467 transactions. Clearly there is increasing dependence on this as we are still a cash dependent society with evolving electronic payment systems. I have two core issues with our current ATM deployments. One is the issue of availability. It is still too common to find machines that are offline, not working or simply connected to networks that are too slow to deliver seamless transaction communications with the centralised servers that deliver authentication and fulfillment services.

One would have thought that with the levels of resources available to banking organisation there would have been a high capacity 'pooled' network carved out of form existing fibre optic networks to create a high speed broadband infrastructure supporting interlinked banking services. Perhaps the institutions do not understand the psychology that supports a cashless economy. It revolves around trust and the perception of dependability. Users need to have a 100 per cent reliance orientation to do away with withdrawing and keeping unproductive cash, which is kept as a hedge against the perception of unreliable ATM services.

Despite the obvious advancements made by the banks, the vision has to be one of unfettered availability, which can only be guaranteed with reliable high capacity networks that have end points delivered to locations that the banks or other ATM licensees can connect. It could even be branded as an ATMconnectpoint denoting service excellence and reliability. To contextaulise it, unavailable ATM infrastructure at a time when banks are not open can cost lives, especially in a country where medical services are still frequently denied to victims of in live threatening situations, if cash payment is not available.

The other issue is that of security, which demands more robust technical architecture and customer advocacy. Without PIN disclosure, it is relatively difficult to perform authentication - banking institution to individual.

Merchant attitude is another issue that has to be tackled comprehensively. Where electronic means are tendered to acquire goods and services there is a difference in economic dynamics. Unlike an ATM that dispenses cash and introduces the inefficiencies of cash management into the dynamics of settling obligations, e-payment systems are a system of transferring obligation for settlement of a debt from the customer to a banking institution following authentication of customers identity.

The benefits are immense to a financial system. Economic activity can be more accurately gauges, costs of cash production and management can be reduced as no physical money moves in a typical transaction. Risk of losing cash is significantly reduced and it is often the case that merchants often blame non - functioning equipment as the reason why they cant accept a debit card payment, masking the real reasons of distrust, fear of delays in the settlement process and a crude preference for physical cash.

I was constrained to ask a foreign merchant at the weekend if his native country's payment systems would have evolved had they continuously hidden behind excuses of imperfection to justify why they must be paid in cash despite having a card payment device in the store.

However, there are two sides to every coin and there may indeed be some validity in their concerns. Are the settlement systems and timeframes predictable and bound in a concrete time frame? Are dispute resolution mechanisms clear and designed to provide quick results? After all, in a Card and PIN world, the merchant is not authenticating signatures. If the card presented and the PIN are authenticated by the banks fulfillment systems via the banks POS machines, responsibility must be swept to the banking institution and payment must be made upon presentation of transaction evidence.

Therefore, in a scenario where reliability of networks becomes resolved, there may be the need for laws to make it mandatory to accept presentation of a debit card as payment offer. Spot checks can be undertaken to ensure compliance as the cost of producing money and the other factors must drive the level of seriousness attached to compliance. Banks can also incentivise merchants by designing innovating reward schemes to break the cycle of resistance which is still currently widespread.

On the issue of increased inclusion there is a number of baseline facts that must be appreciated. Nigeria remains a largely unbanked population limiting the ability of the well intentioned banks to mobilize deposits and consequently impact investments in the real economy. With a reported 50 - 60 million Nigerian adults unbanked, hundreds of billions of Naira probably remain outside the sphere of banking activity, diluting the ability of these institutions to translate them to structured financial products and loans that drive economic growth.

The dilemma of exclusion has to be understood from a number of perspectives. First, despite the fact that approximately half of Nigeria's population can be found in peri urban and rural areas, even those in the urban areas still remain largely unbanked. The factors are numerous. There are real and perceived hurdles thrown in the way of would be low - income earners, as they are often required to maintain minimum deposits which they can scarcely afford. In some cases the account opening costs are simply too high, the processes too involved and the banking edifices oftentimes intimidating, especially to the low income Nigeria who has an innate distrust for institutions and does not have the comfort of being guaranteed a fair hearing if a dispute occurs at some point in the future. In rural areas, banks simply appear unable to justify the costs of putting up branches to serve relatively small communities.

Countries like the Philippines, Russia and Kenya, Sudan, Somalia and Ghana have leveraged the concept of branchless mobile phone banking services to mitigate the adverse effect of having a huge population of unbanked citizens. These services are not additive, as in the case of additional services offered to existing customers via a mobile interface, but are entirely transformational - bringing service capabilities to people who do not have a bank account, and there is an underlying assumption that mobile phone penetration is faster and more ubiquitous that physical bank branch penetration.

In fact, Mpesa the market leading mobile transfer and banking service offered by Safaricom of Kenya, now boasts of well over 6.1 million users transacting in excess of $230m USD per month for money transfer, bill payment and purchases. To underscore the success, Martin Odour - Otieno, the CEO of the Kenya Commercial Bank, describes their partnership with Safaricom as "the largest outreach programme in corporate Kenya's history,"

The Mpesa story is well known, globally. It demonstrates, critically that Kenyans, regardless of education level or status are able to utilize VAS services that they perceive as beneficial to them. Safaricom states in it's 2009 results that SMS, MPESA & Data continue on an upward trend with 83% increase in revenues to 12.9% of total revenue mainly attributed to M-Pesa and 3G.

But it is critical to understand the drivers and dynamics of the market. It is critical to understand the role advocacy and education will play as virtualisation tends to increase distrust. It is also important to understand the potential challenges within our own landscape. The size of the country necessitates an extensive retail network of agents to disburse money. This does not need to be exclusive to mobile transfer / banking services but can leverage existing retail outlets. However, this introduces the question of light touch regulation to ensure customer protection and service delivery.

For example, cash float availability has emerged as one of the leading problems in Kenya. Because the majority of transactions in rural areas are withdrawals, agents must maintain their cash float. They do this by making frequent trips to the bank. This can be problematic if the agent is not close to an urban centre, where most banks in Kenya are located. An agent in Malaha, a small village in Western Kenya, is reported as saying, "almost every day I ride my bicycle to Kakamega to top-up my float. This takes me almost three hours. I have to leave at 6am because I want to be there when the bank opens. I must then come back again and serve my customers"

Our own major issue may be the presence of cash floats attracting incidents of violent crime to rural agents. They may be guaranteeing the integrity of the retail chain. Questions of security of transmission will arise and I note companies like cell trust the SMS security specialists are already partnering with Nigerian companies to meet this anticipated challenge.

It is therefore important to look at the models that are delivering success and identify the main success drivers and challenges when juxtaposed on our own environment. One of the foundational factors will be regulatory control. Although, I have always felt that as a financial solution simply leveraging telecommunications networks and devices as access channels, this is a purely financial services regulatory environment, there are those who consider this a telecommunications product and in Kenya for example it operates outside existing banking regulations and has spooked financial institutions who claim that some users treat it like a bank deposit account.

During 2008, Kenyan finance minister John Michuki ordered an audit of M-Pesa, in an effort to allay concerns about the safety of users' money.

Vodafone and Nokia are also reported to have issued a issued a policy paper calling for an overhaul of the regulatory framework in emerging economies that would open up the market for deposit-taking, clearing systems, and know-your-customer rules to incorporate the activities of mobile operators. These development underscore the importance of a well considered approach to the issue of mobile assisted financial inclusion. The upside is that we are late entrants who can take advantage of painful lessons that others have learnt.

In conclusion, The CBN needs to contexualize the economic value of this eworld in the Nigerian context, identify the channels and challenges that should be focused on, and challenges it put the appropriate regulatory elements in place.

The CBN needs to inspire confidence in the electronically leveraged payment and transfer system. It should influence legislation where necessary, set clear benchmarks and process enhancements, and stipulate penalties. It may benefit from packaging this bouquet of many facets into a well branded vehicle that can be pushed by the bank, institutions and all stakeholders with the common goal of delivering secure e - leveraged payment and money transfer systems, that provide additional value for the banked, and low cost and simple banking type capabilities to those outside the formal banking system within a framework that emphasizes reliability and customer service.

Adeagbo writes from Abuja.