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4 Things that will keep Nigerian Bank CEOs Awake in 2020

Mobile security threats, service downtime, consumer credit services and TechFin challenges will keep bank and Fintech CEOs awake in the year 2020, OLU OJO PHILIPS argues.

There is no doubt that we are living and leading in uncertain times. Whilst the role of a bank or Fintech CEO is an incredibly rewarding one, it also comes with its fair share of worries. But what are those concerns and what is it that’s keeping them, or you, up at night?

Research suggests that their concerns tend to fall into a number of broad categories: the ability to operate in a global market place; political uncertainty and legislation; being able to capitalise on emerging technologies in a timely manner and talent related issues.

Locally, if there is one thing the bank and Fintech CEOs would worry about in the year 2020, it is mobile security threats and others.

  1. Mobile security threats

The mobile channel is becoming increasingly diverse, and hence, difficult to manage and deliver services through. This is due to a combination of greater use, and complexity and density of data.

Financial organisations face the growing challenge of managing and growing the mobile channel, including, crucially, keeping it secure. Already, Nigerians are counting their losses as SIM swap fraudsters’ empty bank accounts. The sad news is that this may just be the beginning of mobile security threats in the financial industry.

As big data, 5G, cloud computing, industrial internet, artificial intelligence, block chain, QR Code payments and other emerging technologies will inject new vitality to the system next year, they will also bring new risks, challenges and uncertainties. Here lies the reason the CEOs would have sleepless night in 2020.

Security measures need to work across platforms, and over multiple channels, such that the experience for the end user is at least consistent, and the relevant information is shared at the relevant points throughout the customer journey.

Beyond two-factor authentication, how advanced and sophisticated does security now have to be and how do you achieve it?

2. Service downtime

In today’s ‘always-on’ world, customers expect to use a service whenever they wish. Downtime therefore is not acceptable, especially in mission-critical industries like financial services where people rely on apps and online systems to complete vital everyday tasks.

Furthermore, it is not in the banks’ interests to continue suffering these frequent outages.

Downtime is costly. Firstly, it affects brand reputation – customers don’t forgive easily. Just a few minutes of downtime can completely destroy the customer experience and if organisations fail to deliver exceptional customer service in today’s fast-moving world, competition will waste no time trying to steal customers and swallow market share.

The cost and impact of IT system downtime has never been greater due to businesses’ increasing dependence on IT systems and infrastructure across all areas of their operations.

Gartner estimates the average cost of network downtime at a staggering $5,600 per minute.

Holiday periods are nightmarish in Nigeria because of the financial service downtime. Unfortunately, this may continue in the year 2020 as the industry don’t seem to be ready to confront this monster with the require investments.

It is high time Nigeria Inter Bank Settlement System [NIBSS] live up to its name as Nigeria national switch with require upgrade of its infrastructure to cope with increasing transactional data that pass through it system.

NIBSS need to learn from China Union Pay (CUP), a company that plays similar roles in China. CUP is the default China national switch. It processes transactions for WeChat, Alipay, UnionPay International and others.

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Today, CUP processes 5,000 Transactions per Second (TPS) and has 180,000 TPS installed capacity. Despite this, CUP is planning another upgrade in the year 2020 in apparent preparation for China’s Central Bank digital currency and others. It would be recalled that the last time CUP experienced downtime was 14 years ago. This excellence is what NIBSS must attain.  CUP has three data centres in Shangai, Beijing and Hong Kong.

As the Bankers’ Committee prepares for their annual retreat this weekend, I hope service downtime will be part of the agenda.

3. Consumer Credit services

As against the international best practices, payment services are the Holy Grail for Nigerian banks. Our banks hardly bother to earn money from lending services. Some of our big banks earn as must as N1 billion monthly from transaction alerts.

The Central Bank of Nigeria [CBN] is keen to change the narratives and that is good for the economy. For breaching its guidelines on lending to the real sector of the economy, the apex bank has fined 12 major banks a total of N499.1billion in the outgoing year. This is highly commendable.

To ramp up economic growth through investment in real sector, the CBN had approved that all the banks should maintain a minimum loan to deposit ratio [LDR] of 60 per cent by September 30.

Based on the guidelines, failure to meet the minimum LDR of 60 per cent by October 1, would attract a levy of fine which is additional CRR equal to 50 per cent of the lending shortfall of the target.

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And to encourage SMEs, retail, mortgage and consumer lending, these sectors shall be assigned a weight of 150 per cent in computing LDR for this purpose. This is probably the biggest worry for the bank CEOs. I have witnessed at least five credit card scheme pilots in the last three weeks.

  1. TechFin challenge

The entry of the big technology companies into the banking sector is going to be a big concern for the bank CEOs in the year 2020.

The sheer size and funding of companies such as Google, Facebook and Amazon meant that they could soon dominate, rather than diversify, many of the world’s financial services.

How would bank ensure that these companies are forced to share data on their financial service customers with the banks and financial technology to prevent unfair competition and ensure a level playing field?  These are some of the issues that the bank CEOs must prepare to face in the year 2020.

May your roads be rough?

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