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The Life of Payments in Q4, 2018

I’ve always been curious about how we make payments in Nigeria. Here I talk about some of my observations on our payments patterns especially between October – December 2018 based on data available from the NBS.

ATM v POS – How did we prefer to pay? 

The average transaction values of ATM and POS transactions for the period were nearly the same, the lowest and highest being N7,291 and N8,518 across both categories. Also noteworthy is that the transaction count and value numbers for ATM transactions were around 2.5X and 2.0X those of POS transactions respectively. This could count as progress as data from H1 2017 shows that ATM transaction count was usually 6X to 8X that of POS transactions. 

Reasons for lower POS transactions aren’t far fetched and there are 2 primary architects in my opinion – the merchants and of course, “network” 

Case in point, the last time I was at The Place in Phase 1, they had a notice at the door saying that there was a POS downtime and so customers needed to withdraw cash at the ATM outside —better than Hubmart that allows me get out my card to pay at the till before telling me the POS isn’t working. There are also times the POS displays error codes – 91, 06 etc but the customer is able to withdraw without incident at the ATM outside. Sometimes I catch myself withdrawing the cash I expect to spend in a store before walking in. Essentially, customers trust that cash will make the check-out process less painful. 

Let’s not talk about the merchants that tell you to pay extra if your goods are lower than a certain amount. The store I get frozen meat from in Mende expects me to pay an extra N500 or so when my total purchase is less than N5,000. 1kg of Turkey is maybe N1,500 giving me 3 choices: buy more than 3kgs of turkey, pay N2,000 for 1kg or just have my N1,500 cash available. Oh, if I try to suggest a transfer, they have to get out the account number, call their madam to confirm receipt of funds and that’s if my mobile banking apps decide to be on their best behaviour – see where I’m going with this?

On WEB

Transaction value for this category practically exploded in November 2018 – with an amount that was nearly the sum of the previous 8 months, does anyone know why? Data going as far back as January 2017 shows that this has never happened. If anything, the transaction value average has been on a decline while the transaction count has steadily risen – to 6,257,553 as at December 2018. Also, there was no corresponding spike in transaction count in November 2018.

CHEQUES vs NIP 

I find it interesting that the Cheques transaction data hasn’t changed much in the last 2 years. It’s almost like the same people have refused to let go of this payment method. The bottom line is that Nigerians prefer to trust cheques when it comes to the heavy lifting – this is reflected in the data that puts the transaction average around N500,000+. Infact the only time the average went below N500,000 was in the period May-November 2017. In my opinion, people prefer cheques because: 

  • there’s a paper trail for when things go awry. It helps them keep better records (or so they think). Internet and mobile banking platforms enable you generate transaction receipts these days. Admittedly, the receipts are not immediately available to both parties.
  • it’s not affected by implemented limits on e-banking platforms.
  • it’s less likely to get reversed or liened. It is not uncommon for the transferring party to call their bank claiming an erroneous or even fraudulent transfer after receiving value for goods or services – in the case of NIP. 

Rather unfortunately though, the transaction value average for NIP transactions in December 2018 (N100,038) was less than 50% of what it was in January 2017 (N203,766) even though the transaction count grew 4X in the same period. 

On Mobile Payments 

Mobile Payments sank to 5.8M in December 2018 from its November figure of 10.9M – nearly 50%. This in addition to Web’s transaction value spike in November 2018 I find interesting. Could there be a correlation? 

Growth across all e-payment channels

I’ld say we are making progress. Transaction count and value as at Q4 2018 show that we are running at nearly 2X the numbers we were working with in Q1 2017. I wonder though, how can we effectively incentivise customers and merchants to drive an increase in POS transactions?

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The Future of work in Lagos is r-e-m-o-t-e

About two weeks ago, I ran a Twitter poll. The goal was simple — confirm if I was the only one that had spent 24 hours/every work-week shuttling Ogudu and Lekki Phase 1 despite setting out around 5:20 am everyday and leaving Lekki as late as 10:30pm sometimes. The results were interesting.

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When do you leave for work?

43% of respondents said they set out for work before 6am. One of my friends in the US could simply not understand this. His question was “when do they sleep?”

80% said they needed 1–2 hours to get to work on an average day. 7% informed that they’d still need 1–2 hours to get to work even without rush hour traffic — this means that regardless of traffic, a bunch still live pretty far from their office. Another question my US friend asked was “Do they live in Ogun state?” The answer I told him was “Yes, actually!”

This friend’s total commute in a week is about 2–3 hours.

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About getting to work

60% found the distance between home and the office so stressful that they had to move and 50% said they’d be worried if there wasn’t traffic! Moving to the island for me was common sense.

The days were flying by and I was waking up with a headache nearly everyday.

The stats also revealed that 66% of respondents worked on the island. This came as no surprise. The evidence is in the To and Fro lanes of 3MB. The question is “Do we all have to be in the office everyday?”

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When do you leave work?

A staggering 70% believed that closing at 4pm instead of 5pm would make all the difference. We also had 71% say they’d rather leave work once it was 5pm instead of staying till really late when the traffic had cleared up — this reinforces the fact that people want to have a life outside work. How will this happen when 65% get home between 8pm-10pm? Sterling Bank Plc may be the only major employer doing something about this with their Flexi-time and Flexi-place rules. A quote from The Guardian article sums up Abubakar Suleiman’s expectations,

“… described the pilot stage as highly successful, expressed his optimism that the initiative will enhance productivity of staff, promote bonding among family members, reduce the stress of waking very early and spend long hours in traffic to get to the office early, improve the well-being of staff and ultimately promote work life and balance among the workforce.”

It’s time to go remote!

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According to this CNBC article, 70% of professionals work remotely at least once every week and 53% work remotely at least half of the week. This feedback was from 18,000 employees spread across 96 international companies.

In the Twitter poll, 73% said they believed that their jobs could be done remotely. For software engineers and sales professionals who currently enjoy this option, apart from not having to spend half of their weekend on the road, they are able to commit to more than one employer — some international. This eventually translates to more opportunities, varied experience and of course more money in their pockets. Some cogent advantages for employers are reduced admin costs, reduced employee turnover, recruiting better (many have bowed out of a recruitment process because of distance). You are also able to recruit more talented employees (on a need basis) without having to compete with the bigger companies that can actually afford them.

Presence ≠ Productivity

The major concern I have had employers express is how to measure work done. In other words, they do not trust that remote workers will submit deliverables when due if they do not monitor them physically. This makes me think that a vast majority of Nigerian employers recognise presence over productivity. We have to change this if we are ever going to achieve work-life balance. With claims that Lagos state houses ~20m people, it’s time to work out smarter ways of achieving productivity.

What can we do to get there?

While this feedback was from a relatively small sample, the majority share the same sentiments — working at a preferred time and location as long as the job gets done.

Depending on what the measure of productivity is — it shouldn’t always be number of hours worked by the way, information available here and here give great ideas on managing remote teams.

Also, replicating the SeedspaceWorkstation and Cranium One models across Lagos will go a long way especially for instances where employees need to hold frequent standups or client meetings.

If we are ever going to truly disrupt anything, we need to start with the way we work. Who created “8–5” anyway?

I’ld love to hear your thoughts!

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The Data Advantage: A proposed solution for KYC in Nigeria

Major efforts are often dedicated to ensuring seamless KYC and authentication processes especially for financial institutions that are looking to transform to digital. Bankers are naturally shrewd and always erring on the side of caution. There’s also the endless battle between the Control team-notorious for saying “No” to every request and the Product Innovation team-always wanting to play with new toys. Current trends in customer behaviour inform that they want more convenient solutions. Studies also show that security is priority for them as well and rightly so. 2016 data from The Nigeria Electronic Fraud Forum (NeFF) Report recorded 19,531 e-fraud cases, an 82% increase from 10,743 recorded in 2015. Customers however do not want it to be so obvious that it disturbs their experience.

The spate of fraudulent SIM swaps has done nothing to assuage regulation’s paranoia. A way to curb this may be giving telcos access to a view-only option of NIBSS’s BVN portal. Properly using this along with the already existing SIM registration database may help bring down current fraud stats as early as Q2, 2019. This method not only allows telcos verify customers by face, but also allows them confirm that their BVN has not been blacklisted. Fingerprint verification can also be be added to the process, much like verifying image and signature at the bank. This plays out as a 2FA, confirming that the individual was indeed physically present. Utilising this option will however mean that SIM swap operations will no longer be available at “under bridge” for obvious reasons.

Customer Care in banks often have the added responsibility of authenticating in such a way that a fraudster is not given free access and the real account holder is not irritated by the process. Existing processes are either poorly thought through or not properly executed. I once had an agent “authenticate” me for over 3 minutes after I was on hold for 6 waiting to have someone hotlist my retracted card. I have also had someone in a branch refuse to hotlist my stolen debit card until she saw my mother. What exactly is the cost of security?

Banks also need to be smarter in scaling the hurdle of KYC during onboarding. I have never seen the need of carrying out independent KYC processes across banks and all other OFIs. This is needlessly repetitive and backend verification processes often prove cumbersome, manual and time-wasting. Customer data which currently reside in silos can be consolidated into one central database so that when a customer walks into another bank, the process flow becomes: verify that the BVN provided is not blacklisted, confirm that provided telephone number is not flagged, authenticate with image and fingerprint and then create account. This ultimately means that I can walk into a bank without any document and have an account opened.

For the truly adventurous, translating this to digital banking could mean asking the customer to put his thumb and index finger on his phone’s fingerprint sensor, the result of which is scanned against the existing (BVN) database checking for suspicious activity and up-to-date information. A green light means that the customer is setup and allowed transactions up to N500k, agreed upon authentication methods could allow him perform more. Prompts of an expired ID would mean that a tier-2 account is opened with the customer needing to upload a more recent National ID. Undetectable ID and utility bill will result in a tier-1 account opened with the customer allowed to upload pending documents on that app. Once verified, these can be synced to the central database so that the customer does not have to do this again. Document verification can be maker-checker with the collecting bank performing first-level verification and a regulatory body authorising the upload and sync to the central system upon due diligence.

KPMG in an article here proposes a blockchain utility bill which can be implemented within a large conglomerate, nationally or internationally. Much like these other ideas, this means that the onboarding process will shed unnecessary weight and totally eliminate the need for customers to repeatedly provide the same documentation across providers. A prototype has already passed the Monetary Authority of Singapore’s test scenarios.

In the case of transaction monitoring, a more intelligent system hinged on customer data needs to be created. This may be as simple as setting better rules. For example, rules that block accounts that transact at midnight to 6am Nigerian time do not consider that midnight in Lagos is 5pm in Vancouver and 8am in China. The 24 hour cycle is different for every customer so it will be better to perform this function on a per customer basis. An alternative may be working with your customer’s location (after requesting permission just as Uber or Taxify would) in a bid to provide a more personalised experience.

Rule setting by current transaction pattern is important as well. For example, a customer that usually performs cheque withdrawals twice every month suddenly performing a self-recharge of N30,000 via USSD should raise an eyebrow even if it occurs 3pm on a Wednesday. Also, accounts owned by private university students for example are likely to receive heavy periodic credits. Let’s face it, their tuition costs an arm and a leg and the system should be able to account for this to avoid needless PNDs.

As with all things truly disruptive though, tangible investment will be required in terms of funds, effort and expertise to have these systems set up and customised to Nigerian realities. The best time to start is now and refining and scaling the process could mean generating another income stream for us as a country. We have a problem however, we prefer the “fire-brigade” approach.

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Leveraging on AI to improve Customer Service

For financial institutions to thrive in the current economic clime, customer service delivery must adequately align with customer demands and expectations. Beyond seeking lightning fast responses and resolution of complaints, customers are beginning to tend towards banks and payment solutions that incorporate AI into their CS process to ensure excellence in service delivery to customers and also enable them (the organization) make the ultimate switch to cognitive banking.

With the massive influx of MVPs and product lines in the financial services space in the past 2 years, it is becoming glaringly apparent that beefing up CS staff strength in proportion to the volume of interactions received will not be sustainable in the long run as running that model means that companies must be ready to build stadiums to accommodate their growing staff strength at some point. 

What companies need to start looking at is a solution that allows them rapidly conclude monotonous and repetitive tasks, provide cognitive banking services, and do so for up to a thousand customers simultaneously.

Consolidating the efforts of physical agents with AI and ML to support scaling ambitions will be the future of CS. With the present focus on financial services, AI will enable institutions effectively handle increasing interaction volumes, cater to dynamic customer needs and explore options that revolve around predicting the best value propositions for customers.

The need for human operators cannot be underplayed as some customers will still prefer the traditional methods of communication (email, telephone, SMS, walk-in etc) over chatbots to have their issues resolved. Over-reliance on AI is never a good idea and so the ideal mix of human intervention and AI must be concocted very carefully. Measures must be put in place to ensure that calls which can no longer be handled by AI are escalated to human operators. In handling email interactions, human operators will need to proofread responses drafted by AI until the system becomes foolproof. This will undoubtedly take some time as it will need to be trained with Nigerian/specific country peculiarities and contexts to ensure usability and relevance.

Added benefits to the financial services company that adopts AI will include reduced time and effort spent on training agents as AI requires one-off training, winning points on brand perception and maintaining consistent performance levels instead of the inevitable fluctuations that occur when a new set of agents are hurriedly recruited. Adopting AI also significantly lowers interaction abandonment rates, improves capacity for handling high traffic periods and ultimately ensures 24 hour real time support.

To properly launch into intuitive/cognitive banking services, AI will need to learn from transaction patterns, existing tickets logged on the organization’s CRM system, conversation histories, help content uploaded etc and leverage on these to provide spot-on recommendations for customers (after ensuring that their initial complaints/enquiries have been sorted out) 

To optimally drive these initiatives, special attention needs to be placed on the data which AI will be feeding off. This is because the more specific, detailed and viable the data, the more intelligent the system becomes. If properly executed, we may well be on our way to breaking ground in mimicking the human thought process in providing financial services.

*AI=artificial intelligence

*CS-customer service

*ML=machine learning

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Managing customers according to type

“Customer is king”

“The customer is always right”

These two are probably the most popular phrases that companies incorporate as slogans especially during Customer Service Week. This seems fair enough as without these customers, they’ld be out of business. 

I work in FinTech and trust me when I say that this industry demands that you put your money where your mouth is. Here, the surefire way your customers take you seriously is when the efficacy of your customer service/complaints resolution team is second only to that of your Tech team. I believe that the best way to deliver on the customer service bit of this is by dealing with customers according to the stratum which you conclude that they belong to within the first 20 seconds of conversing with them. Remember that it’s not just about solving their problems, it’s also about how you go on about it.

In the next part of this post, I talk about the customer categories I have come up with so far and a little bit about how some highlighted traits help in better managing them and ensuring that their funds are safeguarded in the long run.

THE KNOW IT ALL

This customer thinks he knows all about bank processes and resolution timeframes but his info usually falls short of being accurate. He might have garnered his info through assumptions, misinterpretation or misinformation. It is also not uncommon for this customer to expect less stringency with documentation, I mean it’s a Digital Bank afterall. This customer usually does not mind being corrected as long as these corrections are not made in a rude or aggressive manner. 

THE ONE WHO ACTUALLY KNOWS IT ALL

These customers are extremely knowledgeable and are not shy to let you in on this within the first 30 seconds of speaking with them. They usually want exact details and specifics. They are very inquisitive. I’ve learnt that it’s best to treat them as “adults” as they are quick to take offence if they perceive that they are being babied or if you turn overly apologetic. You also have to be careful not to overpromise as they often come across as intimidating. 

THE ONE WHO KNOWS A BIGWIG

Sometimes you wonder why this customer bothers with contacting customer service for resolution. He usually dwells on naming the higher-ups that are close friends instead of stating exactly what his complaint is. In dealing with them, it’s best to “just respect yourself”

THE ONE WHO SHARES TOO MUCH INFORMATION

It is not uncommon for this class of customers to volunteer their PINs, PANs, CVVs, passwords, OTPs etc when speaking with their bank. This occurs especially when they are reporting failed login, dispense error and card functionality issues. It is pertinent that this customer is properly educated on the dangers of divulging his details over virtual channels. You may also want to advise him to visit a branch when unsure of what info to give online or on a call. If not properly educated, they easily get themselves into the next category.

THE ONE WHO ENTERTAINS FRAUDSTERS BEFORE THINKING TO CALL HIS BANK

If you remember this message, “Dear customer, your ATM card has been deactivated due to BVN. Call Mr John on 080XXX” then you know this category. It’s quite fascinating how easily this SMS gets them to call these fraudulent individuals and provide their card details only for them to turn around and contact their bank 5 minutes later. Needless to say, these calls end in card hotlists. Fortunately, measures such as Card Control and periodic email and SMS blasts advising on non-disclosure of banking credentials seem to be reining in this group somewhat. 

THE (POTENTIAL) FRAUDSTER

This post will become a Long Form if we dwell on this. Just know that when your gut tells you something is off, something usually is.

THE ONE WHO WANTS RESOLUTION NOW

This customer is usually this way out of desperation, delayed resolution or sheer impatience. Most times, it is the thought that someone is doing something differently or going above and beyond for them that helps.

THE ONE WHO JUST WANTS COMPANY

Although rare, this does happen. It dawns on you 3 minutes into the conversation that this customer doesn’t have any enquiry or complaint. The dicey part is gently saying your goodbyes as these interactions always create an impression. Besides, cross-selling and upselling never hurt anyone. 

Always one for intelligent conversation, I’m definitely the customer that actually knows it all. 

What kind of customer are you? Let’s discuss in the Comments section.