Seamless data’ll improve access to financial services –Joda, ACCION MFB boss

Recent advances in computing and telecommunications technology are dramatically transforming the global landscape by changing the way the financial industry operates.

The advancement came during the COVID-19 pandemic in 2020 which held the world on siege leading to companies and stock markets among others resorting to technology to keep their businesses running.

Compared to industrialised countries, developing countries like Nigeria have exhibited lower penetration of financial services but that improved gradually when the pandemic struck. There is however much work to be done as research studies have shown that the general consumer, business finance companies and microcredit organisations have had limited success in serving the needs of Nigerians cost-effectively and sustainably.

The reason is simple. These barriers exist due to the poor performance of credit rating agencies to provide information about the creditworthiness of most SMEs.

A National Credit Bureau would collect and distribute reliable credit information and hence increase transparency and minimize banks’ lending risks but as the case is in Nigeria, data remains a challenge. A key mechanism underlying the transformation seen in the world today concerns the use of big data in assessing, evaluating and refining the creditworthiness of potential borrowers and reducing the transaction costs. Recently, the Deputy Governor of the Central Bank of Nigeria (CBN), Aishah Ahmad, said the country has attained 64 per cent as regards financial inclusion and is well on its way to achieving 95 per cent by 2024.

This means that to attain the said target by 2024, better risk models using increased computing power and new sources of data and information can be created.

A recent report revealed that traditional banks in China recognized that high quality data about customers is a key to succeed in the financial market. This is no surprise as to why Accion Microfinance Bank (MFB), a bank committed to creating a financial inclusive world, at its 5th Annual Financial Inclusion seminar which held in Lagos, advocated that for financial inclusion to improve significantly, banks must leverage on the data collected from the credit registry, credit bureaus to provide easy access to financial services and easy access to loans.

Speaking on the theme of the seminar tagged “Financial Inclusion- Using Big Data to improve customer experience”, the Chairman, Board of Directors at Accion MFB, Patrick Akinwuntan, said big data has become critical and when mined properly, can put together products and services that will help the customers achieve their objectives and solve problems before they occur or reoccur.

Akinwuntan noted that Nigerians particularly Nigeria, with a demography of more than 50 per cent of young people are very active on the internet and active in using technology while adding that banks should leverage on that by collecting data from credit registry, credit bureaus to find the credit assessment of their customers, risk assessment and be able to use that profile to grant easy access to loans.

“Big data has the opportunity to improve the ability of financial institutions to come to the level of leveraging on the data collected to provide easy access to financial services and easy access to loans. Opening an account should not be a barrier to access to finance rather it should be available at zero cost automatically.

Since your NIN is behind the phone number, we should remove that from a critical barrier or success factor for banks and their dominating other players. Let banks compete on the service to the customer”, he said.

According to him, “the ease of every individual having access to financial services will galvanise the productive capacity of Nigerians.

Managing Director, Accion MFB, Taiwo Joda, said big data is a critical touchpoint to determine customer’ behavior.