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Trust: A drive for financial inclusion in the fintech industry

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By Enoch Deyon Kantan

After the Global Financial Crises (GFC), only 22 percent of American Financial Institutions were deemed trusted. Since then, trust in the financial sector has increased to 33 percent in 2019, and over 50 percent in 2023. Despite this increase, the financial sector world – wide remains the least trusted sector. If the Americans least – trusted the financial sector, how much more is the Africans in Sub-Sahara Africa?

As EFInA survey report reveals, Nigeria’s formal financial inclusion improved to 64 percent in 2023 from 56 percent in 2020, fueled by growth in the banking population and non – bank financial institutions. However, financial exclusion persisted due to poverty and difficulty in accessing services in remote areas.

Due to lack of physical infrastructure in their respective regions from the commercial banks, coupled with cynicism and insecurities in the FinTech Industry, some Nigerians are financially excluded.

As a young startup founder in the FinTech industry, who knows the power of financial inclusion with the impact of the Fintech industry, Nigeria’s financial inclusion landscape has transformed significantly from 2016 to 2023, with formal financial service usage growing from 30 percent to 57 percent. The adoption of financial service agents has also skyrocketed, from 4.4 percent in 2018 to 54 percent in 2023, yet low levels of awareness, limited understanding of product offerings continue to hamper trust in other formal (non-bank) products. I will highlight the Key Drivers of Trust for Financial Inclusion comes 2024:

Of what importance is Trust?

Trust in financial Institutions is widely believed to be important for financial stability. With low trust (a 1 out of 10) customers may decide not to become customers of a financial institution. Distrustful people are less likely to have a savings account than trustful people and have stronger liquidity preferences. Report also reveals that Nigerians continue to rely on physical financial coping mechanisms to meet their goals, address liquidity distress and cope with shocks. Both active physical mechanisms, such as taking on additional work and cutting back on expenses, and passive physical mechanisms, like doing nothing, remain prevalent choices.

What are the drivers of Trust in the financial institutions?

We can categorise different drivers of trust into five groups: Economic Factors (Like Financial Crises), Behavior and Characteristics of Financial Institutions, Consumer Characteristics (like demographic characteristics, their financial literacy, and their economic and political views).

Economic Factors: Trust here moves procyclically . The procyclicality of trust is confirmed by a cross-country analysis for 98 countries: Countries with the largest rise in unemployment also experienced a dramatic decline of trust in financial institutions and banks. The link is strongest in the Organisation for Economic Co-operation and Development (OECD) countries. With the EFInA report of 27 percent Nigerians considered “Financially Healthy” means that Nigeria is expressing a dramatic decline of trust in the Financial Institutions. End-users’ views of general economic situation, their own financial situation and the stability of prices are most important in explaining trust. Financial crises may not only have a direct impact on trust, it can also change the (effect of other) drivers of trust and the extent to which trust matters for financial decisions. For example, The Naira redesign policy advanced digital finance but had broad negative impacts. Businesses and households saw more harm than good. About 70 percent of entrepreneurs reported setbacks, with losses in revenue and market disruptions which hamper trust in the financial institutions. Despite 45 percent of Nigerians used Digital Financial Services in the past 12 months, up from 34 percent in 2020, yet cynicism in the digital financial services persisted. At Softawallet, we will work together with the Government in 2024 to improve the economy by bettering our services and making it swift, reliable and more of customers satisfactory.

Behaviour and characteristics of financial institutions:

Trust in Financial Institutions depends on the behaviour and characteristics of these institutions. Starting with behavior, various studies show that prudent behavior, which is characterised by long-term focus – taking  into account the interest of all its stakeholders – as opposed to short – term profit maximisation, has a positive effect on end-users trust. For example, the big sharks in the FinTech industry have demonstrated high level of trust coupled with high integrity, competence, stability and benevolence. We the startups can learn from their consistency characterized on long-term focus – taking, rather than the short – term profit maximisation sharks that go oblivion.

Softawallet will strengthen her transparency, competence, consistency, stability and integrity with thorough legal backings in 2024 and beyond.

Consumer Characteristics: Apart from demographic variables like age and gender, three characteristics of people have been considered potential drivers of trust in the financial institutions (aside from Financial Crises earlier discussed) financial literacy, political and economic values.

Financial Literacy argues that end – users with more knowledge will be more trustful towards their own financial institution than less knowledgeable end – users. Knowledgeable end-users have better ability to evaluate information and are likely to make better decisions about which service provider to choose. The lack of knowledge may lead to distrust from non-knowledgeable end-users.

Trust in Fintech industry is measured on information perhaps information source. Access to the internet, social media, television, or newspaper may foster trust in service providers because financial institutions use these communication channels to provide information on their products and because authorities use these particular media to disseminate views that boast confidence in the financial system. A significant proportion of formally served Nigerians face challenges related to fraud incidence, poor service, high banking costs, and a lack of clarity in financial information.

Political and Economic values find that people with pro-market economic views i.e individuals who favour hard work and lower government ownership and think that larger income differences are needed as incentives for individual effort – exhibit higher trust than people with negative attitudes towards the market.

At Softawallet, regarding political views, we’ll find relatively high trust levels for individuals who place importance on wealth, on helping society and with greater preference for democracy, individuals and environmental concerns. Also, we won’t relent in digital literacy for youths in expanding our tentacles for Financial Inclusions.

Enoch Deyon Kantan is the Founder of Softawallet Financial Services

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Infotech

NITDA, NIMC forge partnership to revolutionise Nigeria’s digital infrastructure

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By Blessing Emmanuel, Abuja

In a strategic move aimed at reinforcing Nigeria’s digital ecosystem and fostering digital trust, the National Information Technology Development Agency (NITDA) has announced its collaboration with the National Identity Management Commission (NIMC) on the implementation of the National Public Key Infrastructure (PKI) and Digital Public Infrastructure (DPI) initiatives.

This collaboration is expected to significantly enhance digital identity management, streamline the payment ecosystem, and facilitate secure, seamless data exchange across the country.

The partnership was formalised during a recent high-level meeting between NITDA Director General, Kashifu Inuwa, CCIE, and NIMC Director General, Engr. Bisoye Coker-Odusote.

During the meeting, Inuwa reiterated the importance of building robust DPI stacks to ensure the secure exchange of data, emphasizing that partnerships such as this are instrumental in transforming the national identity system. He also highlighted the pivotal role of PKI in driving Nigeria’s digital transformation agenda forward.

This partnership represents a key step forward in enhancing Nigeria’s digital infrastructure, ensuring secure data exchange, and fostering digital trust among stakeholders.

In discussing NITDA’s Strategic Roadmap and Action Plan (SRAP) 2.0, Inuwa provided insights into the agency’s evolving vision and mission, which have been crafted to align with current industry realities.

The SRAP 2.0 is built on eight key pillars, including fostering digital literacy, cultivating talent, building a robust technology research ecosystem, strengthening policy implementation and legal frameworks, promoting inclusive access to digital infrastructure and services, enhancing cybersecurity and digital trust, nurturing an innovative and entrepreneurial ecosystem, forging strategic partnerships and collaborations, and cultivating a vibrant organisational culture with an agile workforce.

Echoing Inuwa’s sentiments, NIMC’s Director General expressed the commission’s enthusiasm for collaborating with NITDA to advance the digital economy sector.

She emphasised the importance of cooperation among institutions to achieve common goals, stating, “No institution can implement all its policies and programs in isolation; we need each other to achieve the set targets.”

She also highlighted President Bola Ahmed Tinubu’s support for data integration and harmonisation across Ministries, Departments, and Agencies (MDAs) as well as the adoption of PKI to drive the country’s growth and development agenda.

The meeting concluded with the inauguration of a 12-man committee tasked with kick-starting and harmonising the initiatives outlined in the collaboration.

The committee is expected to deliver a comprehensive implementation report in the coming weeks, marking a significant milestone in the collaboration between NITDA and NIMC.

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Focus on building AI not just for Nigeria but global market — Tijani

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The Minister of Communications, Innovation and Digital Economy, Dr ‘Bosun Tijani has charged participants to focus on building Artificial Intelligence(AI) indications for the global market.

The Minister spoke at a 4-day stakeholders’ strategy workshop with the theme “Developing the High-Level Strategy and Implementation Plan for a National AI Strategy in Nigeria.”

Speaking, the Minister reminded participants of their collective responsibility in harnessing the power of AI for the betterment of humanity and urged them to embrace a future where connectivity and innovation serve as catalysts for national and global development.

While highlighting the profound impact of digital technology on human interactions and societal norms, he emphasised the need for inclusive participation in shaping the trajectory of AI development.

“Digital technologies are also quite transformational because of their scope. Not only do they connect, but they allow us to transform nearly every aspect of our lives as humans,” he added.

The Minister emphasised that inclusive dialogue and cooperation are  essential elements in shaping a future where AI serves the collective good.

He called for unity among the participants to embrace conflicting views that could emanate from their brainstorming on AI development.

While challenging participants to rise above ideological differences and embrace a vision of AI that transcends national boundaries, Dr Tijani averred that “I’m challenging each one of us that will participate in this workshop not to be too focused on strategies in building AI that is limited to Nigeria or Africa but to the world.”

“Let us show leadership globally so that the world could be converging and not diverging when we talk AI  because these set of technology tools and products that will be built from this workshop can be used across borders,” he noted.

Earlier, in his welcome address, the Director General, National Information Technology Development Agency, (NITDA), Kashifu Inuwa CCIE, emphasised the significance of leveraging AI not only as a technological tool but as a catalyst for broader societal change.

The DG underscored the imperative of harnessing the transformative potential of AI for the betterment of Nigerian society with emphasis on not only developing a strategy for AI but also developing a strategy with AI.

“Our vision for this strategy is clear. It is to harness the power of AI to derive values from it while harnessing its potential and avoiding its errors,” he noted.

While stating that technology is like a double-edged sword with its promises and pitfalls, Inuwa said that the uniqueness of the workshop is not only to discuss but to actively share ideas through cognitive processes.

“This approach is fundamental because it will help us to use our diverse insights and expertise in creating a strategy that will be inclusive as well as reflecting our national consensus,” he averred.

The NITDA DG asserted that the strategy would help in making significant advancements toward achieving Mr President’s economic transformation in priority areas of national security, boosting agriculture to achieve food security, increasing the nation’s GDP, unlocking energy and transportation potentials as well as improving the healthcare sector among many others.

“Our success depends on our ability to work together across government, academia, industry and civil society in bringing our unique perspectives to this strategy which will help us craft not just an innovative strategy but a practicable and implementable strategy that will lay a foundation for a prosperous nation for Nigerians,” he concluded.

The highlight of the workshop was the breakout sessions with industry and global experts sharing insights on contextualising AI strategy, setting directional beacons for Nigeria’s AI, developing a national vision and goal setting for AI in Nigeria.

At the end of the workshop, participants who were grouped into syndicates which include; AI Ethics and Social Impact, AI Infrastructure and Ecosystem in Talent, AI Talent and Workforce Development, AI Research and Innovation, AI Adoption and Sector Focus, AI Policy and Governance, AI International Collaboration and Engagement, AI Safety and Regulations gave presentations on various strategic initiatives, roadmap development and thematic visioning needed for the development of a robust AI Strategy document.

While giving his vote of thanks, Dr Tijani thanked NITDA, Nigerian Communications Commission, Galaxy Backbone, Nigeria Data Protection Commission, Data Science Nigeria, Microsoft, Google, Meta, the academia and a host of other public and private organisations for their invaluable contribution to the success of the workshop.

Expressing his excitement at the active engagement by participants at the workshop where in-depth ideas and experiences were shared, he said that he was confident that a robust National AI Strategy which Nigerians can derive value from will be developed for the benefit of the nation and the world.

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PalmPay unveils first set of winners in Eid mobile bonanza

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PalmPay has announced the first set of winners in its ongoing Eid campaign tagged PalmPay Eid Bonanza, which kicked off on April 10th and will run until April 30th, 2024.

Since the start of the bonanza on April 10th, 5 lucky winners have been emerging daily simply by performing tasks on the PalmPay App such as transferring funds, airtime and data purchases, bill payments, and savings.

Comfort Udoh from Lagos, one of the proud recipients of an iPhone 15 Pro, expressed her sheer delight. “I simply won by recharging my phone with airtime on the PalmPay app. I received the exciting news via a call from PalmPay Nigeria. I thank them for the generous reward of a brand new iPhone 15 pro”

Also, Mr. Abegurin Patrick Segun’s winning entry came about when he placed a N100 bet using his PalmPay app. It was a delightful surprise for him to receive a call from PalmPay Nigeria, informing him of his victory in the daily raffle draw, and he’s now the proud owner of an Infinix Hot 40i.

To participate in the remaining weeks of the campaign, download the PalmPay App from Google Play or App Store. Sign up for an account and include your BVN or NIN to complete the process and click on the Eid Bonanza Feature.

There are still numerous phones to be won daily, along with the added bonus of daily free transfers to any bank via the PalmPay App.

Enakeno Umuteme, the Head of Marketing and Communications at PalmPay Nigeria, notes that, “Our primary objective is to reward and acknowledge our loyal customers. This campaign stays true to its promise of appreciating Nigerians who are PalmPay users”

PalmPay offers an array of services including money transfers, bill payments, credit services, and savings on its app and via its mobile money agents. Since its inception in Nigeria in 2019 under a Mobile Money Operator license, the platform has amassed over 30 million app users as part of its cashless payment ecosystem.

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