Thursday, 31 March 2016

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.

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