On the ground that Nigeria has no efficient national identity system, the co-founder and chief marketing officer of PiggyVest (formerly known as PiggyBank), Joshua Chibueze emphasises the need for one, which will in turn enable a digital wallet system that could serve everyone.
He told Techpoint in a recent chat that a digital wallet system has the capacity to reduce the amount of cash in circulation while also on-boarding more people into the financial system.
As at December 2018, there were 8.5 million mobile money customers in the country according to the Nigerian Inter-Bank Settlement Systems. Total mobile money transaction volume for the same period was ₦1.8 trillion (PDF). Apparently, an increase in mobile money subscribers is likely to affect transaction volume, which in turn translates to less cash in circulation.
Imagine making a non-cash payment for as little as a small sachet of powdered milk at a retail kiosk, even if the store owner doesn’t have a bank account. Emphasising the importance of a wallet system, Chibueze believes mass adoption will open up opportunities to introduce other financial services like insurance, investment among others to people.
Credit facilities are another means through which the PiggyVest co-founder believes more people will get into the financial system.
For instance, the federal government of Nigeria’s informal sector empowerment initiative, TraderMoni is currently powered by the likes of Eyowo -- a platform that allows fund transfers to even non-bank account holders. And as stated on the TraderMoni website, a bank account or Bank Verification Number (BVN) is not needed for the disbursement of the first ₦10,000 ($27) loan.
However, subsequent loans from TraderMoni require a bank account and BVN. This in a way will bring more people into the banking system. However, the level of their financial inclusiveness is likely to be limited to banking services alone. Just like the services of online platforms offering collateral-free loans are limited to people with bank accounts.
But with a wallet system, these traders can accept non-cash payments and have access to other financial services aside savings, deposits and loans. Interestingly, a higher financial inclusion rate translates to a larger market size for the likes of PiggyVest, Aella Credit among others in the industry.
For the kind of wallet system that serves everybody, whether they are in the banking system or not, Chibueze insists there’s a need for an efficient national identity system.
Don't miss out on Africa's financial revolution
As it is, there seems to be no much use for the national identification number of the NIMC.
Suggested Read: Why does Nigeria not have a unified database?
In the place of a BVN, all anyone old enough to be in the banking system would need is the identification number. This is likely to give room for more people as well as more players.
With the current identification system, Nigerians will likely have to wait for a couple more years for an efficient unified identification system. This brings up other means of getting people into the financial system in the meantime.
Despite the fact that the payment service bank (PSB) establishment framework doesn’t permit any form of loans or advance, Chibueze believes banks would have a great impact on people that are excluded, especially as telcos have already shown interest.
Furthermore, Chibueze envisions that there will be more players providing digital savings services. With that, it will be about who has better products and services.
Having recently changed its name from PiggyBank to PiggyVest, his company which currently has a fixed deposit-like feature -- called Safelock -- on its platform is looking forward to exploring other products like mutual funds and allowing users to invest in agriculture while also catering for the needs of micro, small and medium enterprises (MSMEs).
Foreseeing itself as a household name by 2024, the PiggyVest platform has evolved over the years, adding features and eventually changing its name which was in line with the responses from a prior survey. Apparently, over 65% of respondents who are users of the platform wanted more investment options.
Currently maintaining a partnership with Avon HMO to help millennials pay for insurance seamlessly, PiggyVest believes breaking down insurance to simpler terms would help boost insurance penetration.
On the possibility of banks seeing fintech startups as competitors, Chibueze calls for more collaboration between the two sides. “We (fintechs) are not here to disrupt banks per se, banks will continue to exist. They have their core functions.”
He admits that a lot of what the fintech companies are currently doing is reliant on banking infrastructure.
Evidently, fintechs especially savings, loans and investment platforms are only helping to improve the distribution of these services while the banks are serving as the support systems.
If he had a chance to speak with the Central Bank of Nigeria’s governor, Chibueze says he would recommend a more targeted and timely framework for the fintech space. He would also call for initiatives that allow easy collaboration between fintechs and the banks.