Thursday, 31 March 2016

How to make UBA’s Smart Money smarter.

In 2014, UBA released the Smart Money mobile app and Visa backed debit card with a lot of hype and fanfare. But beyond the fluff and PR hype, what does the product offer the average customer. Granted, it is targeted at young adults and individuals who make transactions online, on the ATM and POS. That way one can make transactions without exposing one’s account to fraudsters. Equally, one can manage one’s fund properly as one determines the amount to load on the card thereby limiting one's spending.

But however, the same benefits can be gotten by creating another traditional account with another bank, with the added benefit of accessing the bank counter to make over the counter withdrawals which UBA’s Smart Money cannot do as one is limited to ATM, POS, and online transactions.

As such, there should be added benefits that differentiate UBA’s Smart Money from conventional bank accounts. One of such is setting a higher interest rate. This would draw more people from the physical branch to the digital bank as they stand to make more money off their savings. This would also be beneficial to UBA as their overhead cost for maintaining their bank branches is lowered.

Another means is putting in place overdrafts. After all, it is targeted at young adults whom might depend on their parents for stipends. As such, the overdraft serves as a buffer till their cash flow becomes positive.

Equally, financial and investment advice and tools for making investments in stocks and the likes would be of great use to many young people who are figuring out a means to earn income and would need advice.

Finally, integrating social features into the mobile app such as enabling shared payments, and giving friends the option to compete over savings can make it attractive to young people.

Why Banks need to push the mobile money platform.

In Nigeria, mobile money has become the new buzz word with various platforms being churned out. Examples of mobile money platforms include Pay by Capture, Pay with Attitude, Naira Box, and Zoto. While many offer conveniences to customers which include the ability to top up airtime, pay utility and cable bills and pay at offline locations; this article aims to discuss the added advantages it offers to banks and financial institutions. 

One of such added benefit is big data. In modern time, big data is essential to innovative companies taking decisions. As such, having data on consumer spending patterns enables the banks to size up the net worth of the individuals, and offer products and services that are targeted at the individual’s needs. This action would be impossible without capturing data on the individuals spending pattern. 

Furthermore, by attaching such data to the BVN of the individuals, banks are able to share the data of the individual among themselves ranging from income level to spending patterns, to be able to have a picture of the individual’s net worth and needs, and offer products targeted to such needs.

This also leads to knowing the individuals credit worthiness as the income and spending pattern are already captured by the Banks. As such, credit facilities can be pushed by banks to a wide range of individuals who have the means and spend a lot. This action would be impossible if the data on the individual’s income and spending patterns are not captured and shared among the banks. This can equally be pushed through a partnership with merchants. For example, Spar’s partnership with Diamond Bank which brought about a Diamond credit card aimed at customers’ who purchase from Spar.

This large adoption of mobile payments by individuals’ owing to the customisation and personalisation of services to them and the availability of credit lines would compel reluctant merchants to adopt the service as they would sell more products and services. Equally, this will increase consumer spending as they can take loans or credit from the banks to increase their spending power, and they have the banking products and services tailored to their needs. This also further pushes the cashless policy the banks have been trying to implement.
Finally, this can aid the banks further their policy of financial inclusion. This is because individuals in rural areas and out of reach of the banks can use their mobile phones to make financial transactions without the need to be at a branch location to withdraw money. This, in turn, reduces the overhead cost of maintaining physical branches by the banks as more people move to carrying out their financial transactions on their mobile devices.