The issue of authentication will be critical as there is no standard means of identification in the country (although the federal government has commenced a national identity project). In addition, not every individual possesses a driver’s license or an international passport – the traditional identification requirement for opening a bank account. Operators are expected to deploy a simplified know-your-customer (KYC) process that will become more stringent as the number and volume of transactions exceeds certain thresholds. In the future, it may be possible to use the biometrics to identify and verify customers.
Convincing customers used to dealing in physical cash about the safety and security of their mobile money will be critical and will require massive change management. Potential security risks will encompass application, data and network security.
For example, will the mobile money applications be storing sensitive data (e.g. access codes) on devices, thus providing an opportunity for hackers? Also, given that there are different payment solutions, the Central Bank of Nigeria is yet to define clear standards governing data security (master data and transactional data) except for standards that relate to card transactions which are not directly transferable.
Competition is expected to be strong, but banks will need to be more dynamic
In the short- to medium-term, the mobile money landscape is expected to remain quite competitive. There is not likely to be one dominant bank or MNO as in markets such as Kenya, for example. Banks will need to work extra hard not to be seen as only fund custodians, especially as MNOs and other non-bank mobile money organisations appear to have taken ownership of marketing / promotional efforts. Clearly, a business strategy linking mobile money to the banks’ growth plans and using it to drive growth is required.
While many of the detailed challenges in Nigeria are very different to those found in other territories, the strategic imperative of linking mobile money to a bank’s retail (and commercial) strategy remains a consistent challenge across the globe.
By Egheosa Onaiwu, Manager in Nigeria