Vanguard (Lagos)

12 December 2012

Nigeria: CR2 Offers Cardless Access to Atms

interview

The banking landscape in Nigeria has been subjected to significant changes in the past years. Notably, the Central Bank of Nigeria , (CBN) has launched the Cashless Lagos Project to reduce cash handling costs and combat related fraud activity in the system.

To support the CBN initiative, Martin Dolan, the Chief Executive Officer of CR2, the leading global provider in self-service banking software solutions in a recent forum in partnership with Global InfoSwift Nigeria while announcing a secured self-service banking channels in the country told IT Journalists in an interview that they would provide users with card less access to ATM. According to him, their solution would supplement the card, rather than replace it. Excerpts:

Will the self-service banking ride on existing ATM or it will require new ones?

This is a great question because all ATM that are supplied today come with what drives the screen as a powerful PC. So we have a significantly bigger PC inside the ATM. So we take that same PC and we unleash the power to drive 50 transactions and to interact with other channels like the internet and mobile, and to make it more secure.

So in a nutshell, what we are doing is to take a standard ATM and unleash the potential that is driven by technological advantage to exploit devices that doesn't happen today in most ATM. We actually write our own software for the ATM and we have made sure that software talks to our central controller in a very powerful way. We make that much bigger so you can send richer data, which support more transactions, more advertisements and a totally different local view.

Replacing the ATM card with your card less transactions, are you considering advantages of the cards?

We are not trying to phase out the cards. What we are saying is today you have Chip & PIN cards in Nigeria. Chip cards are expensive to produce. If you want to provide service to the unbanked, they can't afford the charges for card, it may be too expensive for them. So you need an alternative.

So we would use the card for customers who can afford them to process transactions, but for customers who wouldn't necessarily be able to afford the cost of the card, we can provide card less access to the ATM. So we are supplementing the card, rather than replacing it.

A lot of people remained unbanked in Nigeria, how do you intend to work with Nigerian banks to carry these people along?

One of our major works is to help the unbanked. I was having this discussion with Central Bank this morning. There there was a study done in South America and it is said that 1.5 trillion dollars held by the unbanked are kept under their mattress across ten countries in South America.

I am sure that it will not be too different in Nigeria. People save for their funerals They keep it inside a box under their bed for whatever. IF that money makes its way into the economy into the banking system, then the bank takes a trillion dollars and can loan it out for more productive purposes.

It's in a thin box, it's not useful for anybody and it's not productive. So enabling people have the virtual account; a low cost account is what we do. The whole idea is to effectively make it easy for banks to acquire customers at low cost, and not charging those customers money that they couldn't afford at the first place.

Don't you think the idea of banks opening their e-channels to non-customers in order to generate more revenue will throw up security challenge, bearing in mind that these banks don't have the KYC of those customers coming in?

That is a very good question because the KYC issue is a big issue. From my point of view, that is the biggest problem. I have been studying the whole idea of mobile banking for a long time. I interviewed people from banking in South Africa, and the biggest issue for a lot of mobile banking people is to get the customer in the first place.

So, what we do is, we enable the customer receive the payment, so long as it stays below the limits that the Central Banks specified for the KYC. But the whole idea is to make the barrier to entry very low to encourage people enter the system, and once they get in, they will later get confidence to give their credentials.

Don't you think poor quality network experienced by Nigerians most of the time using the ATM will not affect the efficiency of this Self-Service Banking?

The Network challenges are infrastructure within the country. But a lot of banks are beginning to understand the critical importance of these devices, and so what they will be doing is putting the use of mobile system as a backup to the normal connections they have. So the combination of using the mobile connection with the existing connection is really a good one.

What has been the level of campaign so far for the Self-Service Banking in Nigeria?

Yes! I think the first step is to come and show the banks what is possible. The second stage is to probably go and show the system specifically to the CBN because they are taking a lead role in the whole modernization of the banking system, so we think that if we can communicate with the central bank, their leadership position in the market will make it more known to the general population. I think banks are often very careful not to do something that the central banks are not in support of.

Secure self service banking, the secure part is very important to self service because what we see today is that fraudsters are full time on trying to crack the security and some of them are very clever, so it's a very important aspect of the solution.

But the big issue that we address in a market place like this is that we see that what's happening is that banks are trying to get transactions more convenient to their customers and what we are finding is that migrating the transaction out of the branch to some other device is becoming a challenge because your standard ATM only has nine transactions and so a branch does 50 transactions, so you can migrate 50 transactions to a device.

In Europe we talk about migrating the people to the internet, but the central bank today gave me some very interesting statistics, more that 95% of the transaction done today in Nigeria are on the ATM that probably unique knowing that ATM have high usage, it offers a good opportunity for banks to migrate transactions because what you saw today and what you see this afternoon is that instead of nine transitions we have made 50 transactions available on the ATM because we specialized in Africa as a market.

We understand that internet banking is indeed available to everybody, it's available to the minority, so what we have effectively done is make the ATM the internet for markets like Africa and that is their most secure network, because you are assessing with a secure card and pin so that is the context of what we are trying to do here.

We can actually allow a customer with no card go to the AT, say for instance I want to send you money and I didn't know whether you have an account or not,I can send you the money and you get a message from my bank saying I sent you mone, when you reply to the message it will tell you here is a one time password, go to the ATM and select cardless interactionand it will ask you to put in your mobile number with the pin we just gave you and you will get your mone.

Now for instance you want to pay a member of your staff that doesn't hav a bank account, there is a very easy way to do it, they describe it as an electronic check because that is what it is. What happen to a paper check today when you write it to a member of your staff, they stand in the bank line, fill up the branch and face all kinds of stress where as when you give them an electronic check they can go to the ATM 24/7 and can take their money at their convenient. It benefits the bank branch and benefits the person who receive that money.

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