Our team recently met Olusegun Adeniyi, Chief Digital Officer for Wema Bank Plc., the pioneer of Africa’s first fully digital bank, ALAT, in Nigeria, the most populous African country. Olusegun Adeniyi is active and passionate about developing the Tech ecosystem within Africa. He talks with us about financial inclusion, digital banking and the future of financial services.
How does a digital bank facilitate financial inclusion in Africa? Are there any specificities to take into account?
Olusegun Adeniyi : The World Bank, in its definition of Financial inclusion, implies that Financial inclusion is the availability of a bouquet of financial products in an affordable and sustainable manner.
The digitization of these financial products by the creation of digital banks has reduced the cost-to-serve, while shortening the steps required to access these services. While the digital penetration in Africa (39.3%) is still below the global average (58.8%), there has been significant growth in the adoption of digitized financial products which has recently been bolstered by the Covid-19 pandemic. In the past, a major concern that undermined the efforts of digital adoption was that of interacting with mobile/digital devices rather than people or physical structures, however, as broadband connectivity is being extended to rural areas, banks have been able to offer not just ease, but increased reliability of services, allaying these fears.
On the side of banks that have digitized their services, regulatory issues such as know-your-customer (KYC) have also been taken care of, with the use of data obtained from smartphones and government issued identity numbers. These data have also provided banks with the opportunity to extend micro forms of credit to hitherto ineligible individuals, as digital banks through the aid of plugins and algorithms can now ascertain and evaluate credit risk in real time.
In conclusion, digital banks facilitate financial inclusion in Africa by increasing access to financial services through lowering costs and increasing efficiency; solving KYC concerns; and allowing for the disbursement of micro-credit facilities.
What is the typical profile of a Wema Bank client? How do you reach and attract new customers?
O. A. : The ideal Wema Bank customer profile has been identified as one that is eccentric, adventurous, has strong negotiation power, an eye for opportunities, is aspirational and open to career and personal development & business opportunities, deals and discounts, always looks for the easiest and fastest way to do things (works smartly).
We meet these customers at their various conveniences, largely through social interactions via social media, visiting schools to have direct contacts with students that fall under the identified persona. We also look to engage via adverts on the various websites that have been proven to engage these client types directly.
What are the strengths and weaknesses of Nigeria on the road to digital transformation, for the development of a tech ecosystem?
O. A. : Nigeria’s strength is and always has been its people, we are a nation that has always been innovative at heart. According to a report by fDi Intelligence, Nigeria has the largest number of tech startups in Africa. However, headwinds such as the heterodox policy climate has resulted in the perceived low values in the ‘EASE OF DOING BUSINESS MATRIX’, slow pace of infrastructural development which has invariable resulted in the high cost to serve. Also, currency devaluations have negatively affected the funding of opportunities required to achieve a total transformation.
Mobile payments have revolutionized financial services in Africa. What will be, according to you, the next disrupter for the banking industry?
O. A. : Well, for me, the next big thing will be the adoption of Open Banking, which is in many ways similar but not the same as Banking as a Service (BaaS). This is borne out of the wide scale adoption of digital services and certain market and regulatory overtures in that direction. Banks have gradually disregarded the notion of FinTechs being their competition and now view them as partners for growth, this is given credence by the willingness of banks to open up their APIs to these FinTechs to plug in and deliver value.
Wema Bank is one of the pioneers in the banking market in Africa. What will be its next move? How do you see Wema Bank in 5 years?
O. A. : We have taken the first step of becoming an industry first in the digital space with the creation of ALAT. The digital bank has continued to grow and garner new capabilities and it will be pivotal in Wema Bank’s strategy of achieving digital dominance. The bank’s 3-year strategic vision culminates with us becoming the dominant digital bank in Nigeria. Our aspiration is to go beyond being viewed as just a payment channel to becoming a lifestyle partner endearing ourselves in all the facets of our customers’ (in Nigeria and in Africa as a whole) lives.
[Olusegun Adeniyi will be a speaker at the Fintech Summit next September 14th and 15th at European Convention Center Luxembourg. Among other things, he will deliver a keynote speech entitled “The path to Financial Inclusion: Technology First”. Fintech Summit is part of the renowned tech summit ICT Spring Europe, attended by more than a hundred experts.