The banking industry is transiting from a situation where customers are migrating from physical in-person transaction to do-it- yourself transaction, courtesy of what telecommunications has enabled. The telecoms sector is going to get bigger and bigger and every other sector of the Nigerian economy will be relying on telecoms, because, there is going to be heavier dependency on telecoms for consumers to continue to carry out their human endeavours, says EBENEZAR ONYEAGWU.
Protocols.
So, thank you for the opportunity for me to share a bit of insight with respect to the topic of financial inclusion. When I reflected through what a MasterClass is, I said to myself, “MasterClass? The audience; they are in trouble. I am going to set questions that will be answered,” but when I saw it was MasterClass for the Fourth Estate of The Realm, I said, “No. Let me remove it , let me not get into trouble. Otherwise, the editorials that would follow soon, I will never come out of it.” Anyway, for you the journalists, I must also commend you for the great work you are doing in terms of projecting what is happening, especially with respect to the innovative and transformative digital agenda that we are pursuing.
Great things are happening in Nigeria
You know, I would like to share one experience for us to see that no matter how bad things are there are great things happening in this country. There are a number of great things happening. I guess it was in 2008, I went somewhere in the United States of America. We had introduced (at Zenith Bank) credit cards; we had also introduced what we call Alert and Deposit Notification. So where you carry out a transaction, instantly, as your account is debited you get an alert, which is the convention now. I went to a shop in the US and after shopping and I slotted in my card, the owner of the shop said, ‘No. The credit has not reflected, that he was not sure, because he couldn’t print! I said, ”Why are you saying this?” He said: “unless he prints he assumes the transaction did not go through.” As we were going through that motion, my alert came and I said to him: ‘This is the name of the shop. I have just received a notification that my account had been debited and your account has been credited.’ He looked at it and he said: ‘Yes, the name of the shop is correct; my POS code is correct; the amount is correct. Young man, where are you from? This technology is not in the US yet.” I said: “I am from Nigeria!’ So way back in 2008, when we had things like deposit notification, it wasn’t there in the US as advanced as the US Economy is!
Telecoms a game changer
Even yesterday, in our Board meeting, when we were having a discussion, one of our Board members, who is also in the US, said, ‘’Yes, I can tell you, there is notification in the US now, but that the one in Nigeria is much much faster! Once a transaction happens, it happens instantaneously.” But however, what is the fundamental for this to happen? It is telecommunications. So, in terms of the topic I am asked to speak on, I will just tell you; ‘Look, everything we are doing now, without telecommunications, beyond financial inclusion, without telecommunications, we can’t have banking the way it is. Without telecommunications, we can’t drive volumes that we are driving. Without telecommunications, we can’t talk about product innovation. When we are talking about product innovation, it is typically about application of digital technologies to revamp, reshape and change the way we do things. What we have now is that we are transiting from a situation where we have physical in-person transaction to do-it- yourself transaction, by virtue of what telecommunications has enabled.
Telecommunications sustains other sectors
Remember, if the system goes down, the biggest challenge is (Our mandate is to make sure our system doesn’t go down)and as a result, we were spending so much money building infrastructure to see that once one channel fails, there is a fall back to something else. It is telecoms that sustains this. So ladies and gentlemen, I would like to give that before going into the topic.
Well, telecommunications, the way we have seen it, I recall many years ago, I think it was in 1997, I was a branch manager and I was posted to Warri. At that time, telephone line in Warri was a problem; it wasn’t working. And, as a branch manager, even though a telephone was installed in my house, which I considered a source of pride that time, I realise that for the first two months I was not getting any tone on the line; I had to, on my own, go out to look for a NITEL technician; they became my friends. So, at that time, until 2001, if you had a phone line and you didn’t have a NITEL technician as a friend, your phone was not likely to work. But from 2001, with the evolution or emergence of GSM, everything changed completely! That is the watershed to what we are discussing as the topic today. That marked the beginning of new things to happen.
Bigger telecoms sector ahead
So, I would like to start by first and foremost, congratulating the NCC for what is being done and for this 20th year GSM anniversary celebration and, certainly, this is the beginning of many more years that will be celebrated and over the period, we are going to see that whether we like it or not, the telecoms sector is going to get bigger and bigger and every other sector of the Nigerian economy will be relying on telecoms, because, there is going to be heavier dependency on telecoms for us to continue to carry out our human endeavours.
Liberalisation of sector brought quantum growth
So, the liberalization of the Nigerian telecoms sector in 2001 unleashed quantum growth. Before 2001, telecoms in Nigeria was primarily run by NITEL. Telephone lines and a few mobile sets were running on CDMA-Code Division Multiple Access technologies, with a combined capacity of about 400,000 lines for the whole country! And this technology allowed for voice-only services and an abysmal contribution to formal financial activities. At that time in the banking industry, we relied on the telephone for basically voice communications and, by extension, for transmission of fax messages. A review of key indicators demonstrate that Nigerian Telecoms sector has recorded phenomenal growth since 2001. This can be seen from the figures from the NCC that total telephony subscribers rose from 2.2 million in 2001 to 204.6 million in 2020.
Mentality of NITEL days persist
Again, it is understandably so. You know that we carry the mentality of the NITEL days, because we are used to picking phone handsets and not getting a dial. When GSM came what did we end up doing? We all ended up buying from every network. What was driving it? Well, if this particular one goes off, this one will go on. And remember too, when GSM was introduced, coverage was not global (I mean, it was not national). Some could work in some cities, so, as a result, you saw people going ahead to have three or four lines. Again, it could help you manage connectivity problem, but now that the coverage is national, we are still stuck with our remaining number of telephone lines. I think, I personally have like three or four that I carry.
Regulator deserves applause
In the same vein, teledensity (the connections for every 100 individuals living within a geographical area) climbed from 1.9 per cent in 2002 to 107.2 per cent in 2020. This again, is from the NCC figures. I think we should give a rounding applause to the NCC. The percentage of the Nigerian population also using the Internet rose from 0.3 per cent in 2002 to 33.6 per cent in 2009, according to the ITU, while total Internet subscriptions stood at about 154.3 million as at December 2020. The impact of the dramatic growth in telecoms sector contributed significantly to the rebased GDP of the country in 2004. And from the data we have from the CBN, the telecoms sector accounted for 1.28 per cent ie N339.92 billion of our GDP in 2001. Now fast-forward that to June 2021, telecoms sector now from a paltry 1. 28 per cent to 14.42 per cent ie N2.41 Trillion of our GDP. This is a massive quantum leap of over 600 per cent! Another applause for the telecoms sector.
Progression in mobile wireless standards
So the telecoms industry has ensured that Nigeria is not behind in the global data revolution that began with the first generation (1G) networks. While 1G was groundbreaking, coverage was poor, the sound quality was low and there was no roaming support between various operators due to lack of compatibility between systems. Since the first generation of mobile wireless standards was introduced, successive standards like 2G, 3G, 4G and now, recently 5G, brought about advances in data carrying capacity and decreases in latency.
While 2G enabled text messages, picture messages, multimedia messages, it revolutionalised data transfer speeds! The technology had two major implications for the formal financial sector. First, banks would rely on telecoms networks to carry out banking operations . Secondly, individuals could use internet services provided by telecoms providers to access banking services. 3G launched in 2007 enabled users to access data from any location in the world due to its faster speeds. It led to the rise of new services such as video conferencing, video streaming, and Voice Over Internet Protocols(VoIP). 4G launched by Internet Service Providers( ISPs) in 2014 and telcos in 2016, made high quality video streaming a reality for millions of consumers. It offers fast mobile web access which facilitates gaming services, high definition videos and high quality video conferencing.
Disaster management
Ladies and gentlemen, we are just coming out of the coronavirus(COVID-19) pandemic. Last year (2020)was an unusual year. Imagine you having to deal with relating with your relations, family members, children, without you having the ability to do video conferencing. If not for the higher capabilities that we have now seen emerge in the telecoms sector, it would have been difficult for everyone of us psychologically to have survived the lockdown period of the COVID-19. I have my children who are not in the country, but we made sure that everyday we were able to do video calls and having video calls, discussing with them, seeing them and knowing where they are, gave some assurance that yes, all is well. So can you imagine life without that? Life without that is like asking somebody to go back to the stone age.
Telecoms revolution a recivilisation
So, if you are looking at the revolution of telecoms, I see it like another re-civilisation of the way we live, the way we conduct ourselves and we can never go back to where we are coming from. Because going back to where we were coming from is like saying: we are returning to stone age; it is not possible! It’s just not possible. They have changed our lives. We can only help but go with the flow. I don’t remember the number of times I have written a cheque ; I have never written a cheque in the last three years. Why do I need to write a cheque when I know I can do my transfer electronically? Why do I have to do that? And, I guess, the number of people who had to do no cheques even made things difficult for us too. Because, I remember, in the village, someone walked up to me and said : “I need some money,” and I said, “you know it is weekend and bank doesn’t open,” and he said, ‘’no I have USSD”. Again, this is the power of telecommunications. I said to him, “what do you know about USSD?” and he said, “I know that, because, I have a mobile phone; I will give you my number and you will transfer… You as bank CEO, are telling me you don’t know…unless you don’t want to give me money?” I ended up, instead of pretending, I had to send the money. So you, see in a way, just as they are catalysts for our operations, they are creating problems for us too, because, we now spend more money. We don’t have excuses. So, the reliable speed provided by this technology, now gave impetus for the digitization of the financial industry, which subsequently gave rise to the emergence of fintech companies in Nigeria, who use technologies like cloud computing, artificial intelligence, data analytics, robotics, machine learning…, to design and deliver financial services .
We ain’t seen nothing yet
Now to tell you, part of the change we are seeing, the revolution we are seeing, is only beginning; it is just beginning. I never imagined from my earlier days as a banker, that I can give a loan to someone without him coming to the bank. Now, given the capability, the fallback, the foundation, the enablement that telecoms has provided, we have all built the algorithm for us to do the retail and digital lending where you don’t even need to have an account with me; all you need to do is dial my USSD string for a loan and the system will automatically score and know whether you qualify for a N50,000 loan or a N10,000 loan. Without telecoms, we will not have that. And again, you apply for a loan; you are not writing an application, you are not standing before a loan officer who is interviewing you. The beauty of it, the kind of transformation, is unimaginable. We have not even scratched the surface because we are just beginning.
The promise of 5G
So, the latest technology which is 5G promises superior connectivity, suitable for emerging era of internet of things(IoT). It offers possibilities of innovations such as remote surgeries, telemedicine and even remote vital sign monitoring that will save lives. Indeed, the liberalization of the industry has positioned the country to participate in the growing trend of digital transformation, while building our digital economy. Digital finance has emerged as one of the leading subsectors of the Nigeria emerging from digital economy, given the robust demand for electronic financial services and the need to boost financial inclusion. So the success of the telecom revolution and the immense contribution of telecoms sector, is reflected in the expansion of the economic opportunities and total national output.
Definition of financial inclusion
Now, let us talk about financial inclusion. Why do we talk about financial inclusion? First, is that financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs-transactions, payments, savings, credits, and insurance and delivered in a responsible and sustainable way. This is a paraphrase of how the World Bank defines financial inclusion. But, if I am looking at it, the way I would like to describe it is that anything that has to do with sustainability, which is also part of the sustainable development goals(SDGs) goals that the UN is pursuing, is about equity and fairness. It is about objectivity, so here, when we are talking about financial inclusion, we are saying that there should be no one left behind, we shouldn’t have a situation where you can’t have banking services for any reason. So it is about making the availability of financial services to all and sundry . So the CBN posits that financial inclusion is achieved when adult Nigerians have access to a broad range of formal financial services that meet their needs at affordable cost.
Digital channels adoption amidst COVID
For the unbanked and underserved, access to financial services enables individuals and small businesses to start and expand businesses, invest in education and health, manage risks and weather financial shocks. Ultimately, financial inclusion contributes to improvements in overall quality of life. Again, when we were battling the COVID-19, the period of the lockdown, without financial inclusion, it could have even been worse . You realize that nobody could do anything, the banks were not opened. Even when they were opened the protocols for you to access the banking hall was just too herculean for everybody. And what did we all resort to doing? Everybody started using the digital channels. And, I can tell you that, within that period, since the COVID-19, we have observed a remarkable surge in the number of customers that want to enroll on digital channels and, especially, the USSD. The number is growing by the day, because, what that means is that, once you have your telephone, you have access to banking service. That is what USSD connotes. Financial inclusion is also an enabler of several SDGs including: No Poverty, Zero Hunger, Good Health and Wellbeing , among others. So for a nation to effectively address financial inclusion needs of their unbanked population, the World Bank recognizes collaboration between diverse stakeholders, including financial services players and telecoms industry players.
Recap of Nigeria’s journey of financial inclusion
Now, let’s have a recap of our journey of financial inclusion in Nigeria. And, when we talk about financial inclusion, we assume started a few years ago. In fact, it started before I joined banking. Nigeria has largely been a cash-based economy with huge cash exchanges happening outside the banking system. Nigeria has recorded significant attempt to revive this trend and boost financial inclusion at the grassroot level. Some of the initiatives are as follow:
Rural Banking Programme in the 1970s, with the aim of having at least one bank branch in each local government. That was supposed to provide access to banking services to the rural communities. But today, you don’t see any of those rural branches surviving. Why are they not surviving? Armed robbers have pursued all of them from business. Again, it was not sustainable. Mark you, the definition of financial inclusion is providing financial services that are sustainable at affordable cost. Rural banking then meant that we had to do it by brick and mortar. The cost of you building, what it costs me to build a branch in Lagos, the same size, is about the same that it will cost me to build in another remotest part of the country; the only difference is the cost of the land. And, may be, marginally, the cost of labour. So, if you are looking at the brick and mortar that was the signpost of old, it would take us many years to have effective coverage across the country.
Then, there was also the launch of People’s Bank in 1989 to cater for poor professional people and traders. I am sure we all remember the story of People’s Bank? I am sure we all remember the story of the Peoples Bank? It was not sustainable. It was also an agenda of financial inclusion intended to provide credit support to the SMEs, and those at the grassroot level.
There was also the establishment of Community Banks in the 1990s, owned by different communities. The next was the launch of the National Economic Reconstruction Fund(NERFUND) to provide funds for SMEs and medium scale enterprises and Family Economic Advancement Programme(FEAP) to assist rural women. These were laudable objectives by government, but the gains were minimal. The gains were just less than marginal! So most of these financial inclusion initiatives, have been largely, what you see is that Community Banks, were succeeded by the Microfinance Banks, by virtue of the Microfinance Bank Policy of 2005, but again, MFBs too, depended on brick and mortar; we couldn’t achieve much for as long as we depended upon brick and mortar for inclusion. But in 2012, the CBN adopted the National Financial Inclusion Strategy which was aimed at reducing the percentage of financially-excluded adults in Nigeria from 46 per cent in 2010 to 20 per cent in 2020. It was expected that physical branches of banks and microfinance institutions would drive financial inclusion. However, the emergence of digital financial products and services, such as USSD banking, which enabled feature phone users carry out banking transactions and riding on the connectivity backbone of telecommunications, changed the game for financial inclusion!
USSD, a disrupter
The introduction of USSD changed everything. Right now, you can open account with Zenith Bank by just dialing *966#. Once you dial it, it takes you straight to the profile of Zenith Bank where you can open your account immediately. I think somebody should try it here and let’s see. So, that was the game-changer! And what happened when CBN saw that? The USSD code? Without the telecoms infrastructure, you don’t have a USSD code. When the CBN saw that was enabling us to unbundle a number of banks and reaching many unbanked, the CBN in 2018 revised the strategy for the National Financial Inclusion project. So in 2018, what did the CBN do? They now prioritized digital financial services as the main financial inclusion driver, identifying various stakeholders, roles and responsibilities, key among them, being the telecommunications companies, because ,they provide the connectivity infrastructure on which this service runs. The strategies employed are:
• Agent Banking
• Mobile Banking
• The USSD
• The Link model, ie link model cooperation between traditional banks and microfinance banks and the client empowerment.
In all, telecommunications is the enabler for the operation of the various digital platforms. So, with this, the financial inclusion rate trended up according to data from enhancing financial innovation and access (ENFInA).
From ENFInA report in 2010, financial exclusion rate in Nigeria was 46.3 per cent. In 2012, it dropped to 39.7 per cent; 2014, it dropped marginally to 39.5 per cent ; 2016, it was 41.6 per cent; 2018, it came down to 36. 3 per cent and in 2020, it was 35.9 per cent. We are behind the set target of CBN of achieving 20 per cent financial inclusion, but if we didn’t have the telecoms services, we would have been where we were in 2010. So, telecoms services and acceleration of financial services inclusion can be expoused as follow:
The delivery of digital financial services is only possible through the interconnectedness of systems and exchange of data.
The rise of multiplicity of payment channels
Today, transactions are being processed on different platforms such as smartphones, ATMs, POS, and the web. This will not be possible without telecommunications service. So Nigerian telecoms revolution has increased the number of players in the industry who are integrating into the financial services ecosystem, such as mobile money operators, super agents, payment facilitators, digital banks, payment terminal service providers, and the payment service banks, mobile money operators, mobile network operators and internet service providers. All of them now form the critical stakeholders in providing the significant digital infrastructure component that facilitates transactions by all the players. So in all this, it is clearly evident that telecoms has accelerated the expansion of digital finance leading to improvement in financial inclusion.
Telecoms more than a catalyst
So, for me, telecoms is more than a catalyst for driving financial inclusion. Indeed, what oxygen is to the body is what telecoms is to financial inclusion. Without it, there is no oxygen that will empower the soul of financial inclusion. Telecoms isn’t just an enabler; it is the fundamental behind it. First, even much more than financial inclusion. Think of the possibilities we have, the many possibilities, and that you can see in terms of what telecoms is doing.
Talking to Zenith Bank slide
Permit me to just show a slide that tells the story of what you see in terms of the growing volume of transactions we have between the conventional cheques and the transactions happening on the electronic platforms. What you see in the orange column represents the growth in transaction volumes on electronic channels ; there is another green bar that represents cheques. But I can give you the figures: In 2012, cheques accounted for 2.9 per cent of total transactions volumes , in terms of exchange, excluding cash, whereas, 97 per cent of the transactions were happening through digital channels. In terms of volume, it was 403.7billion counts of transactions . Fast-forward to 2020, the total transaction count is now 5.3trillion that happened on the digital platform (which accounts for 99.8% of the transactions between digital payments and cheques). What you see for cheques account for 0.2 per cent total volume, 11.6. So, whereas the transactions happening on digital channels are growing exponentially, the ones happening on cheques remain muted. People like us are contributing to that because, remember, I told you in the last three years I have never written a cheque. I have my phone, I can do my transactions on mobile phone, I can do it on USSD. I can do it on my Internet banking. The options are there. So, electronic transactions grew at a compounded annual growth rate of about 27 per cent while cheques declined by 1 per cent during the period even though transaction volumes for cheques are already very very insignificant. So, we can see that is only possible through the capability that the telecoms services have enabled. Again, a significant part of this volume of transactions you see are coming from financial inclusion participants, because for those financially excluded, what we see in terms of the transactions, especially when we deal with issues around tieback and complaints, I sent N1500 to my brother he has not received it, I bought N200 airtime it has not been received, I tried to recharge my NEPA bill for N500, I didn’t get the alert. When you do the transaction count there is quite a number and it would keep growing.
Challenges
Yes, we are talking about the services and the empowerment that telecoms has enabled. These cannot come without challenges. There are being challenges. That is why I am stressing that as this MasterClass is for members of the Fourth Estate of the Realm , we need you to create more awareness and advocacy First, let’s deal with the major one-availability, penetration and cost of broadband. Broadband penetration, as at June 2020 was 41.23 per cent in Nigeria compared with Kenya(46%) China and the US have over 70 per cent and 80 per cent respectively, of broadband penetration. Initially, when we started applying digital technologies to run business and provide service, we realized that first, before USSD came, you could only do mobile banking with your smartphone. So, if you have the ordinary feature phone, you were disenfranchised, but through the creativity from the finance industry together with the telecoms industry, the USSD product emerged. That USSD product has now made it possible for anybody as I said, once you have your telephone line, you have access to financial services. All you need to do is dial the USSD code of whatever bank you want to transact with. However, the experience we are also seeing is that those on USSD, because the kind of account and transactions you can do there are negligible, for USSD you can’t do certain transactions above N20,000.00. Those who have been using it that are so consumed by the excitement of being able to do transactions, are now migrating from the USSD to the next higher level of account. There are some, too, who are moving from feature phones, buying smartphones so that they can enroll in mobile banking. So, when they go and enroll in mobile banking, where is the broadband to cover them? The man in the remotest village in this country do we have broadband covering him? And even when broadband is there, what is the cost? The penetration, availability and cost of broadband is a major issue that we need to deal with.
Telcos have their own story
I know that we have telcos who have their own challenges; everybody has to provide infrastructure… but, I think, we can have a talk around it on how to make broadband more affordable. So, while it is estimated that over 100 million Nigerians have access to the internet, the cost for internet service is far higher than what we have at the global average. And, in terms of affordability, Africa has the highest price relative to income for mobile broadband services. As we have this session, it is important for stakeholders to satay back and begin to ask the question: How do we recalibrate this for better and improved inclusiveness and if you think that what we have , one of the beauties of inclusiveness is that we begin to have volume, so what you lose by virtue of the drop in your unit cost you can regain by volume . So, I applaud the efforts of the federal government though the NCC and the Honourable Minister of Communications and Digital Economy, who work to see this cost slashed by 50 per cent by in 2020 and are working to ensure that Nigerians pay not more than N390 per 1Gb of data by 2025.
Cybercrime, the biggest elephant in the house
Cybercrime is the biggest one! Before I go on to speak on cybercrime, permit me to show you statistics of crime that we see or the trend and pattern …What you see in blue represents losses suffered by banks that fraud and forgeries suffered by banks on the electronic channels compared to fraud and forgeries from other conventional channels. It is not peculiar to Nigeria. It was reported that globally, in 2018, the world financial institutions lost over half a billion US dollars to cybercrime! And it is projected that in another 2-3 years, it is going to be over a billion dollars!
The Internet Crime Complaints Centre noted that the most reported cybercrimes are phishing, non payment and non delivery owing to the e-Commerce , ransomware, personal data and identity theft. Other forms of attacks include: malware, password attack, there are different kinds of attacks. Some of these attacks occur when unsuspecting persons connect to the internet using public Wi-Fi, visit unsecure websites, connect foreign devices to their Pcs or smartphones.
The banks suffer most
And, we the banks, are at the receiving end. We are like a sandwitch in between two bread. A customer goes to a site he doesn’t tell us he went the site, he loses money ; he comes to you and says: “They have withdrawn money from my account and I didn’t give out my password, you have to compensate me.”
When we started installing ATMs way back in 2003, as a matter of fact, we launched the first offsite ATM in 2003 at Heineken Ama Breweries, it was launched by His Excellency President Olusegun Obasanjo, we requested that it should have an inbuilt camera, that the moment you collect your cash, it takes a photograph of who collected the cash. There was one incident that was very interesting for us. And, there was this man who came to the office fuming that someone has withdrawn N200,000 from his account. “ I didn’t give out my PIN, I didn’t do anything,” he said. We called the IT team. We provided the details on the man’s account and asked the team to review the photograph of who collected the money from his account. We printed it; it was a lady. When he came I showed him the photograph and asked whether he could recognize the lady. He turned sideways, he turned backwards, he looked round and asked: “How did you get that picture?” I asked: “what is the problem?” He said : “She is my girlfriend.” Lo and behold, Oga has compromised the card with his girlfriend, he forgot and now he brought the blame on us. He begged me that nobody should know this and that we should kindly delete it from our system. So, that’s the kind of thing that we face. There was also one that said, “Look Oga, they took money from my account; I don’t know who took the money from my account.” What did they do? They went and used the account for betting and they lost money. It was N40, 000.00; he kept on disturbing that he lost money. Something struck my mind: I had to ask him, “do you bet?” There was going to be this football match, I have forgotten who were playing. He said, “oga, occasionally I bet, but my son is more involved.” We asked our team to query what happened to the account on that fateful day. The man’s son actually betted, he used the money in his account without telling him and he lost.
Weak digital maturity, literacy levels
So, we are dealing with a situation where the digital maturity and literacy level is so weak. By virtue of what we have, we seem to have brought in a burden upon people without teaching them, without creating the awareness for them. With what we have done with digital technology, it appears we have loaded an AK 47 riffle for a boy and say to him: this is a toy you can play with it. The day he misdirects it, he will fire himself, the day he thinks he is attempting at something else, he would shoot someone. So we are seeing customers taking aims, shooting at the banks; we are seeing customers taking aims shooting at themselves! The level of digital maturity is so low.
Handling harmful capabilities
Yet another experience. There was someone who said: could you imagine? He said : “be careful, this phone, it records wherever you go.” I asked him: “how do you mean it records?” He said :
“you know the other time my wife came and was telling me the various places I travelled to; I didn’t know how she got to know.” What did he do; in the process of him using the Google map, you know you have to activate location services. And when you activate location services, at times you activate share on your device and those on your contacts. When you share those on your contacts where does the information go? And he said, “Oh my God, this phone will not kill us.”
People find themselves using many things without looking at the controls. And when he asked me what he should do, I said “well, why do you even have to hide where you are going from your wife; is there any place unusual you went?” He said, “No I am just worried people could tell my movement. “ He asked me how to go about it. I said, “okay, for locational services, disable it. When you want to use the Google map put it on, when you finish, put it off. “ Three months later, he came back and said, “God bless you. My wife asked me how come she is unable to tell my movements again?” So, there is a lot of learning to do. People need to learn and understand that inasmuch as this capability is there and it is useful, it can also harm us. look at the rate e-fraud is happening!
eNaira Blues
Even the eNaira that was just launched. eNaira was launched this week Monday. I remember telling my colleagues : Let’s start preparing the communication materials that will go out that will begin to caution people on the possible pitfalls, the dangers of eNaira, they said, “No.” They prevailed on me that it will create negative news. Yesterday, what did we start seeing? Fake websites. From my elementary days in banking, we were taught that the fraudsters are as intelligent as the best bankers you see. So, whatever you see developed, they will go back and study the pitfalls in it. It appears a bit innocuous. So, it goes back to our digital immaturity and illiteracy and what I will continued to advocate is literacy- Yesterday at the Fintech Association session, I repeated it. For us to deal with it, we need to introduce curricula for digital training, the way we had civics of old. People need to know and understand from the elementary level, what it means to have a computer, what it means to be in a digital environment. People need to understand so that ultimately, you now know how to conduct others and comport yourself. There is also the avalanche of fraudulent websites. When you see them they look like the real ones but they are not the same. One of our CEOs called me and said : “I received an email from you telling me that some people are coming that he needs to pay them some money and that the people have called that he wanted to let me know.” I said: “Wait a minute. You received an email from me telling you to pay money. If you are going to pay money, will I not call you to discuss it?” He said, he was wondering but he saw the email was my email address. I said, “wait a minute, go there, open the email address.” It happened that they masked my email address and when he opened he saw something like .gmail.com. Or you have a situation where a genuine email you have like ade.balogun@gmail.com, they will just come and put adee.balogun@gmail.com. That e they have added to ade has given it a different name and connotation. The other issue we have again is, what the telcos also need to understand, is that the SIM card is not an ordinary device to convey messages.
The SIM card-a repository of data
The SIM Card is now a repository of valuable data of the individual. There is so much data in it. Data about yourself, your financial services. So, the process of recycling SIM we dare say, we need to look at it and make sure that for a SIM to be recycled, the digital content must be purged. Otherwise, if my phone, especially, for our brothers and sisters, who live abroad and come visiting, while here they get a Nigerian number, they open a bank account, they put all the details and, if they don’t come back after one year, those SIM cards are repossessed. It is not a bad idea to repossess but we should work on purging those SIM cards of their digital content. What do you see? As soon as you drive a USSD string on that phone, it will reveal the BVN there and once I have your BVN , you are gone! Once I have your BVN and I dial the USSD, you are gone!
Another problem is identity theft, which the USSD has helped us a great deal to checkmate, but if you don’t manage it well, if you give out your BVN carelessly, it will be used to access your account. So if we can have that collaboration, within the banking community, we are working through NIMC to see how we will ensure that any Sim SWAP, once you hack into the system, there should be a trigger. But we can do much with collaboration, so that the telcos will see that if they are repossessing a SIM, they need to take it through a process that will purge it of whatever content that existed there, because, if we don’t do so, we are also breaching the data protection regulation. If I have my notification of my financial transaction on that SIM card, the moment somebody takes it without you purging it, all my details about my transactions will be going to the person. This is a fundamental breach. We don’t need to wait until the public wakes up to it to see that yes, I have a right to go and sue for undue disclosure of my confidential information.
Regulatory loopholes
We are living now in an era where products are being developed almost every day. Every aspect of human endeavor is being digitized. New apps are coming up. All you need to have digital connectivity with your bank is for you to have your application programme interface(API), user interface and together, we are connected and transactions will start going through. We have problems when, if we have developed an app, you want to decommission it; we have not thought of the regulation to deal with the decommissioning of digital assets and infrastructure, because they are virtual. We need to think about it. Why do I say so? We face a period when accounts are opened and under two minutes, you start getting fraudulent calls from somebody telling you , you have just opened an account, we need so so and so information. How was that possible? There was one expatriate who just came into the country and when he complained, I felt so embarrassed and I said, we must track this. We took the phone number and escalated it to the DSS at Ekpoma. DSS worked very effectively and they were able to track the boy behind it. We asked him: “How were you able to know when someone opens an account?” And he said, “There was an app one of the banks came up with, but that app is not in use. That app is not on Google Playstore, it is not on Applestore , but yet this app was still very active,that if you ask for some information, it will pop up your name and telephone number that you just opened an account. All they need do is call you for your BVN. Unfortunately, the bank didn’t even know that that was happening! So the issue is: how do we decompose such apps? If you don’t decompose them, create a regulation or process on how to decompose it, just as what I said for the SIM card, we are going to be encourage a huge amount and volume of cybercrime. There is no regulation on their data protection and also individuals need to mindful of the way they share their information. Smartphone users are reminded to be mindful of apps installed in their devices to stop cybercriminals from maliciously harvesting their data. There are many free apps to download. These apps are riders to so many other things… The free items are not completely free. The free items, in some cases, are quite expensive. A friend of mine told me there is nothing you cannot learn on the internet, including how to commit murder. So, we need to be careful how we use our data, how we visit websites, use these apps. Again, I am very happy that journalists are here; we need a lot of commentaries, we need a lot of advocacy on it. Somebody connects to a free Wi-Fi and he goes celebrating he has preserved his data! Some free Wi-Fi are genuinely put there for our use; some of them have been put there to harvest our data, to harvest our credentials and you wake up to go complaining to the banks.
Abuse of privacy
We need to have a collaboration, there should be understanding on how people use these infrastructure that is there. Recently, I have been receiving text messages from a certain microlending institution : “Emeka Okoye who took a loan from us has not paid. This is just to let you know; talk to him to let him pay.” My response is: “Do I know who he is? Why are you disturbing my privacy? Why are you banging into me?” I said it yesterday at the Fintech Association session that (the Fintech team, some of them didn’t like it) that you cannot come into financial services and not be regulated. The day you agreed that you are going to be into financial services, there are rules and regulations, subject yourself to them. If I give a loan to Mr A and Mr B was not mentioned as a guarantor of the loan the regulations do not allow me to go and start scandalizing him because he is owing. Unless I have the authority of the courts or the CBN to publish, I cannot publish your name because you owe me. And, besides, at my level, people may see my contacts they will take it and save it, so why are you sending it to me while I don’t know this person? One of my staff, who shares the same experience, has threatened to sue if he gets another one. These are cases of abuse of privacy. Because these services are there does not mean they should be abused, otherwise, it is going to hinder financial inclusion we are talking about. We need to have discipline, we need to have order, we need to have a sense of decorum that this is not a facility you use recklessly, because, it is at your fingertips.
Fake websites
And when people register, another thing is fake websites. The era of digital revolution is an era where there are a lot of possibilities. I said to some programmers, some ICT security experts, “What will it cost the IT industry for us to say, if you want to create a website, you need to have a validation.” For instance, in Nigeria, validate it with your BVN. If you are a company, validate it with your RC number and we have all the open APIs; that you have an API exchanged with CAC, so that on a day anything happens from your site, we know who to hold. The fake website, created for eNaira, who are you holding? It is in the thin air! Somebody will wake up and create anything and put a name there. And they said to me: what happens if the person is abroad? And I said, they use their social security number. So, we need to think about it to safeguard the ecosystem, otherwise, that ecosystem, itself, is endangered. People can’t tell what is right and wrong in terms of fake websites. So, identity management is a big issue.
My final thoughts
Telecom investment will continue to underpine the growth of financial inclusion. Therefore, it is important that all stakeholders have a continuing commitment towards the sustainability of this space. Telecoms capability has given rise to a new set of players- the Fintechs, the mobile money operators, the payment system providers, service providers, They have created new niche businesses for the economy. Without telecoms, we will not have Paystack, Flutterwave, Twiter, name them. They have no capabilities to stand anywhere. Telecoms is that enabler , it is that fibre that is holding this niche and it can only get better. That is why we all need to be committed to this.
Despite the contributions of the telecoms sector to the success of the digital finance services, and advancement of financial inclusion, ongoing investment in telecoms infrastructure and broadband will need to be encouraged. We would like to appeal to NCC to encourage the telcos for them to increase broadband penetration, not just broadband penetration but also the cost, to recalibrate the cost so that it becomes much more available and accessible. Part of the ecosystem requires for us to boost digital technologies,including but not limited to power and networking space.
5G technology, which is the next phase of telecoms revolution, is one with a big promise- it will, no doubt, deepen financial inclusion as well as economic growth. However, we must tackle the concerns that I raised earlier. Digital literacy, as I said, needs to be taught in primary and secondary school. From the cradle, we need to understand the discipline we need to operate in the digital environment.
Registration of domain names and email addresses should be tied directly to biometrics- the NIN in order to arrest the activities of cybercriminals. Enforcement of SIM registration and payment of penalties by defaulters as required by NCC, to ensure that all SIMs are linked to the NINs of owners. I don’t think we should compromise here, every SIM card should be traceable to a biometric. That way if you perpetuate a crime, you can easily be traced and tracked down. The beauty about what we are seeing telecom is enabling is that you leave an internal footprint. You need a footprint, you can’t walk into a digital environment and not leave a digital footprint. The question is whether what we are seeing we can identify it to someone. Who do we identify the fake websites we see with? Yes, I can see the IP address. The IP address will tell you the location, what of the real individual? It is important that we look at it, not just in Nigeria, but at the global space.
There should be stronger control in the process of reallocation of recycled inactive SIM cards as these are repositories of subscribers banking details. Recycled SIM cards should be purged of the digital content. Banks, telcos, and the Nigerian interbank settlement system should continue to engage the SIM swap API to ensure that swapped SIMs are disconnected from the banks networks until they are properly authenticated.
Implementation of the procedure and planning and removing fake and malicious websites to prevent them from being used to defraud unsuspecting individuals. Here, I would be making an appeal to NITDA and NCC to see how these can be implemented so that once there is a fake website, that we know is fraudulent, once we report there should be a process to ensure they are brought down immediately; we don’t need to wait until that website has defrauded a good number of us, because when one of us has been defrauded all of us have been defrauded.
Improved synergy between regulators and telecommunication companies
Telecommunications will continue to facilitate the pace of digital transformation in every sector of the economy including the financial sector. Even the eNaira that we launched will not be possible unless we have reliable and dependable telecoms connectivity.
- Onyeagwu, GMD/CEO, Zenith Bank Plc, delivered this MasterClass as part of Nigeria’s Telecommunications Revolution At 20 Summit Anniversary Lecture by Compact Communications Limited, at Shell Hall, MUSON Centre, Lagos, under the theme: Telecommunications in Nigeria; The Revolution And The Next Frontier.
- Editor’s Note: This is a Cyber Era NG exclusive. The Final Thoughts part of this report was earlier published by us.
