Digitization in Nigeria’s Microfinance Banks

Many IT professionals were idle, while some were overwhelmed with so many activities during the lockdown due to Covid-19 pandemic.

I feel reluctant to write this, but it is a path to opening up digital growth for Microfinance Banks (MFBs).

A digital Microfinance bank in this context is a bank that is reasonably equipped technologically with necessary gadgets and IT infrastructures directly or indirectly to function fully and discharge its products and services to its target customers through E-channels at all times with minimal or no limitations.

I have reviewed several fantastic and creative Core Banking Solutions suitable for Microfinance activities but some of them never had the opportunity to become noticed.

There is one major problem regarding digitization that had slowed down the growth in the Microfinance sub-sector in more than a decade. The problem was self-inflicted by MFBs unknowingly while choosing Core Banking Solution as everyone wants to connect to a popular platform.

The emergence of several innovations through Fintechs has opened our eyes to see more possibilities.

I do not support a unified IT platform for MFBs from the onset, but the enforcement of reporting templates among Solution Providers for uniformity will be preferred.

To help microfinance banks grow digitally, CBN should limit the numbers of Mfbs that should subscribe to each Core Banking Solution Provider for effectiveness and promptness of creative innovations.

Many Core-banking Solutions Providers are overwhelmed; professionalism in responding to complaints that could evoke innovative solutions is usually sacrificed at this point.

When the focus begins to shift from excellent Customer Service to “they don’t have a choice because the decision to change Core Banking Solutions cannot be hurriedly taken”. It shows there is a huge problem ahead.

Many Mfbs (most especially Unit-licensed) are dying in silence. Their Core Banking Solutions are fast-tracking their funerals. I have once used a Solution that gives conflicting reports on the same query at different times. Many Mfbs may still be facing such a problem. Even those MFBs that invested heavily in IT infrastructure are not yet getting the expected returns on their investments due to unresolved high failure rates in the activities on e-channels that could be traced to their Core Banking Solutions.

Dear MFB, behold yourself now, are you sure you do not need help to grow digitally?

I am sure you do. But you are handicapped because you cannot run faster than the rope while being dragged.

Review the activities of your IT Solution Providers.

When was the last time they innovated and implemented a new or better approach to your operations’ processes digitally?

It is not a capability issue in most cases, but many of them are overwhelmed by the number of clients they serve.

It does not necessarily mean migrating to another better Solution that is willing and authorized to grow the client base should cost you more; it all depends on negotiation.

The first bold step into the journey of achieving improved digitization in the activities of MFBs is to have the numbers of subscribers to each Core Banking Solution regulated.