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The financial services industry has witnessed a landmark in the penetration of banking services to rural and urban areas with the introduction and migration of its payment cards and terminals from magnetic to the more secure chip and pin EMV platform.

However, despite these achievements, the industry is still faced with the challenge of encouraging about seventy per cent of the presently ‘unbanked’ population to be financially inclusive.

About seventy per cent of adult Nigerians do not have bank accounts, said a report by Enhancing Financial Innovation and Access (EFInA), an independent non-profit organisation, set up to promote access to financial services for the unbanked and financial sector development in Nigeria.

According to the EFInA report, presented in November last year, Nigeria remains largely unbanked with only 25.4 million people, representing 30 per cent of the adult population, having bank accounts.

The report also said that 39.2 million Nigerians, about 46.3 per cent of the adult population, are financially excluded, that is, have no access to financial services.

Some of the challenges that make many unbanked include the long process of opening bank accounts, the time spent during bank transactions, fear of fraud, arbitrary bank charges, among others.

Complex demands

Ganisirey Seck, MD, Ingenico (Nigeria), said she could not open a bank account on her arrival into Nigeria.

“The Know Your Customer (KYC) is all about filling forms. When I went to fill an account opening form in one of the banks, I couldn’t fill it because I was lost. They were requesting for this and that. There are challenges and we have to overcome them. About 68 per cent of Nigerians are without identity cards. We need more than one identity factor. Is there any possibility that we can be enlightened on the KYC form?” Mrs. Seck said.

She said she had to go back because she couldn’t fill the form. “I couldn’t fill anything; I didn’t understand what they were asking me, and why they were asking,” she said.

Funmi Adeoye, a song writer, said despite the fact that “I already had an idea of what could be requested, I still spent over an hour trying to open an account in one of the banks I use. I already had NEPA bills, passport photographs, international passports, and all that, yet, the time I spent trying to open that account can actually be improved on.”

Industry watchers say under normal circumstance, opening bank accounts should not be as tedious as it is obtainable. Some of the information requested by the bank include basic data details that the government should have made available to the banks if there was an existing central database for national identity.

It is probably because of the lack of this that the Central Bank came up with different policies of identifying bank customers, which may indirectly be a burden on the customers.

Just recently, the Central Bank ordered that all bank users should go to their respective banks to update their personal data.

Moving forward

Some finance experts believe the ongoing SIM registration would help address some of the challenges of customer identification in the banking industry, which has to battle with identifying its customers, especially when it comes to e-payment, mobile payment, and all the related banking activities.

“SIM card registration, a mandatory collection and registration of identity information on mobile phone users as a requirement for their owning and using their mobile phone number, can help with bank’s KYC and identity confirmation for payment,” James Agada, MD. ExpertEdge Systems (CWG’s software division), said.

According to him, the SIM card registration can help in tracing transactions related to criminals and criminal activity.

“By registering a SIM, you can know all about an individual, technically,” Mr. Agada said.

Mosh Adetoro, CEO, Qrios Networks, a specialised technology house focused on services on helping clients in the deployment and maintenance of mission-critical environments, said some of those who would have been interested in opening accounts have got no means of identification and are not literate.

“There are too many things that you ask for in KYC that makes it even impossible for them to fill and be included. This has to change,” Mr. Adetoro said.

According to him, mobile payments, using mobile devices as a means of transferring monetary value in Nigeria, may fail if the Central Bank does not step in and make this change, as it is too hectic a process for people to go through, all because of opening an account.

Know Your Customer (KYC) compliance regulation has over the years proven to be one of the biggest operational challenges banks, accountants, lawyers, and similar financial service providers worldwide have had to overcome.

The KYC compliance mandate, its positive outcomes notwithstanding, has burdened companies and organisations with an extensive administrative obligation. Furthermore, it increasingly entails the creation of auditable proof of due diligence activities, in addition to the need for customer identification.

Basically, in order to meet KYC compliance requirements, financial institutions have to verify that customers are not or have not been involved in illegal activities such as fraud, money laundering or organised crime, verify a prospective client’s identity, maintain proof of the steps taken to identify their identity, establish whether a prospective customer is listed on any sanctions lists in connection with suspected terrorist activities, money laundering, fraud, or other crimes.

Because no single form of identification can be fully guaranteed as genuine, or representing correct identity, the Central Bank says the identification process would be cumulative.