Financial Technology online e-Edition by Oluwasegun Matthew

Mobile Money:

The scared banks, the protectionist regulator

CRYSTAL BALL What Will Happen

in Insurance Technology in 2014?

X-GENERATION

How the New Trading Platform Drives NSE toward Emerging Market

financialtechnology An eMaginations Publication

Banking | Insurance | Capital Markets

Digital Edition

June 2014

CWG 2.0 Platform is a Social Impact Investment - Okere

financialtechnology

January 2013

EDITORIAL

Financialtechnology goes digital

financialtechnology is published six times a year by eMaginations

y grandparents wrote on a tablet and hung it on their necks. My parents wrote on a blackboard and nailed to the wall. My generation is doing it on a whiteboard and flipchart. My parents had a house phone. I own mobile phones. My children own smart phones and they get stuffs done at the speed of thought. You can say the children are in a hurry. I would not blame them.

It is a digital tablet. They play games, not manual ones but computer games. They read the newspaper, not in the old ways. They read it digitally. They communicate quickly and succinctly and they do it online. That is why the young and young-adults have become citizens of the world with friends, foes and followers in far-flung countries. Right now, the social media platform has broken all barriers. There is no longer that much feared language barrier. One platform has united the world.

They are the future of the world. We are following their footsteps now; if you are not, what are you doing here? Admit it. We have all gone digital. Now, our phones are smarter, sleeker and saner. Because of this evolution, the world has become a digital ecosystem. This evolution has caused our children to write on tablets not hung on their necks. They carry it like a clutch bag.

The social media platform has become a Mecca. We all go to there. The internet makes this migration effortless. The internet, too, has compelled financialtechnology magazine, to produce the digital edition. Like my grandparents, do not hang it on your neck. Enjoy it.

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CONTENTS

Technology & Web Development Consultant Abimbola Adams Guest Writers Andrew Bossone Lilian Nalumansi Kate Philip

9 Columnists Mitchell Elegbe mitchellelegbe@ftr-africa.com James Agada jamesagada@ftr-africa.com Adedoyin Odunfa adedoyiodunfa@ftr-africa.com Kolapo Ademola kolapoademola@ftr-africa.com

CWG 2.0 Platform is a Social Impact Investment - Okere

Barry Coetzee barrycoetzee@ftr-africa.com Managing Editor Rarzack Olaegbe Tel: +234-808-247-7799 rarzack@emaginationsng.com Editor-in-chief Sola fanawopo Tel: +234-808-247-7786 sola@emaginationsng.com Official Large Format Digitting Companyal Print PRODUTION POINT info@production.com

PFS Story of a Serial Software Entrepreneur

financialtechnology

January 2013

financialtechnology

January 2013

â&#x20AC;&#x153;The logical progression for any country that wants to move to electronic cash is cheque... PFS, MD/CEO, Yele Okeremi

PFS: Story of a Serial Software Entrepreneur Rarzack Olaegbe

ne person does not truly build a great company. It takes a community. It takes collaboration with others. It takes openness to do so. That is what Yele Okeremi, a Computer Scientist, did by collaborating with Philip Ayeni, a Chartered Accountant, to start a

business entity 20 years ago in the heart of Yaba, a Lagos suburb. Today that business, formerly PEE-AARR Consulting, in recognition of its core competence as provider of financial software, metamorphosed into Precise Financial Systems [PFS], a wholly owned indigenous software development company. PFS' innovative solutions are operating

several computers, serving numerous clients in Nigeria and 27 African countries. Some of its cutting-edge software technologies include an integrated account reconciliation solution and electronic payment processing, security and remittance as well as an end-to-end outward and inward cheque clearing solutions among others. Its flagship software,

Clirec, a reconciliation solution is regarded as the catalyst that engineered the company's growth, as most banks in Nigeria currently deploy it. Clirec received honours for providing complete access to â&#x20AC;&#x153;reconciliation functions and processes with fully integrated accounts reconciliation modulesâ&#x20AC;? with multi-currency and multi-

financialtechnology

January 2013

Yele Okeremi {R} accepts one of the awards won by the company

“Cheque processes can be extremely fast. What we did with cheque truncation is to take it beyond the limit. The technology is available, as such; cheque truncation can be extremely fast. It is now T+1. We can actually achieve T+0 with the right technology. lingual capabilities” in 2012. However, through its ingenious software solutions, PFS has successfully positioned itself as a foremost force in the financial software development in Nigeria. This positioning was responsible for the cheque truncation project commissioned by the Central Bank of Nigeria [CBN] in collaboration with Nigeria Inter Bank Settlement Systems [NIBSS], which the company executed. The successful implementation of the project enabled the CBN to truncate the settlement life cycle of a cheque to one day [T+1]. Meaning: cheques presented for settlement are resolved within stipulated date in the country. This exercise is operational in all CBN’s branches and banks in Nigeria. It was a giant leap for the CBN towards the realisation of its cashless policy regime.

electronic payment is cheque. The CBN entrusted the cheque truncation process to a Nigerian company. This shows the confidence CBN reposed in indigenous companies”, Yele informed financialtechnology in Lagos. Aside the CBN cheque truncation project, PFS is involved in other offshore projects and agencies such as Microsoft Corporation, Ernst Reiner Gmbh & Co. KG, Germany, Arit of Africa, International Marketing partners, etc. As a member of the Presidential Initiative for development of the software industry and CBN Working Group on automated clearinghouse and cheque truncation, PFS was recognised in 2010 at the fourth IT Edge West Africa Convergence Forum as the “Innovative Leader in Financial Software Solution”. It ranked fourth among top 50 West African IT companies.

Foreign investors had approached the management for stakes, but running the company as a manager and entrepreneur, he says foreign investors have different orientation, which is quite “different from our own”. Besides, he explained, the company engages in responsible collaboration. “I am an advocate of evolution not a big bang”. This is

responsible for the steady growth of the company that started in March 1, 1994, twenty years ago. Nevertheless, with the rising business costs, stricter regulations and spiking software acquisition costs, companies are searching for locally developed and supported, environmental-friendly alternatives. PFS offers these benefits and more, and it is working with banks in Nigeria and other markets. Reports estimated that the average investment for financial software importation annually by Nigerian companies range from $4 billion. However, according to Gartner Inc. world-wide, software-as-a-service (SaaS) revenue is forecast to reach $14.5 billion in 2012, a 17.9 percent increase from 2011 revenue of $12.3 billion. SaaS-based delivery will experience healthy growth through 2015, when world-wide revenue would reach $22.1 billion. Some of the software players that would benefit in this revenue would include Expert Edge, SystemSpecs, Programos, CSA, PFS, Signal Alliance and Infosoft, etc. According to Yele, exposure, discipline and focus are responsible for the company's growth. Despite that, he would say, “We are still a small company”. However, the prestigious

All World Network and the Tony Elumelu Foundation disagreed. In the foundation's Nigeria Fast Growth 50 companies [Nigeria50] survey recently, PFS is ranked 36th. Equally, it got an award for emerging one of Nigeria’s Fast Growth 50 companies that are growing at 100% annually, employing over 6,500 people, 76% of which plan to start another company, which represent over 15 industries in the national economy and 54% of which have helped employees to start businesses. Tony Elumelu, founder of the foundation, informed that the Nigeria 50 would shine a unique spotlight on the pipeline of fastgrowing businesses led by Nigerian entrepreneur and business leaders, who are driving Nigeria's economic transformation. Nigeria 50 is poised to generate much-needed excitement about entrepreneurship and its role in the future prosperity of Nigeria. This is another side of the Nigerian story that needs to be heard, a story of innovation, ambition and success. That is the story of PFS because one person does not build a successful company.

financialtechnology

January 2013

financialtechnology

January 2013

ANALYSIS | FEATURE | OPINION

Eko Atlantic City would enhance the status of Lagos and create a new and stronger financial hub for West Africa

Atlantic, Konza & HOPE: Tales of Two Smart Cities, One Financial Hub Sola Fanawopo

n Africa, building a new city could be a major undertaking. This is exactly what Nigeria, Kenya and Ghana are doing. Kenya is erecting Techno City, called Konza; Ghana is establishing ICT hub, christened HOPE City while Lagos State in Nigeria is building a financial city, named Eko Atlantic City. These cities are unarguably the largest estate developments being undertaking simultaneously in three countries in the history of Africa.

coastal erosion and to safeguard Victoria Island from the threat of flooding. In the development of these cities, a public private partnership (PPP) financing model is being pursued. Various governments would concentrate on the provision of necessary infrastructure, policy and legal environment in accordance with the best global practices.

accommodate a total â&#x20AC;&#x153;Gross floor area of approximately 1,200,000, for a total built area of about 1,500,000sqmâ&#x20AC;?. Creatively, the architectural design of HOPE City is based on the beautiful traditional round house units, which embrace families in northern Ghana. But the structures would comprise six towers. The tallest would be 75-storey that is over 270 metres in height from the HOPE City, Ghana ground. It is expected to be the highest HOPE is acronym for Home, Office, People building on the continent. Two of the & Environment. HOPE City is a vertical city buildings would be 60-storey while the where over 50,000 workers, especially in the remaining three lowest would be 42-storey While two are located in the West African ICT field, would be engaged in the each. region (Eko Atlantic & HOPE), Konza is production of equipment and facilities for located in East African region. Two of the the design, fabrication and assembling of The six towers would be linked together by structures (Konza & HOPE) are inspired by software, hardware and other innovative a system of bridges at different heights with trends in Business Processing Outsourcing products for the entire continent and common amenities. This technological city and Information Technology Enabled beyond. Besides the 50,000 workers, over will have a university that would Services (BPO/ITES). However, Eko Atlantic 25,000 inhabitants are expected to live accommodate over 5,000 students, 100 City is motivated by the desire to find happily in this technological paradise. This professors and over 50 staff and academic permanent solution to protect the Bar Beach wonder city, which is built on a plot of land facilities such as libraries, etc. One of the on Victoria Island from the effects of severe covering over 100,000 square metres would major official businesses President John

Mahama undertook after his election was the inauguration of HOPE City, a worldclass ICT project aimed at bringing all ICT players under one roof and to engender paperless business practices in Ghana. Konza Techno City, Kenya The idea and interest for African Silicon Savannah in Kenya was first inspired by trends in BPO/ITES, which showed global offshore BPO/ITES revenue estimated at US$110 billion in 2010 and a projected three-fold growth to reach US$300 billion by 2015. Currently, there are over 2.8 million people employed in this sub-sector world-wide, however, statistics show that Africa only attracts about 1% of total revenues accruing from this growing industry. Only a few African countries have made effort to develop this industry, viz, South Africa, Egypt, Morocco, Ghana and Mauritius, have each launched national programmes to grow BPO/ITES. It was clear

financialtechnology

that Kenya could attract a sizeable chunk of the expected growth in the off shoring BPO/ITES trade revenues if government took lead in the development of this industry. In 2009, Kenyan government hired the International Finance Corporation (IFC) as the lead consultant (Transaction Advisor) to guide and advice on project implementation for a planned technopolis. Government through the advice of IFC commissioned feasibility studies that indicated that the project is viable and would contribute immensely to economic development if successfully implemented. Several studies were carried out to determine Kenya's readiness and advice on what is required for the project's success. The studies include the strategic environmental and social assessment, legal and regulatory due diligence and the demand assessment and a conceptual master plan. From the findings, Konza Technology City was feasible with a focus on ITES. Identified as possible drivers of growth for the Techno City are: Business Process Outsourcing (BPO), Software Development, Data Centres, Disaster Recovery Centres, Call Centres and Light assembly/ manufacturing industries In 2009, Konza Technology City project was initiated with the procurement of a 5,000 acres of land at Malili Ranch, 60km South East of Nairobi along MombasaNairobi A09 Trunk road. With this, the realisation of Africa's Silicon Savannah officially began.

January 2013

elephant project. Watch this space in the next five yearsâ&#x20AC;?, he said. Eko Atlantic City, Nigeria In 2003, the story of Eko Atlantic City started. Lagos State government was searching of a permanent solution to protect Bar Beach in Victoria Island from the effects of severe coastal erosion and to safeguard Victoria Island from the threat of flooding. Between 2003 and 2005 South Energyx Nigeria Limited, developers and city planners of Eko Atlantic City engaged in a feasibility study with international experts to solve the problem finally. This chronology began in 2005. Eko Atlantic City is reportedly the most impressive urban land reclamation project in Africa. Eko Atlantic City would house 250,000 people and serve as a workplace of another 150,000. The ten square kilometres development would have waterfront, treelined streets, efficient transport systems and mixed-use plots that combine residential areas with leisure facilities, offices and shops.

lost to the power of the sea into an ocean city that will be one of the wonders of the 21st century. The multi-billion-dollar investment is provided solely by private investors. Those already on board include local and international banks â&#x20AC;&#x201C; First Bank, FCMB and GTBank in Nigeria; BNP Paribas Fortis and KBC Bank and several private investors. Prime investment property opportunities are available for private companies and individuals, and are proving very popular. The job of planning and building Eko Atlantic City involves many different contractors and partners; some are based in Nigeria while others are international companies bringing their unique skills to the Lagos development. Some of the cities, according to the government, would be

built around the nation's airports beginning with Lagos and Abuja in the next three years as pilot schemes. In February, while dedicating the five million square metres of land reclaimed from the sea for the development of Eko Atlantic City in Lagos, President Goodluck Jonathan disclosed that more cities would be built across the country in the next few years in recognition of their potential for economic growth. Eko Atlantic is an ambitious JV project by Lagos State government and South Energyx Nigeria Limited to develop 'tomorrow's Lagos and Africa's Dubai'.

Eko Atlantic City would enhance the status of Lagos and create a new and stronger financial hub for West Africa. It would become the financial centre of Nigeria, if not West Africa. The scale of the Eko Atlantic City project is immense and progress is being achieved through a team effort among investors, planners, engineers and contractors. The development brings together private individuals and companies that have the knowledge and expertise to transform land

Konza City is expected to create over 20,000 direct and indirect jobs in Kenya

The first phase of Konza City is expected to create over 20,000 direct and indirect jobs. Konza would be developed under PPP in which government would play minimal role by developing the basic infrastructure and regulatory guidelines. Driven by commercial technology services, Konza would be home to Kenya's financial city initiative, provide university and science parks, potentially house government ministries from nearby Nairobi and establish a modern living community, which attracts high calibre professionals to a modern life style. To develop Konza would cost approximately Kshs 800 billion with Kenyan government expending approximately 5% of the total cost (Kshs 40 billion). PPP financing model would be adopted in the development of Konza. Government would concentrate on provision of the necessary infrastructure and policy and legal environment in accordance with best global practices. Government proposes to lease land to prospective private investors who will build and operate industries in either of the identified areas of investment. On January 22, President Kibaki launched Konza and, thus, set the stage for construction work to begin. He condemned the mushrooming of unplanned structures in Nairobi and its environs. â&#x20AC;&#x153;We are excited to finally launch this development, though it has come later than we initially expected. This will remove doubts among sceptics who thought Konza was a white

HOPE is acronym for Home, Office, People & Environment. HOPE City in Ghana is a vertical city where over 50,000 workers, especially in the ICT field would be engaged

financialtechnology

January 2013

SmartExecutive

CWG 2.0 Platform is a Social Impact Investment - Okere He is a big player in the IT sector of the Nigerian economy. His humility will enthrall you. He remains unaffected by the lofty heights he has attained. He is Austin Okere, Group Managing Director of Computer Warehouse Group Plc. In this interview, he speaks about his company's new initiative tagged CWG 2.0, a Social Impact Investment. WHAT ARE THE VARIABLES THAT PROPELLED CWG BUSINESS GROWTH? es, there is tremendous growth in our business, but I think the first thing is to learn through experience, innovation and intuition. Intuition is what you cannot explain when you are at the right place at the right time. Innovation is also important because everything works for a while, and thereafter, things could change. Before now, everywhere in Lagos had cyber cafĂŠs, but today they are not there anymore because the cafĂŠ owners did not see the need to innovate. Not too long ago, travel agencies

were everywhere. Now you can book your flights directly on the Internet. To remain in business, travel agencies need to innovate. At CWG, innovation is our passion, and it has among other strategies - kept us in business. That was why we came up with CWG 2.0 platform. CWG started as a Dell PC supplier and supporter but today, everybody can buy Dell PCs and maintain them. Therefore, we went into what we called 'Enterprise System', which is big data for banks. Even today, everybody can do that as well. The next step we took as a company was to go into managed services, where, as I talk to you, we have over 100 people that resume work and

close at MTN office as if they are MTN staff, but they are CWG employees, handling managed services for MTN. They supervise all our clients' IT facilities. They are the ones that enable all the calls subscribers make to work. They work in the data centres and today, we are taking some steps forward by discussing cloud computing, putting software as enterprise solution to use. That becomes the purpose but the issue is in helping to reduce IT expenditure for businesses in order to better the lots of entrepreneurs. UNDER WHAT CLASS OF INVESTMENT WOULD YOU CATEGORISE IT?

This could be categorized under social impact investment. If out of the 17 million registered Small and Medium Enterprises (SMEs) in the country, we were able to empower 1.7 million to get loan, and thereafter make 170 of the 1.7 million to be listed on the Nigeria Stock Exchange (NSE), then, we would be happy. From the service we offer at CWG, money-making is not our sole objective. We are in business to make social impact investment, which will eventually spin into money-making ventures. Therefore, the secret in business growth is innovation. I will give you a good example: Nokia was into paper business and it realised that paper

financialtechnology

January 2013

Austin Okere

CWG, as a company, has launched CWG 2.0 technology. The CWG 2.0 is to tell those 17 million companies that they should not bother to buy their own computer systems for accounting purposes because this approach is very expensive to have and run. could be used for communication and it began phone business. It ruled the mobile industry for a long period, but as soon as it stopped innovating, it started dying. Another example is the Research-in-Motion (RIM), makers of BlackBerry smart phones, which later rebranded to BlackBerry. At a point, Blackberry was the only mobile phone that could offer e-mail services. With such service, you could take a picture and e-mail it. Then, the company added the Blackberry Messenger and later stopped innovating. The truth is that Blackberry stopped innovating and that was how it started dying. If CWG had stopped innovating, it would have gone into extinction long ago. Dangote started not as a manufacturer, but as a trader who buys and sells. However, at a time, the company started manufacturing sugar and cement and today, Dangote has innovated itself into one of the biggest companies in Africa. Therefore, at the end of the day, the secret is how to innovate through learning, experience and intuition. WHY DID YOU COME UP WITH CWG 2.0 CONCEPTS? Today, there are 17 million micro small and medium enterprises that cannot access bank loans for two reasons: They do not have transparent books and they do not have collateral. Therefore, when they approach banks for capital to invest in their businesses, the banks cannot give them because the banks are spending people's money and they cannot loan out such money when they are not sure the money would be paid back. The issues have already become serious challenges to banks. Therefore, to solve them

on behalf of banks, CWG, as a company, has launched CWG 2.0 technology. The CWG 2.0 is to tell those 17 million companies that they should not bother to buy their own computer systems for accounting purposes because this approach is very expensive to have and run. Therefore, just like Google, Twitter and others, we would put an Enterprise Resource Planning, ERP, applications on the cloud, which the SMEs would pay for on a subscription basis to run their businesses. With ERP in the cloud, it means it would sit in our data centre and businesses can subscribe to it to do their accounting, inventory, access management and so on. Therefore, automatically, as a business owner, you then have enough time to concentrate on your key business operations. Also, with the ERP at any point in time, your stocks and sales are being managed so that when the banks comes and look at your books over the last three years, they would know exactly what have been going on. Invariably, we have solved the problem of transparency of books. By so doing, you will start witnessing growth among the 17 million SMEs. For instance, if 10 per cent of the SMEs is able to bring themselves to a point where banks can invest in them, then that is about 1.7 million people or companies. Out of these, if we take 10 per cent and get them listed on the stock exchange that would be 170 companies. Currently, records show that there are about 200 companies listed on the NSE. Therefore, by what I have just described, we can double the number and many people can easily get jobs through expansion arising from the growth of those companies. Therefore, at CWG we believe that instead of having 10

billionaires, it is better to have a thousand millionaires, or better still, have a million people with $100,000 and you would see the wonders they can do. We started with less than $100,000. CWG started with $16,000, that was 21 years ago and today, we are doing a turnover of $130 million a year. Look at the growth. It is tremendous. CWG RECENTLY BUILT AND OPERATE ITS TIER-3 DATA CENTRE IN LEKKI, LAGOS. WHAT IMPACT WOULD THE FACILITY BE TO NIGERIAN BUSINESS ENVIRONMENT? We actually got the idea of the data centre, first for our old products, which needed to be hosted in a data centre. After that, we had more space, and we brought in other companies to collocate with us and then many major companies showed interest. We had FirstBank Mobile Money that we are hosting, MasterCard and more companies started looking at the opportunity. From there, we know from experience that people need data centre and our target was the disaster recovery of banks, because banks have their primary data centres, where they process all their data. However, because of the sensitive nature of their businesses, they also need disaster recovery data centre so that if anything happens to their data centre, they would be able to retrieve their data from a backup housed in a data centre. As a result, we said to the banks not to build two primary data centres, instead co-locate your disaster recovery site with us. Therefore, what we have is a 50-rack capacity data centre, which can, at least, take a space of seven banks to be co-located with just the cost

of cooling of power and so on. We now discover it was a brilliant idea because they were now buying into it. That was why we opened the data centre, but the primary reason was the SME/ERP I described earlier. The data centre is a state-of-the-art because many life-saving businesses are in our hands. Most people have not seen the Google data centre, but they have Gmail accounts. How are you sure that one day, Google server would not just go down and then, what happens to all your e-mail? However, we said that people should come and see and that is why we opened the Tier-3 data centre. WHY DID YOU DESCRIBE THE DATA CENTRE AS TIER-3? It is Tier-3 because it presents a global standard. For instance, it has two authentications for security. It has precision air-conditioners and power source from two independent sources so that if something happens to one power source, the second takes over to prevent downtime. As I speak, we have five generators that feed two Uninterrupted Power Supplies (UPSs) that switch to inverter and data centre. Therefore, every rack has two power sources coming to it, which means that, if one source fails, you can run on the other power source. Even if you still want to maintain one power source, you do not have to take the system down. You can do that with one power source while the system is still up and running. The whole idea is that it is designed for 999.9 per cent reliability, which means it never goes down. It has been a very good investment.

financialtechnology

January 2013

SURF & PAY

50 eCommerce Players Fight for Nigeria's $35 billion Market

hat Nigeria has discovered a working and successful template for e-Commerce is no longer in doubt. The runaway success of Jumia and Konga, two leading domestic e-commerce players is a huge testament to the fertile e-commerce market in Nigeria. However, where the likes of South Africa's Kalahari and Mocality Deal did fail, Nigerian e-commerce brands have succeeded. With a young and vibrant population of over 160 million and a thriving e-commerce market, Nigeria is becoming a game-changer in African e-commerce. As one of the few countries in the world with half of its population below 35 years, Nigeria has over 49 million population on the Internet. The electronic payments system in the country is getting better daily.

launched Dial-a-Deal project with the aim of empowering customers with limited Internet access to have a deal. The company encourages customers to dial a customised telephone number it setup in order for customers to get the 'rytedeal'. Such is the ingenuity of the ecommerce market in Nigeria. “Online retail in Nigeria has grown by over 200%, in terms of orders”, COO of Konga.com, Alex Kamara, said. Konga.com is ranked by global traffic website, alexa.com to be among the top 20 websites in Nigeria. Kamara said Nigeria's ecommerce market is “huge” and with 160+ million population the market is massive.

Though logistics remains a huge challenge, the e-commerce firms are finding their ways around it. Average internet download speed in Nigeria is 17.48 Mbps and the country is ranked eight on the list of xxxxxxxxxxxxxxxxxxx '. The statistics corroborates the idea that Nigeria has more people online. This signifies growth of ecommerce. However, the limited internet access has not limit most Nigerians from shopping online.

“If we manage to convince even 1% of that market to adopt the benefits of e-commerce, we would be very happy,” he said. CEO, Ryte Internet Technologies, the company behind www.rytedeals.com, Dr. Victor Alaofin, predicted that e-commerce in Nigeria would reach $35 billion in 5 years. According to him, online business, ecommerce and the entire space is growing very rapidly. “We are definitely growing not less than four or five times the average growth of the Nigerian economy.

One e-commerce firm that has created a way around this limitation is Rytedeals, a fast growing new entrant into the market, which

Data on anything in Nigeria is always inaccurate because we have many sources and each source seem to have its own figure.

1. Adibba| www.adibba.com This shopping platform offers an ever growing variety of product categories for sale to consumers at a very competitive price. 2. Agbeke's way outlet |www.agbekeswayoutlet.com This site offers trendy, multi-channel source for affordable shoes for men, women and children. 3. Bringitbay | www.bringitbay.com Established in 2008, Bringitbay has operations in Nigeria, United Kingdom and USA. The team is carefully selected to deliver the best possible shopping experience for Africans yearning to shop online from UK and USA. Its objective is to delight its customers by providing access too hard to find, rare and excellent quality products with emphasis on variety, affordability and convenience while providing unequalled customer service. 4. Brahma stores| www. brahmastores.com Rahma stores deals in fashion, as it sells

variety of clothes from menswear, women wears and kids. The portal is connected with leading clothiers around the world from Italy, France America, Japan and more. 5. Carissa| http://www.carissasonline.com Carissa caters to young and matured women who desire quality clothing and accessories at competitive prices. Carissa prides itself at being one of the trendiest online stores in Nigeria with new arrivals weekly. 6. Carmudi | www.camudi.com.ng Carmudi is the vehicle website offering the best current offers of Nigeria's car market. It offers thousands of carefully selected vehicles in Nigeria and provides details customers need. 7. Cheki | Cheki.com.ng Nigeria's #1 auto website with more car buyers and car sellers than any other site in Nigeria. Cheki.com.ng is an online marketplace where all of Nigeria's leading car dealers, importers and private sellers

But if you look at all the sources that we have seen, there is no source that predicts less than 15 per cent growth year-on-year”, Victor emphasized.Victor's predication might become reality before 2015 if the number of e-commerce companies springing up daily is anything to consider. financialtechnology findings revealed that over 50 e-commerce firms operate in the country. Our findings

post their cars for sale in Nigeria. Cheki offers a one-stop destination for all buyers of US and European import cars to Nigeria by centrally hosting all the cars of many leading International car dealers and importers to Nigeria. 8. Circuit Atlantic | www.circuitatlantic.com A shopping and procurement company based in Nigeria, Circuit Atlantic helps individuals and businesses to buy online items from US-based websites through its proxy shopping system. 9. Da Fun-shop | www.dafunshop.com Nigeria's leading kid's online store, Da Fun-shop offers a vast range of toys, games, books, party supplies, apparels and educational products for kids from 0-15 years. 10. Dokadots Wholesale | www.dokadotswholesale.com A business-to-business online fashion store that provides high quality fashion apparel and accessories at discounted prices to resellers, Dokadots offer a variety of carefully selected high quality

further revealed that the industry has witnessed specialisation and compartmentalisation. Some new entrants specialised in shoes, apparels, technology, furniture, grocery, etc. Given the expected growth figures, the conclusion is that competition among the e-commerce firms will be fierce. E-commerce firms operating in Nigeria today include the following:

and trendy fashion items ranging from clothing to shoes, bags and other fashion accessories at competitive prices. 11. Dynamic Systems and Communications | www. dsclng.com Nigeria's leading dealer of phones and gadgets, dsclng offers online shopping solution to customers by providing opportunity to purchase mobile phones online and have them shipped directly to homes or offices. 12. Emart Nigeria |www.emartnigeria.com Creating a shopping cart system to connect buyers and sellers together, Emart connect buyers and sellers and help them create their own customized online store and sell products online with or without developing their own web site. Buyers can search thousands of products from hundreds of merchants around Nigeria from one place, find information about the products or purchase directly online. 13. EfiziStore | www.efiziStore.com These days, everyone wants to shop with

financialtechnology

January 2013

ease from the comfort of the office or homes. EfiziStore.com offers a range of products from technology to fashion.

medication online and these can be shipped directly to homes and offices. 41. Rokobi | www. rokobi .com Rokobi is a new online shopping experience that enables customers to find and buy products from retailers around the world. Rokobi enables you to shop globally and pay in your local currency.

14. Fouani Group| www.fouani.com Integrity is the key to preserving its most valuable asset, its reputation, Fouani therefore value integrity as its foundation. 15. Futwia| www.futwia.com Futwia's goal is simple to offer quality brands at affordable prices on shoes and fashion all families.

42. RyteDeal |www.rytedeals.com One of the top online stores in Nigeria, rytedeals is an initiative of Ryte Internet Technology Limited a wholly and proudly Nigerian IT company with focus on using the internet to benefit its teaming customers and improve the quality of online shopping in Nigeria.

16. Glamour | www.glamour.com.ng Nigeria's #1 online retailer and wholesaler for all things beauty, for men and women including fragrances, makeup, skin-care and cosmetics, Glamour offers these and more. 17. Giddimint | www.giddimint.com An online fashion store, Giddimint.com celebrates African art and culture through urban fashion items and accessories. 18. Gloo.ng| www.gloo.ng A pure-play electronic retailing service dedicated to delivering direct to the doorsteps of clients, on a same-day basis and at very affordable prices, Gloo.ng offers a wide variety of high quality brands of grocery and living essential items. Its vision is to do to supermarket shopping in Nigeria what Amazon did to book shopping in the US. 19. Hellofood | www.hellofood.com.ng Hellofood is the most powerful online tool for food delivery and offers best online food ordering experience. 20. Heroshe | www. heroshe.com Based in the US, Heroshe is a lifestyle service company procuring products in the USA to shoppers in Nigeria. Its team has provided personalised, reliable international shopping service for Nigerian shoppers seeking convenience, care and attention. 21. Jumia | www.jumia.com Nigeria's #1 online shopping destination where users can shop the widest selection of electronics, fashion, home appliances, kid's items and more in Nigeria, Jumia ship directly to homes or office. With affordable prices and great products, Jumia lets users enjoy an awesome shopping experience with order sent directly to their doorsteps. 22. Jaramall |www.jaramall.com Nigeria's leading online grocery store that offers a wide range of products from foodstuff to household items, Jaramall.com provides the best deals for customers and delivers goods purchased right to homes or offices. 23. Kara | www.kara.com Kara delivers the benefits of technology to individual and the communities through collaboration with business, government and educational institutions. It delivers reliable, cost effective and touching edge solutions to customers. 24. Kaymu| www.kaymu.com.ng Kaymu is Nigeria's #1 online marketplace where buyers and sellers meet and make awesome deals thanks to the fixed or auction pricing system. Kaymu is the place where users buy the cheapest items, used or new, such as smartphones, computers,

fashion and clothing, home appliances, cars and real estate for the best prices. 25. KOKOstores| www.kokostores.com Koko Stores offers unisex luxury products including footwear, jewellery and beauty care. 26. Konga | www.konga.com Nigeria's largest online mall, Konga offers huge catalog of 200,000 products including phones, computers, clothing, shoes, home appliances, books, baby products and much more.

shoe fashion at affordable prices. It has a wide range of classy stylish and beautiful footwear for office, casual and bridal footwear. 33. Mylocaleshop| www.mylocaleshop.com Webber Networks conceptualized, designed and developed this site, which is an information technology company with offices in Lagos, Port-Harcourt and Abuja.

27. Lamudi | www.lamudi.com.ng Lamudi is the number one online marketplace for real estate classifieds. Whether buyer or seller, Lamudi will provide the best service for you. Lamudi offers properties in Lagos, Abuja, Port Harcourt, and all around Nigeria.

34. Ninostyle | www.ninostyle.com Bringing the concept of e-commerce into the Nigerian fashion world, Ninostyle.com's commitment is to provide fashion loving patrons authentic, high quality fashion products. This fashionloving e-firm travels the world to provide its demanding clients the very best in fashion. Many products on the portal are hand crafted by the finest Italian craftsmen/women.

28. Manna Stores | www.mannastores.com Manna Stores is a procurement firm with offices in UK and Nigeria, a subsidiary of Manna mart Online Limited. Products offered include electronics, home appliances, game consoles, computers, beauty products, toys, clothing, shoes, jewelry, kitchenware etc.

35. NgPricehunter|www.NgPricehunter.com This site does not sell products. Products on this website belong to other shops. All it does is to make products prices available in many Nigerian shops to NgPricehunter.com so that buyers can compare prices in one place before buying a product.

29. MallforAfrica | www.mallforafrica.com A global economy e-commerce infrastructure company focused on providing Africans with the ability to purchase items directly from international online retailers in the USA and Europe and from local online retailers in Africa, in a seamless manner, MallforAfrica gives users access to over 7 billion items, accessing a true global economy infrastructure.

36. Ozyet Collections | www.ozyet.com Ozyet was an idea of a student from the UK who studied in that country for eight years. He realized the high demand for UK products in his native country (Nigeria) and decided to exploit that by offering Nigerians what they wanted at a very cheap rate.

30. Mystoreng |www.mystoreng.com This is classified listing site. It gives customers privilege to transact business online by placing their merchandise, commodities, products, brands and services on the internet free, thereby attracting more customers. It offers alternative method of transacting business with less hustle. 31. Mofeera | www. mofeera.com.ng Committed to offering value, quality fashion products and excellent customer service, Mofeera delivers through its partner courier company to anywhere in Nigeria. 32. Mizzyb | www.mizzybshoesonline.com Mizzyb is dedicated to constantly providing customers the best in women

37. OLX | www.olx.com.ng A free online classifieds website, OLX provides a simple solution to the complications involved in selling, buying, trading, discussing, organizing and meeting people near you, wherever you may reside. 38. Ohmashoes |www.ohmashoes.com This site aims to improve shoe shopping in Nigeria. It sells leading brands of women shoes and accessories. 39. Party Supplies & More| www.partysuppliesng.com Set up in 2009, partysuppliesng.com is Nigeria's #1 online mail order website with a wide range of party supplies to give parties that edge. 40. Petmata| www.petmata.com Nigeria's #1 online pet product shopping solution, Petmata offers customers all pet products, food, pet accessories and

43. Shopkolo| www.shopkolo.com Shopkolo.com is a Nigerian online platform designed to allow users to buy and sell online. The portal believes that more products and services offered in Nigeria should be online. Users can crossshop products and services from different vendors and sellers more efficiently. 44. Shopaholic |www.shopaholicng.com Trademarked under BVX Limited, shopaholic.com is renowned for offering customers the easiest and most convenient shopping experience. 45. Store| Store.com.ng Nigeria's #1 online store that provides customers amazing deals. Products on offer include phones, laptops, tablets, household electronics, software, games, books, and DVDs. These can be shipped directly to customer homes or office. 46. The ShopBar | www.theshopbarng.com A private company, which specialises in personal and business procurement services, the ShopBar has been in the procurement business since 2005 and has gained procurement expertise over the years. 47. Tafoo| www.taafoo.com A multi-format retail company that offers a wide range of fashion at a price that majority of consumers can afford both online and offline at any of our stores, Tafoo started as a social messaging platform for Nigerian celebrities. It has evolved into a premier online destination in Nigeria. 48. US2Naija | www.us2naija.com An e-logistics company with operational bases in Nigeria, United States and the United Kingdom, US2Naija offers Nigerians who desire to shop online from USA and UK (from over 5,000 reputable online stores in UK and US), thereby linking e-commerce between Nigeria and the world. 49. WebMall| www.webmallng.com Webmallng.com provides great gifts for birthdays, weddings and other special occasions. This site helps when customers do not have a clue what gift to give loved ones. 50. Traclist | www.traclist.com Traclist is a social plaform that gives customers access to a wide range of products from many different stores in Nigeria. Discover interesting products on this site and more.

financialtechnology

January 2013

Ikem Okuhu

08116759766

Who really owns the online banking space?

nline banking is the game everyone is playing. But it does seem no one owns this vast space. In a country where there are just about 20 or so banks in business it does seem there is a struggle among them to compete around similar or related brand positioning statements. Take the cases of FCMB, Diamond Bank, and even Guaranty Trust Bank for example. It would just seem the three are saying the same thing in languages that just slightly differ. While FCMB has its pay off as “My bank and I”, Diamond Bank says “Your Bank”. But GTBank takes it further by asking “Wouldn't You Rather Bank with Us”. This is by no means an exhaustive list but the common thread is effort made to make the customer take ownership or put differently, create a sense of fraternity between the bank and the customer. GTBank at a point attempted to leapfrog to offer Nigerians what would have looked like the “15th Amendment” (online self service) as enunciated by the Financial Brand by trying to get customers to open account via the social network, especially Facebook. The jury is still out on how successful this project has been or whether it was just one of those publicity stunts geared merely towards creating certain impressions in the mind. It goes without saying that Nigeria, despite the speed of adoption of technology, especially by the “Geek” generation, is still too “immature” a market for online self-service banking, which was why, at the conceptualisation of this story, we asked the question, “Who owns the Nigerian e-banking space?” The question became necessary because a look at that ecosystem would reveal a mass of competitors, doing almost exactly the same thing, almost at the same time, yet there are expectations that the result would be different. People would want to give the excuses that it would be difficult for the banks to differentiate based on this theme today, because virtually all of them have adopted or have been made by time, technology progress and perhaps regulation to migrate to e-banking platforms. But should we not pause and learn a bit from history, especially our own history. Back in the days before the 2005 consolidation all the banks had Savings Accounts products and marketed them as well as they could. Matter of fact, most people who walk into banks in Nigeria do so either to open savings or current accounts. It is almost always either of the two. Those who walk in for credit related products or other forms of transactions constitute a negligible minority. But even during this period, there was a savings account product that stood out taller than the rest and that was Intercontinental Bank's Intercontinental Premium Save Account, popularly known as IPSA at the time. IPSA was so popular that virtually everyone doing banking business in Nigeria, with or without Intercontinental Bank, knew of that product. But it was a savings product like many other savings products in the well over 80 banks in the country at the time. How come it stood taller than the rest? There is a second example. During the early days of technology application in banking, virtually every bank

adopted the technology at the same time, especially those in the class of the New Generation banks. But it was Standard Trust Bank (one of the banks that merged to form the present UBA) that best communicated “online, realtime banking.” Others were doing the same thing. But how come this message from then STB was stronger? Let us even show a much stronger example. In the Nigerian financial services history, I am sure the product that could easy rank as the all time most popular was that which was marketed by the then First Inland Bank. In the early days of GSM in the country, First Inland Bank was one of the first few to pioneer product innovations using the mobile phone. Today it is best known as mobile banking. But First Inland Bank introduced a product it named “Flash Me Cash.” In those days when a minute of phone call cost N50, most people at the bottom of the pyramid would leave sufficient value in the phone just to alert their benefactor or whoever they want to talk to that there is a problem to be solved somewhere. It is popularly called “Flash” in our ecosystem. But the story is that First Inland Bank took this product and made it into a household name. The learning point from these examples is that even in an undifferentiated market where everyone is selling the same thing to the same people, there could still be opportunities to differentiate beyond the names of the institutions. The online banking space in Nigeria is a vast Greenfield waiting to be taken advantage of. Yet, what we see are banks, saying the same thing to the same people in virtually the same language. Almost every bank in the country has Verve product. Almost all of them have Mastercard. In the days of ValuCard, everyone marketed it in virtually the same way. PoS and ATMs are advertised almost the same way.

This is why the question became necessary as to what the banks can do to differentiate in this realm. Put differently, which bank will aggregate such strong multi-channel communication that would hand it the ownership of the online banking space, even when all others in the likeness of competition are still sitting on the same bench? Banks like GTBank have done their best to claim spots in this space but the market is yet to see steps geared towards taking ownership. The statistics is there staring everyone in the face and yet no one is seeing the direction to the future. Most banks in Nigeria have continental aspirations, yet they are not acting like they know Africa is now the second largest telecoms market in the world, only coming after Asia. With over 620 million mobile connections as of September 2011, Africa has overtaken Latin America to become the second largest mobile market in the world, thus, becoming the fastest developing mobile market in the world. On its part, Nigeria has about 93 million subscribers representing 16% of the continent's mobile subscribers base. About one in every 20 mobile phones in Nigeria is a smart phone. While the first mobiles gave Nigerians who had never had fixed lines the chance to communicate over distance, faster networks and smartphones have given people who cannot afford computers access to the internet, and social media sites in particular. The number of people going to cyber cafes has been on a decline, since people can now use their phones to do the same job. Statistics also show Nigeria has one of the largest mobile penetration rates for the Internet in the world with 81% of Internet traffic originating from mobile devices. What this suggests is that the future of banking is in the cyberspace. The generation of tomorrow will recognise that bank

that would be waiting for them at the “E-dorado” when they arrive, not the one that will arrive after them breathlessly whining about how they have been with them as they passed through the tortuous paths of growth and maturity. The banks in Nigeria are so highly commoditised you rarely are capable of differentiating one from the other these days. For a country of over 170 million to be serviced by less than 20 banks shows just how much lack of competition there is in the environment. But those that have followed the rapid and most times, radical changes that have taken place in the financial services space in the country would advise that a strong forward outlook should take the place of the largely satisfactory profits and, you may also add, profit-taking of today. In a world where technology has begun to change by the wave of the hand, no one really knows the direction the future change in the financial services environment would take. But it goes without saying it cannot change without technology and the internet driving it. It, therefore, follows that the bank that weaves its body language to suggest this space is in its DNA will be the winner. In any case, many have long predicted the end of the present regime of oligopoly of the few banks. The end is already near with the collapse of Universal banking and the licensing of regional banks as well as the return of merchant banking. What this means is that the change is nearer than was thought. Who knows where what would upset the current financial services applecart would come from? No one knows. But the bank that wires itself with the digital nerve-endings will most certainly trigger the excitement that would lead it into the future as numero uno.

financialtechnology

January 2013

GadgetReview Square Stand vs Credit Card Terminal Can disrupt cash register market? Jack Dorsey

vs S

have works and is not broken. Square needs to work with experts that have empirical experience in actually working with these practical499.99 and pragmatic merchants. iPad Buying into the idea that they are “disruptors” will continue to cost Square many lost opportunities. Square 299.99 Stand

quare, which started with a small card reader that plugs into an iPhone's audio jack has made an iPadbased point of sale system, that is a warning shot across the bow of competitors such as Verifone. It also is a sign of Square's grand ambitions. They say all revolutions start out small. Jack Dorsey's Square is no different. It started with a modest card reader, turned into a little app and now the company has developed and launched Square Stand, a point of sale system that reinvents the idea of cash register with help from Apple's iPad and Square's software, allowing the San Franciscobased company to further spread its wings in the payments business. And if there were any doubts that the company was going after payments incumbents such as NCR and Verifone, Square Stand puts them to an end. Square Stand, simply put, is a point of sale system that allows merchants (big and small) to plug in their iPads (2 or 3, but not the 4th generation) into a stand that comes with a swivel base (so they can turn it around for you to sign for your purchase), a credit card reader and a USB hub that can in turn allow merchants to plug in everything from a scanner to a printer (for printing receipts), a cash register (the Square Stand doesn't hold cash, just works with other devices) and even the backend ordering system into the stand. When asked why the company was making the initial device with support for only the iPad 2 and iPad 3, Dorsey pointed out that majority of their customers were using these two devices and as a result they had to make sure

$ $

Cash Draw

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Receipt Printer

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Jack Dorsey unveils Square Stand, a point of sale system that reinvents the idea of cash register they provided the biggest support. The support for iPad 4 (the newest model available, sold as just “iPad”) will come in subsequent models. The company had launched Square Register for iPad app in March 2012 and has made subsequent upgrades to the app A wonderful design and genius presentation for Square on this device. However, there is reality. The price of the devices is way off the incumbents. Let us attempt some simple arithmetic or bench marking. CONCLUSION Square may have lost it's way. This is not the way to “disrupt” the status quo.

Square is suffering from a reality disconnect of the needs of the 95% of real merchants outside of the tech centers in the US. The reality is the system they use is not seen as “broken” by a vast majority of merchants and costs like this will not do anything to change this thinking; in fact, it will take Square out of the realm of possibilities for these merchants. Do a test; ask your favorite small merchant if they would spend $1,200s for what they currently use. My bet is that you will see and old cash register and old credit card terminal at these merchants and they would nicely or perhaps vigorously state that what they

$ 1,259.91 vs Standard Cash Register

Credit Card Terminal

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financialtechnology

January 2013

GadgetReview Lamassu's Russian ATM that Uses Voice Analysis to Bitcoin ATM tell when you're lying

ranted, it's not exactly a traditional ATM, for one thing, you feed cash in. It's not exactly a vending machine either, there are no candy bars here, just a transfer of funds to your account. Lamassu's Bitcoin Machine scans your info via a QR code on your phone, you put some bills in the slot and voila, you're a little closer to that Bitcoin mansion you've had your eye on. The company opened up pre-orders via its site recently

redit card applications via automated teller are all the rave abroad these days. That's why Russia's Sberbank is using Speech Technology Center's system in its new ATM to tell when you fudge your financials to get approved. Like a polygraph, the technology senses involuntary stress cues to ferret out fib-filled statements only. Instead of using wired sensors, it listens to your angst-ridden voice. Designed using samples from Russian police interrogation recordings where subjects were found to be lying, the system is able to detect the changes in

Heckler iPad Cash Drawer F

or shopkeepers who want to keep their cash and receipts straight when they're using an iPad-based point-of-sale (POS) system, there are a few choices available for cash drawers. Back when Square announced the Business in a Box bundle, the company chose an iPad stand designed by Tempe, Ariz.based Heckler Design. Now Dean Heckler and his team have announced availability of a full-fledged cash drawer. The WindFall Cash Drawer for iPad

Coinstar

hen he was in college, Jens Molbak looked at his overflowing coin jar and thought there had to be a way to turn those coins into cash without having to count them, roll them, and take them to the bank. So he founded Coinstar in 1991 with one goalâ&#x20AC;&#x201D;make it easy and convenient for people to turn their coins into cash. Along with two classmates, Jens created a kiosk that could sort and count the coins. All people had to do was pour their coins into the kiosk. When the first kiosks were installed in stores, people loved the service and the convenience, and the company grew. Today, we're not just about coins anymore. We're about smart ways to turn your money into the things you want. Coinstar is now part of the Outerwall Inc. family.

speech patterns when a person isn't telling the truth. Of course, it's not completely accurate, so the biometric voice data is combined with credit history and other info before the ATM can crush an applicant's credit dreams. And to assuage the public's privacy concerns, patrons' voice prints will be kept on chips in their credit cards instead of a bank database. So, we don't have to worry about hackers stealing our biometric info, but we're slightly concerned that we'll no longer be able to deceive our robot overlords should the need arise.

(Updated: will be part of a bundle priced at US$399) would look great in any store, and comes in black grey, grey white, bright red and hand-polished stainless steel. Heckler Design will be selling the WindFall Cash Drawer as part of its Modern Shop Hardware line, and store owners can also work with ShopKeep.com for a full point-of-sale solution that's an alternative to Square Register. As part of the bundle Heckler will sell, they're planning to include the new Star Micronics DKAirCash wireless cash drawer controller and Star Micronics receipt printers. More info is included in the full press release.

PayPal unveils Beacon: A USB stick that powers hands-free checkout

ayPal recently unveiled a new hands-free payment system known as Beacon. Working alongside compatible Point of Sale systems (Booker, Erply, Leaf, Leapset, Micros, NCR, PayPal Here, Revel, ShopKeep, TouchBistro and Vend), the small USB dongle simply plugs into a power source to facilitate wireless payments in brick-andmortar stores. Beacon utilizes

Bluetooth LE to determine when a shopper enters the store with PayPal's app on their device. The service won't track customers' locations as they shop but it will display an image of the shopper on the PoS system. When it's time for checkout, only a verbal confirmation of payment is required to complete the transaction.

financialtechnology

January 2013

SmartCEO JOHN TANI OBARO CEO, SYSTEMSPECS LIMITED

The Prefferred

Just within seven years of its development, Remita, the premium electronic payment platform from SystemSpecs has become the preferred platform deployed by banks, governments, corporate organizations and individuals for e-payment, collection and payroll processing. It takes a SmartCEO to build a smart platform that helps corporations and individuals to seamlessly adopt e-payment practice, which is the cardinal objective of the CBN's cashless policy.

financialtechnology

January 2013

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financialtechnology

January 2013

CapitalmarketTech

X-GENERATION How the New Trading Platform Drives NSE toward Emerging Market

n a recent presentation on the “Technology Strategy for the Nigerian Capital Market” Executive Director, Market Operations and Technology of the the Nigerian Stock Exchange (NSE), Ade Bajomo, explained that technology will play a significant role in driving the exchange towards emerging market. “A critical prerequisite for frontier market emergence is enabling technology, facilitating operational efficiency within the markets and their eco-systems”, he said. One of the technologies for capital markets' emergence is robust trading platform. According to Bajomo, an efficient exchange requires a trading platform should have a high performance multi-product, multiasset platform, highly scalable to cater for wider participation of growing middle-class and investing segment of the population, supports global investor participation and offers features such as direct market access and automated trading among others. These and other criteria must have determined the choice of X-Gen by NSE when it was considering the replacement of Horizon. The Horizon trading platform had reached its 'end of life' and will no longer be supported by its suppliers from mid 2013. NSE had been using Horizon since 1999.

END OF LIFE FOR HORIZON (OLD TRADING PLATFORM) In 2012, the NSE’s council approved X-Gen platform programme, the largest and most wide-ranging programme undertaken by the exchange with the core objectives of implementing a state-of-the-art trading platform, X-Stream, to replace Horizon, replacing the end-of-day stock manager database with a real-time management

ADE BAJOMO

OSCAR N. ONYEMA

Executive Director, Market Operations and Technology information (MI) report database; upgrading the information technology (IT) infrastructure within the NSE ; improving IT security policy and controls and streamlining internal processes to facilitate a smooth transition.

After a 12-month focused, disciplined and intensive project management and implementation involving the NSE, its technical partners and broker dealer community, the new platform went live in October, 2013. An elated Bajomo said the development would reinforce Nigeria's position as a regional financial centre, adding that the new technology serves as a testimony that the NSE has succeeded in achieving one of its key goals of providing 21st century technologies to support the growth of the Nigerian Capital Market “We

Chief Executive Officer

believe that the successful implementation of this modern, world-class trading technology suite is a significant development that will change the experience of doing business in not only the Nigerian capital market but in Africa”, Bajomo said. Chief Executive Officer, NSE, Mr. Oscar Onyema, said, “The NSE has always been focused on investing in technology, but with X-GEN, our trading platform is now among the most advanced in the world and that further extends our leadership position in Africa”.

X-GEN: GAME CHANGER X-Gen, is a high-performance, robust and scalable, multi-asset, multi-market matching trading engine. It has a highly flexible and configurable market structure

that can be enhanced to support the auctioning process and trading of Treasury Bills, a wide range of Fixed Income securities (including FGN Bonds), Equities, Exchange Traded Funds, Commodities and Derivatives. Based on NASDAQ OMX's proven X-Stream technology, X-Gen will favourably position the NSE as having the fastest trading engine in Africa.

Investors, through stockbrokers, will have real-time access to market prices, their portfolios and will be able to execute market orders in near real-time on a wide range of devices including smart phones. This will encourage wider participation of the growing middle-class and investing segment of the Nigerian population as well as support global investor participation.

8 Reasons NSE Change the Old Trading Platform 1 2 3 4

The former trading platform has reached its 'end of life' and will no longer be supported by its suppliers from mid 2013. Opportunities for automation (straight through processing) will be lost, leading to poor level of price transparency and operational efficiency for both investors and operators as activities outside of trade matching remain largely manual. Opportunities to scale the market with more companies, achieve $1T capitalisation and increase the retail investor base, reaching out to the rural areas will not be possible. The Nigerian Capital market's aspirations to move from frontier to emerging market status, WFE membership and inclusion in the MSCI Emerging market index, all critical for attracting significant order flows and competing with the leading African (an emerging market) Exchanges, will not be achieved.

Nigeria's Vision 2020 for the capital market will not be realised and its current position as the leading capital market in West Africa jeopardised in the medium term as other Exchanges such as Ghana continue in their steady technology investments.

6 7 8

Opportunities to diversify the income base that can be used to grow the Exchange (such as market data) will be lost. The Exchange will lack the ability to offer more products (and especially hedging products) such as Options and Financial Futures, required for a fully functional capital market. The uptime and operational viability of the Exchange will be significantly impacted without investments in modern business continuity approaches, with detrimental impact on not just the market but the wider economy.

financialtechnology

January 2013

CapitalmarketTech

Five Technology Challenges for Investment Banks in 2014 Becca Lipman

Accenture has listsed the most important things clients should think about and the challenges in bringing them to the forefront. In the opinion of Jonathan Firester, managing director of capital markets at Accenture, if you look broadly at the financial landscape we are in the later years of a series of transformations that started after the '08 crisis. "If you think of all forces that occurred and we've been responding to, there were regulatory forces, changes in customer behaviour, and changes in their financials, which caused them to look at various portions of an expense base to cut costs and to improve profitability of RoI. If we look at the top 10 challenges they face now, you're looking at the later changes of that transformation".It is easy to get lost in every day work, clients worry about this too, he adds. "We want to help clients think about and prioritise issues, to focus and aggregate all the honking of all experts who are all having different experiences across industries and functions in technology". Five technology challenges in financial markets are listed below:

Restructuring the 1 Investment Bank: Streamlining and Rationalising

Watching Closely: Improving Surveillance and Mitigating Conduct Risk 2

egulators have become very thorough in terms of monitoring, measuring and mitigating all different kinds of risk, and the public eye still looks towards investment banks with skepticism. Therefore, attention internally and externally is on the technology tools clients are using to look for and predict risk events.

t is no longer an arms race to create more innovative and complex derivatives, instead banks are pulling back to streamline flow of products and looking to their technology platforms for answers. Focus is on removing the expense and complexity of long entrenched technology platforms, and in many places replacing complex custom platforms with combinations of off-theshelf packages with fewer and more focused pieces of customisation. The potential expense savings here are extra-ordinary, says Firester. "I think it's the most important technology discussion, but also the most difficult." They are big and lengthy, results aren't immediate, but can mean the difference between successful or unsuccessful products RoIs.

Using more data across products and functions than in the past enables risk measurement and management tools to produce more information about levels of potential risk being taken. Every risk manager is looking to move from measuring to predicting risk, so there are many technologies related to measuring and monitoring. Even just aggregating risk management across products is a complex undertaking from a product overviewâ&#x20AC;?, explains Firester. Management has made it clear that surveillance and risk management are the responsibility of business themselves. It's not a tension between line managers pushing for profits, and compliance department pushing back to ensure nothing risky is happening.

Sustainable Funding: Managing Collateral and Liquidity

irms are investing their development budget on cross product systems, trying to lower historical cost of complexity and of custom systems. "Because this global cross product integrated management of collateral and liquidity is so important, in the sense that balance sheet and collateral have become the focus of a bank, optimizing it has become critically important from a risk management point of view", says Firester. It requires linking together systems that manage and transact collateral across different products, and it is a huge technology investment, requires integrating systems of data across products and regions. "Integrating all sources and uses of collateral, understanding where it is coming from and where to post collateral, that's an important set of technology investments. Culled from www.WallStreet & Technology

Rethinking the Digital Proposition: 3 Providing Information Clients Really Need

echnology has created disruptions in other industries, but none like the investment banking sector. The very economics of exchanges have changed, leading to some interesting conversations with clients about which major disruptions they can prepare for. â&#x20AC;&#x153;These are disruptive technologies that enable strategic differentiation", explains Firester. This includes taking advantage of multi-channel relationships with clients, cross-selling products and maximising client interaction with their portal by providing more content to those who need it most.

A New Ecosystem: Using Utilities to 4 Share the Load

o not focus on commoditized parts of your business that provide no differentiation in the market. Instead, different software packages and a utility based model helps banks get to the next level without revamping IT systems or great expenditures on compliance. In financial services, there is a long history of customised products. There was a time when that flexibility was worth it and there were profit margins to support it, explains Firester. "Now you don't have to do everything inhouse, many components are similar across competitors". Settlement, creating regulation reports, tracking reference data, are examples of services that may be more effective as industry utilities. "It just doesn't make sense for clients to invest internal resources on parts of a business that doesn't differentiate themselves from competitors. Clearing and settlement was something you had to do right, but rarely an area of competitive advantage. So it's a natural thing to outsource, especially where costs go down with scaleâ&#x20AC;?.

financialtechnology

January 2013

Mobile Money:

The scared banks, the protectionist regulator Mobile money services, the convenient, easily accessible means of speeding up the capture of more Nigerians in the financial services web may yet tarry, thanks to the regulatory â&#x20AC;&#x153;mother-henismâ&#x20AC;? as well as failure to take advantage of available mass channels that could capture a whole lot more than are currently trapped by the banks Sola Fanawopo

ll things being equal, Nigeria and Ghana should be ripe markets for mobile money services. These countries have armies of unbanked and under-banked population. The financial regulators of these countries, Central Bank of Nigeria (CBN) and Bank of Ghana (BoG) have recognised the pivotal role

mobile money could play in financial inclusion. In these countries, several carriers have been aggressively competing and investing in mobile money for many years. The two biggest economies in West African subregion have adopted bank-led models with little variations for ther mobile money systems.

However, BoG recognized early the potential for branchless banking and thus issued mobile payments guidelines in 2008 to support its development. The guidelines request branchless banking services to be led by banks and added a distinctive feature that is not seen elsewhere: there must be at least three banks in every service ('many-to-many') and no

exclusive partnerships are allowed. BoG's primary goal was to create an open and interoperable system to provide greater points of access for consumers and ensure it is driven by banks (BoG perceived this as less risky). This decision was informed by Ghana's experience with proprietary ATM networks, which were uninteroperable, resulting in

financialtechnology

January 2013

The question the journalist did not ask the CBN official was whether the CBN is established for and to protect the interest of incumbent banks that have banked only 14 per cent of Nigerians in over 100 years or to extend financial services to under-served Nigerians? customers inconvenience and perhaps limiting financial inclusion. On the other hand, CBN issued a mobile payments framework in 2010, two years after Ghana. The framework identified three major models for the implementation of mobile payments services. These are bank-focused, financial institutions as lead initiator, bankled, financial institutions and/or its consortium as lead initiator and non-bank led, corporate organisation as lead initiator. The desire of not allowing the Mobile Network Operators (MNOs) to become dominant players in financial service industry because of the 'associated risks' informed this direction. Since then CBN has licensed over 20 banks and independent organisations to offer mobile money in Nigeria. More licenses are coming. So, how have BoG and CBN frameworks for mobile money influenced the development of these markets? Ghana: Passionate MNOs, Reluctant Bank Partners Six years since the guidelines became active in Ghana, three

significant mobile money services have emerged. These are Airtel Money, MTN Mobile Money and Tigo Cash. Each has collaborated with three or ten banks. However, the guidelines have unintentionally distorted incentives for providers. It does not match conditions on the ground. The banks have largely declined to play almost any roles the regulator envisaged. The float is held in a pooled account. The banks are legally responsible for agents and customers KYC and their branches provide passive support to agents in liquidity management. However, there is little incentive for banks to make any significant investments due to free rider concerns. In some ways, the guidelines had the opposite effect as intended. The more banks there are in each partnership, the lower the motivation to invest and, ultimately, service to customers suffers. A representative of one of the nine banks in MTN Mobile Money partnership said, â&#x20AC;&#x153;We spend more time bickering about our perceived interests more than developing strategies for the service.â&#x20AC;?

However, contrary to the letter of the framework, MNOs have largely been leading the mobile money services in Ghana. They are developing the technology platform and front-end product, building agent networks and investing in marketing. However, they face several major challenges. First, they shoulder the vast majority of investment, yet legally, the service is bank-led and banks own the customers and the agents. A senior manager opined, 'We're building the industry but they'll own it.â&#x20AC;? This is a risky position. Aside, they are wasting an incredible amount of time and energy trying to manage and cajole multiple reluctant bank partners. This affects everything from persuading banks to allow branches to be used for liquidity management to making product development decisions. One MNO said that only one of their bank partners was willing to offer interest on a mobile savings account. How should they persuade the other bank partners to offer

interest and, if they are unsuccessful, do they need to drop the idea altogether? Again, the MNOs have no direct reporting relationship to BoG and must approach the banks through indirect channels (partner banks) for every decision, which not only slows the wheel of doing things for the MNOs, it leaves the banks with the actors that are really driving the market. Ghana: The Listening Regulator BoG recognises the discrepancy involved in market developments from its original vision and has reengaged the entire market players, including MNOs in a dialogue, around the regulatory framework. The private sector in Ghana has responded positively to the overtures of BoG and the prospects of a more flexible regulatory environment. Nigeria: Apathetic Banks, Poor Independent Carriers, Confused Regulator Within the three years of guideline issuance, over 20 banks and independent operators have been licensed in Nigeria. Some are still undergoing the process of

financialtechnology

January 2013

licensing. However, only few of these licensees have launched their services. Prominent among those that have launched are Paga, Pocket Moni, Teasy Money, Virtual Terminal Network VTN (independent). Others are First Monie, GT Mobile Money, Ecobank Mobile Money and Mobile Money from Stanbic IBTC.

there is no evidence that bank-led models have led to earlier adoption of a broad range of financial services. Instead, there is a growing body of evidence that nonbank providers, particularly MNOs, are needed to develop sound mobile payments and transfers services and storage of value which then can be used by a range of financial providers to offer more complex financial services that benefit customers, such as credit, savings, insurance, etc. This is because MNOs have assets, expertise and incentives that banks don't have and may never have.

Paga, an independent carrier with limited financial war chest has been the most innovative of the lot. Paga remains the only operator with visible mobile money agents in Nigeria. In December 2013, it celebrated one million customers milestone on the platform. However, the bank-focused mobile money carriers have failed to invest in the building of mobile money agents, inadvertently jettisoning the much touted financial inclusion focus of mobile money service in the country. What the banks are offering is mobile banking for existing customers.

Agbaje's Challenge to MNOs Mr. Segun Agbaje, CEO, GTBank, one of the most liked and innovative banks in Nigeria recently spared some kind words for the MNOs that are clamouring to be co-players with the banks in the delivery of mobile money service. He said as a money instrument, a banking licence would be required.

The early attempts by the MNOs in Nigeria to do what their counterparts did in Ghana, assisting licensed mobile money carriers to build agents, fund marketing communications project was brutally rebuffed by the CBN. Because of the inability of the carriers to fund their marketing operations, recent surveys by various groups revealed that only 30 per cent of literate Nigerians are aware of mobile money services. With these revelations, the juries expected the regulators to review the framework and allow the MNOs into the scheme. But CBN has refused to back down even when it is obvious that its financial inclusion scheme was failing. The recalcitrant regulator is clearly antithetical to its financial service inclusion mantra. The CBN has claimed in several of its policy papers that it is committed to reducing “the percentage of adult Nigerians that are excluded from financial services from the current 46.3% (39.2 million adult Nigerians) to 20% by the year 2020,” and that mobile financial service is a core component of the national financial inclusion strategy (FIS) the CBN launched on October 23, 2012, to achieve this objective.

Recently a national newspaper asked a CBN official why the CBN bet on the bank-led Mobile Money Payment (MMP) model against a growing body of evidence that shows the effective role of MNOs as capable entities to lead the partnership with banks. Reportedly, the CBN official answered: “If you want me to tell you the truth, there are two ways to answer that question. I can tell you the truth and I can tell you the politically correct answer. The

politically correct answer is that they do not need to get involved in MMP, but the truth is that the telcos have close to 90 million customers, banks only have 15 million. If you give them the power to do this, then you must have inadvertently given them the national economy.” The question the journalist did not ask the CBN official was whether the CBN is established for and to protect the interest of incumbent banks that have banked only 14 per cent of Nigerians in over 100 years or to extend financial services to under-served Nigerians?

Mobile Payment Regulation Driven by fear and not provision of service Nigeria's mobile payment regulation has been largely driven by fear. CBN has been reluctant to grant MNOs mobile money licenses because it is afraid that the MNOs could scale very quickly and dominate the formal financial sector, leaving regulators unable to control such growth.

Besides, it seems the CBN is nervous about allowing MNOs to offer mobile money services, given that they believe that only banks can adequately safeguard It is inconceivable for any customers' money. But in other progressive financial regulator that markets, the regulator has been is committed to reduce “the able to design prudential percentage of adult Nigerians that regulation and market conduct are excluded from financial frameworks which help to make services from the current 46.3% non-bank e-money providers sound (39.2 million adult Nigerians) to and effective. CBN also seem to 20% by the year 2020 to choose a prefer the bank-led model because platform that has 15 million people that way, providers will offer over one that has over 90 million customers a broader range of people? financial services. Unfortunately

“The mobile money banking network is a banking instrument. So if the telcos want to do mobile money, they have to go get a banking licence because you have to regulate the deposits and protect the depositors and the public. So it's really not about the banks or the telcos. It's about the process. If you want to run a banking product which has KYC (Know Your Customer) and has inherent risks, then to do that, you have to get a banking licence,” the GTBank boss, stressed. As plausible as Agbaje's postulation seems, it is fundamentally flawed because mobile money only thrives in an environment where regulations are relaxed and progressively proportional to the attendant risks. Rather than improve the policy climate for mobile money and remove regulatory barriers, Agbaje's thesis promotes erection of more walls to fence off a transformational service. Rather than build more walls, what CBN requires is to imbibe positive examples of enabling approaches and regulations that result in market development. They need to learn from the most progressive peers, and share with them more information about the operational aspects of mobile money as well as the risk mitigation measures put in place by the providers. The industry also needs to show CBN the effects of its negative conservative policies on people's lives and economic growth, and the positive impact of enabling policies that are transformational and progressive. We also need to begin to hold CBN responsible for the harm its policy is doing to consumers especially as regards to its clinging to the present arrangement.

financialtechnology

January 2013

SmartImages 1

12 11

1. Mrs. Omobola Johnson, Minister of Communication Technology; and Mr. Austin Okere, Group CEO, CWG PLC. 2. L-R; Mr Oscar Onyema, CEO, NSE; Mr. Austin Okere; Mr. Philip Obioha, Chief Operating Officer, CWG PLC; and Mr Haruna Jalo- Waziri, ED, Business Development, NSE 3. L-R; Mr. Oscar Onyema,; Mrs. Omobola Johnson and Mr. Austin Okere; 4. L-R; Mr. Oscar Onyema and Mr. Austin Okere;. 5. Mr. Austin Okere (middle); Mr. Haruna Jalo- Waziri, ED, Business Development, NSE (right); and Mr Oscar Onyema, (left) 6. L-R; Mr. Austin Okere, Mr. Abiodun B. Fawunmi. Chief Information Technology Service Section, United Nations; Mr. James Agada, Chief Technology Officer, CWG PLC; Mr. Philips Obioha, Chief Operating Officer, CWG PLC; and Mr. Ravi Sharma, Abraaj 7. L-R; Mr. Haruna Jalo Waziri; Mr. Adeolu Bajomo, ED, Market Operations and Technology, NSE; Mr. Oscar Onyema; Mr. Austin Okere, Mr. Philips Obioha, COO, CWG PLC; Mr. James Agada andMrs. Taba Peterside, GM, Listing Sales and Retention. 8. 3rd Right: Mr. Oscar Onyema, Mr. Austin Okere, Mrs. Omobola Johnson and some of the esteemed Stock Brokers at the event. 9. 5th right, Mr. Austin Okere, Mrs. Omobola Johnson, Mr. Oscar Onyema and other dignitaries at the event. 10. L-R; Mr. Adeolu Bajomo, Mrs Omobola Johnson, Mr. Oscar Onyema and Mr. Austin Okere. 11. A cross-section of NSE trading floor and the dignitaries on the podium 12. A cross -section of participants at the event. 13. L-R; Mr. Haruna Jalo- Waziri, Mr. Adeolu Bajomo, Mr. Oscar Onyema, Mr. Austin Okere, Mr. Philips Obioha and Mr. James Agada.

financialtechnology

January 2013

&Markets

ideas Ikem Okuhu

08116759766

Will Southern African Banks Survive ICT Revolution?

t is unarguable that the internet has left an indelible print on the history of the entire human race. The world, as we know it, has changed for many generations unborn because of the role of ICT on business, social, political, academic and military operations. The internet is a massive worldwide library whose literary stock is updated virtually every second or nanosecond. It is an open secret that the internet, just like any tool invented by man, can be misused. The same can be said of the internet since it is like a double-edged sword. It may give an organisation a cutting edge or it may cut an organisation to pieces. It depends on how it is used. This column would look at the contributions of the internet to the banking industry in Southern Africa. It is a controversial issue whether brick and mortar financial institutions will survive the onslaught of fast-paced technological changes. From the look of things, banks as we know them may cease to exist in a few years time. As a student of change in the finance industry, I follow with keen interest the changes that are taking place in the financial sector. As the chair of Microsoft, Bill Gates said: “the world needs banking but it does not need banks.” Obviously honest people who earn their living from brick and mortar banks may not be happy with this grim prediction of Gates. Nevertheless, one needs to take his prediction quite seriously. Data lend weight to the claims of the software fundi. ICT has a multi-faceted impact on the banking industry. Over the past seven years, there has been a revolution, which has swept East and Southern Africa like a hurricane, leaving many with broken limbs so to speak in the banking sector. At present the Safaricom spearheaded mobile money project in Kenya, called M-pesa or M-money has nearly 20 million direct subscribers. This statistic excludes those people, economic sectors, government agencies that are indirectly impacted by M-pesa. At a mobile money conference in Tanzania in November in 2012, some industry opined that the mainstream banking sector and mainstream banking services remain untouched by mobile money transactions

due to the small to medium scale volumes that they cater for and the attendant security concerns that are involved in conducting transactions via the cellular phone. What such sentiments ignore is that every big or great thing today started small and, that numerous tireless tributaries feed every perennial river.

revolution with an estimated over two million subscribers out of a potential eight million subscribers has taken Zimbabwe by storm. Approximately US$150 million is moved in the economy on a monthly basis through Ecocash. A number of banks, seeing that they cannot fight the strong tide of technological changes in Zimbabwe are now part of the Ecocash project. Ecocash has saved jobs in declining industries in Zimbabwe such as the snail mail based quasistate outfit called Zimpost. According to www.leader.co.za 800 million people in Africa do not have access to bank accounts, but 70 percent of own cellphones.

From the foregoing, the current low value or low volume transactions will give way to large volume transactions once the legal frameworks and telecommunication infrastructures are aligned with technology changes. It is understood that the banking industry will change, lending credence to the prognostications of industry watchers such as Accordingly, Wits Business School alumnus Gates. Charles Rowlinson saw the opportunity to “bank the unbanked and the under-banked” and co-started WIZZIT with Brian Last week, it was reported that the M-pesa Richardson in 2002. In South Africa, the hurricane has swept its way through gains of mobile banking have been mixed Mozambique. Mozambique is one of the mainly because at the onset of the e-banking world's lowest per capita countries due to a revolution it was erroneously assumed that protracted civil war, which ended in the what the unbanked population lacked was a early 1990s, stands to benefit in terms of a bank account. It was assumed that the simplified and a faster payments solution. financially excluded needed to be annexed to The Econet inspired Ecocash payments

the operations of the established brick and mortar banking structures. Carmen Nobel says, “In many developing countries it's common for a person to have a mobile phone but not a bank account. In fact, over one billion people fit this description, and the number is only likely to increase.” This view is corroborated by the findings of Harvard scholar, Professor V. Kasturi Rangan, which maintained that between WIZZIT and Mpesa “the more successful of the two, MPESA, realized that the intended customers didn't really want bank accounts at all—they wanted effective ways to send money home to their families.” This is the main reason Vodacom of South Africa is working on modalities to introduce M-pesa in South Africa. Few cases discussed above amply demonstrate that ICT revolution in Africa has achieved much. The sweeping hyper-technology changes still have more to achieve by bettering people's livelihoods and bringing convenience to hundreds of millions of Africans that are operating in the fringes of economic activity.

financialtechnology

January 2013

InsuranceTech

CRYSTAL BALL

What Will Happen in Insurance Technology in 2014? Mr. Fola Daniel, Commisioner for Insurance

With over 100 million mobile phone subscribers in Nigeria coupled with the fact that 65 per cent of mobile phones will have Internet capability in 2014, insurers have a ready-made platform to leverage their products and services. or insurance technology in Nigeria, 2013 was largely a year of false starts. Predicted advances in ICT powered-policies didn't quite materialise. While there are individual insurance products, which leverage on ICT such as Cornerstone's online e-channel and mobile insurance products by Airtel/FNB Life and MTN/Mansard, above all the insurance sector has not yet embraced ICT as other financial services have done. Below are some areas industry analysts expect technologists to focus on in the coming months.

Mobile Insurance There were hints in 2013 that insurers were on the way to adopt mobile technology to drive micro insurance. However, at the end of 2013, two products came into the marketplace. Padi4Life by FBN Life and Airtel Nigeria and Y'ello Cover by MTN Nigeria and

Mansard Insurance. However, indications are rife that more insurers will throw their hats into the mobile games in 2014. With over 100 million mobile phone subscribers in Nigeria coupled with the fact that 65 per cent of mobile phones will have Internet capability in 2014, insurers have a readymade platform to leverage their products and services. According to Peter Gross of MicroEnsure Africa, the time is now for insurers in Nigeria to embrace cellular technology. He lamented that many insurers still have paper forms, slow processes, and complex bureaucracies that are better suited to the 17th-century England than 21st-century Nigeria. “Like any other industry, insurers must change or die, and the ICT revolution will reward those who adapt their businesses to the changing landscape”, he argued.

Automation of Health Insurance Scheme One of the reasons for the delay of government-mandated health insurance scheme is the adoption of brick and mortar operation by the service providers. Interswitch's attempt in 2013 to drive the industry towards automation recorded limited successes. Interswitch's solution allows health institutions to check patients' health coverage, validate and process claims, as well as maintain healthcare database of all patients online and in real-time. In 2014, more service providers will adopt automated healthcare management system. With the adoption of automation system, health insurance subscribers can pay premiums through various payment channels. Besides, the industry will eliminate identity theft while prompt claims settlement by insurance firms would improve, as easy identification of

subscribers through health card that stores their health records would suffice. The Rise of Insurance CIOs Today, risk-averse underwriters manage insurance in Nigeria, while this bodes well for underwriting, it is an unfortunate disposition in terms of growth and innovation. However, as insurers slowly embraces ICT in 2014, the influence of CIOs will begin to manifest. More insurers will hire managers versed in technological applications for financial services in 2014. It is expected that in 2014 insurance will gradually become industry of choice for aspiring technology professionals. According to Collins Onuegbu, CEO, Signal Alliance, “CIOs in the insurance industry are as passionate as any other CIOs in the consumption of technology. They will be more relevant in 2014”.

financialtechnology

January 2013

InsuranceTech

Insurers Must Embrace ICT or Die - Peter Gross too many insurers continue to operate with paper forms, slow processes and complex bureaucracies that are better suited to the 17th century England than 21st century Nigeria... ICT revolution will reward those who adapt their businesses to the changing landscape. Peter Gross

For pricing and product design, insurers can use "big data" from telecoms, mobile financial service providers, retailers and banks to develop innovative products that tap into customer demand. For marketing and client education, insurers can use USSD and SMS technology, outbound calls, Interactive Voice Response (IVR) platforms and much They will be surprised to find how many more. improvements will come into their existing businesses. Why should a young Premium collection can be handled by technology graduate or app developer mobile money; yes, but also by airtime only want to go and work for a telecom deduction, scratch cards, loyalty systems or a bank? I look forward to the time and all the other ways telecoms induce when insurance is also an industry of clients to pay for services. Training can At MicroEnsure, we are confident that choice for aspiring technology be done by mobile applications sent via insurers who find the right ways to use professionals. Second, I think insurers SMS or performed online. Market ICT to market, administer, educate and need to be more front office driven than research and customer feedback can provide service will leapfrog their they are today. Underwriters run similarly use long-form SMS to gauge competitors over the next 3 to 5 years, insurance companies today and that is product perception from thousands of and will dominate the industry. plainly hampering growth. Telecoms customers instantly. Finally, claims Insurers believe that technology means a have grown so large so quickly not servicing for micro-insurance, we According to eLearning Africa, 69% of revamp of IT systems and they shy away because they are especially good at believe, can be handled almost all mobile phones in Africa will have from what they see as a multi-millionproviding communication services completely by mobile money and internet access in 2014 and smartphone dollar price tag. However, embracing Nigerian cell phone users know this too smartphones. At MicroEnsure, we are penetration is growing at lightning technology can come at a much lower well - but rather they have grown piloting a process to have a simple speed. In Nairobi where I live, Samsung cost, and if insurers would simply hire because they excel at marketing, at smartphone photo of a document to has branded the most prominent technology experts, they would quickly meeting customer needs, at creating serve as the claims submission building in the city and it expects to sell identify a number of opportunities to aspirational products and communities mechanism via our web portal. twice as many of its smartphones in reach more customers, reduce costs, and that users want to join. Africa in 2014 as it sold in 2013. improve customer service. This process will allow us to pay claims Insurers need to take on this same nearly instantaneously in rural Africa. The time is now for insurers to embrace How can African insurers address approach, using people inside their So, we are very eager to see what this ICT, and yet too many insurers continue looming technology challenge? businesses who are up to date on could mean for credibility and scale of to operate with paper forms, slow I think the first step is to hire someone technological changes, in order to meet insurance on the continent. processes and complex bureaucracies who is well-versed in technological the challenge - and opportunity that are better suited to the 17th century applications for financial services and represented by ICT. Mobile technology truly represents a England than 21st century Nigeria. Like have that person go through each of the game changing opportunity for the any other industry, insurers must change insurer's processes, looking for How can Africa insurers take advantage insurance industry, and we look forward or die, and the ICT revolution will opportunities to use technology to do to working with insurers who are ready of mobile technology? reward those who adapt their businesses things better, faster and cheaper. At There are so many ways to use mobile to embrace the change. to the changing landscape. MicroEnsure, we have found a number technology in the insurance business. What is the level of ICT usage in insurance in Africa as a whole? lthough the mobile phone has transformed financial services in Africa, unfortunately, insurance lags behind. While there have been individual insurance products launched, which leverage ICT such as Cornerstone's online e-channel and the mobile insurance products offered by Airtel and MTN, as a whole, the insurance sector has not yet embraced ICT as other financial services have done.

What is the attitude of insurers in Africa towards leveraging of technology? Insurers are risk-averse, and while this bodes well for underwriting, it is an unfortunate disposition in terms of growth and innovation. Other industries face risk - banks face risk, telecoms face risk, etc. Yet insurers act as though theirs is the only industry that is exposed, as though they face too many embedded hurdles to innovate as fast as other industries. Thankfully, regulation is less and less one of those hurdles NAICOM has been on the leading edge of micro insurance regulation in Africa and has shown real willingness to help the sector change. Only a few insurers in Nigeria, though, have embraced the opportunities, thus, far. Part of this has to do with perceptions regarding cost.

of small changes that don't cost very much and yet lead to big opportunities for us. So, insurers should look beyond their current system administrators and go find those young technical experts who work in application labs, incubators or telecom service providers and bring them in.

financialtechnology

January 2013

InsuranceTech

Seven Reasons Nigeria Has Low Insurance Penetration INSURERS ARE RISK-AVERSE

POOR DELIVERY CHANNELS

Faulty assumptions in the insurance community have ultimately led to faulty products such as low-value credit life products: 0.5%-6+percentage of loan; heavy conditions and exclusions, which erode consumer trust; insurance processes that do not account for rural realities and administrative systems that cannot handle millions of clients.

Delivery channel remain the biggest single constraints to insurance development in Nigeria. Existing delivery channels often do not recognise opportunities that exist in micro insurance or the secondary benefits. Mobile, cards and online channels would help address insurance industry

UNDUE INFLUENCE OF UNDERWRITERS

TRUST QUESTIONS

Nigeria insurers are risk-averse. While this bodes well for underwriting, it is an unfortunate disposition in terms of growth and innovation. Other industries face risk, banks face risk, telecoms face risk, etc and yet insurers act as though theirs is the only industry that is exposed, as though they face too many embedded hurdles to innovate as fast as other industries. Thankfully, regulation is not one of those hurdles. NAICOM has been on the leading edge of micro insurance regulation in Africa and has shown real willingness to help the sector change. Only a few insurers in Nigeria, though, have embraced the opportunities thus far.

RELUNCTANCE TO EMBRACE ICT

FAULTY ASSUMPTION ABOUT MICRO INSURANCE

Only a few insurers in Nigeria, though, have embraced the opportunities provide by technology or ICT thus far. Part of this has to do with perceptions regarding huge costs of integrating ICT. Nigeria insurers believe that technology means a revamp of IT systems, and they shy away from what they perceive as a multi-milliondollar price tag. Evolving customer technologies such as online distribution channels, mobile devices, price comparison websites, social networking, customer analytics and predictive modeling will determine how well a carrier will survive in the insurance industry in

Against global best practices, underwriters run insurance companies in Nigeria, and that is plainly hampering growth. Telecoms have grown so large so quickly not because they are especially good at providing communication services - Nigerian cell phone users know this too well - but rather they have grown because they excel at marketing, at meeting customer needs, at creating aspirational products and communities that users want to join. Insurers need to take this same approach, using people inside their businesses who are up to date on technological changes, in order to meet the challenge - and opportunity - represented by ICT.

Insurance penetration is low in Nigeria because on the buying side they think insurance products are too expensive, they do not trust the insurers enough; they think insurance products are not available and they feel that no one has explained the products to them.

ABSENCE OF BRANCHLESS BANKING & INSURANCE

Branchless banking re presents a significantly cheaper alternative to conventional branch-based financial services that allows financial institutions and other commercial actors offer financial services outside traditional bank premises by using delivery channels like retail agents, mobile phone etc. Financial inclusion such as insurance and banking services is growing in most countries, but often not because of the expansion of conventional banking channels such as branches and ATMs.

African Insurers Must Address Looming Technology Challenge

he African Insurance Organisation has long warned that lack of ICT infrastructure is holding the African insurance market back. The additional challenge of getting legacy systems to provide improved risk management and mobile services is forcing insurers to rethink their systems strategy. Head of African Operations for SSP, a leading provider of insurance technology to insurers across the continent, Rhys Collins, says modern technology overcomes these challenges and this is increasingly drawing new players into the

African insurance market. Both Hollard and Sanlam, for example, have had good success in Ghana, Kenya, Tanzania, Zambia, Botswana and Nigeria and are believed to be eyeing other opportunities across the continent. “The tighter regulatory and governance requirements are good for the industry but the flipside for insurers is that many will need to make major changes to their administration systems.”

Unlike other markets, the African consumer is by-passing the desktop internet connection and going directly to hand-held devices. “With the likes of MPesa and Fundamo process billions of dollars in transactions every year, and mobile use in Africa continuing to grow at a rapid pace, insurers need to raise their game.” He believes that to deliver insurance products and services effectively on the ground, insurers and managing agents need a strong core insurance system As well as regulatory changes, SSP says the and ICT infrastructure in place. “There's no growth in mobile is the other key trend to denying that Africa has entered the age of watch in the African insurance market. mobile. Insurers and managing agents need

to consider and embrace this and use the many advantages it offers to enhance their offering, or stand the risk of being left behind. To do this, they need a modern, flexible insurance solution”. Obviously, this is easier for new start-ups, but for firms with existing legacy solutions, complex and risky transformation projects are not always popular in boardrooms. However, by adopting a gradual approach to legacy modernisation such as SSP's Enhance and Evolve approach, insurers can address their most urgent business priorities proactively. “They can extend the

financialtechnology

January 2013

CloseUp

Automated teller machines (ATMs) (per 100,000 adults) in African Countries Automated teller machines are computerized telecommunications devices that provide clients of a financial institution with access to financial transactions in a public place. ATM penetration in African countries is not encouraging. Regulations in some countries have contributed to the spread of ATMs as regulator specifies target number of ATMs per 100,000 people, as well as per 1,000 sq. km. South Africa has been able to grow its ATM installed capacity with this method. According to data released by the World Bank, ATM/1000 adults in Africa are very low.

COUNTRY

POPULATION ESTIMATE

NUMBER OF ATMS/1000 ADULTS

Mauritius

2,040

1,200,206

42.78

Rwanda

26,338

7,398,074

2.74

Nigeria

923,768

129,934,911

11.99

Uganda

236,040

24,699,073

3.85

Cape Verde

4,033

408,760

44.64

Ghana

239,460

20,244,154

4.13

Sierra Leone

71,740

5,614,743

0.42

Egypt

1,001,450

70,712,345

8.65

Morocco (excluding Western Sahara)

446,550

31,167,783

21.84

Swaziland

17,363

1,123,605

24.91

Ethiopia

1,127,127

67,673,031

0.33

Tunisia

163,610

9815,644

22.02

Kenya

582,650

31,138,735

9.46

Tanzania

945,087

37,187,939

4.51

South Africa

1,219,912

43,647,658

60.01

Cameroon

475,440

16,184,748

1.38

Liberia

111,370

3,288,198

1.46

Zimbabwe

390,580

11,376,676

5.21

Madagascar

587,040

16,473,477

1.54

Mozambique

801,590

19,607,519

6.54

Democratic Republic of the Congo

2,345,410

55,225,478

0.45

Cameroon

475,440

16,184,748

1.38

Liberia

111,370

3,288,198

1.46

Djibouti

23,000

472,810

1.80

Equatorial Guinea

28,051

498,144

4.47

Northern Sudan

2,505,810

37,090,298

2.63

Algeria

2,381,740

32,277,942

6.55

Zambia

752,614

9,959,037

7.52

Republic of the Congo

342,000

2,958,448

2.58

Angola

1,246,700

10,593,171

15.98

Gabon

267,667

1,233,353

11.12

Libya

1,759,540

5,368,585

3.71

Botswana

600,370

1,591,232

27.11

Namibia

825,418

1,820,916

47.75

financialtechnology

January 2013

AfricaReview

heques are used all over the world in large quantities and though the future of payment systems seems to indicate a move towards a cashless society, the prominent role of cheques as a voucherbased payment system is undeniable. Traditionally, cheque processing is a manual and labour-intensive process, requiring complex logistics and a lot of work force to move the vouchers through the system and manually clear them at a country's clearing houses. Fortunately, modern cheque clearing techniques can eliminate paper from the system altogether, a process referred to as truncation. Cheque Truncation - New Goldmine for Global IT Firms in Africa. Across Africa, cheque truncation is emerging as the new goldmine for global IT firms. Imaging companies, document management players and business process, management solution providers are wooing central banks and commercial banks these days to tap their countrywide cheque truncation project. What role would African IT firms play in this new but assured goldmine? Would they be content to serve as commission

agents to global brands such as NCR Corporation and Newgen Software and the likes? Does any African IT firm has the solution to compete favourably with global brands in the cheque truncation arena? Whither Indigenous African IT Firms Two companies are leading African challenge in the cheque truncation business. These are Sybrin Systems (Pty) Ltd, a South African firm and Precise Financial Systems (PFS), a foremost Nigerian software development company. Sybrin supports all three modern cheque processing and clearing methodologies – full truncation, semi-truncation and centralised processing. Its image-based Centralised Cheque Solution is a proven, robust and flexible software solution for high-speed document imaging and transaction processing applications. It incorporates all the essential components of a transaction processing system including data capture, image capture, image recognition, record validation, data entry, correction, verification, balancing, document sorting, reporting, data extraction, and data transmission. Sybrin differentiates itself from its competition, in that, it allows the customers to choose their hardware. Its

CBN plans to implement the truncation platform to its other branches as soon as possiple. The new system will let all CBN branches to receive all cheques and capture solution is transport-independent, transmit them to its Lagos central server, which in turn remits the cheques to the supporting all makes of transport and clearinghouse. According to Mr. Yele scanners, including Unisys, NCR, Okeremi, PFS, Managing Director/CEO, SeacBanche, TellerScan, Fuji, Panini and the new system will process all incoming Buic to mention a few. cheques and the banks' Nigeria Electronic Financial Transaction (NEFT). The company has won truncation business in Malawi, Kenya and Botswana. He also explained that although it The company is currently working with addresses all the necessary reporting, the The Bank of Tanzania (BoT). BoT has banks will guide its control, as it will only proposed September to be the starting implement the maker-checker rules set date of using truncation system. by the bank. The activation of the cheque regime in Nigeria has so far addressed one The Computech-ICS Limited, Managing major challenge, and that is the CBN's Director, Mr V. Jayatheerthan, whose ability to meet the cheque truncation company provides support for Sybrin in Tanzania said they partnered with Sybrin across the country. It has also reduced the after a two-month search for the firm that time and cost involved in cheque clearing process. It also removed the costs of has the best solution that suits the country’s market's needs "We are satisfied logistics related to cheque clearing. that the banking application works”, he Okeremi added that prior to the said. implementation of the new system; banks in Nigeria had to send their outgoing “And this is better for the economy and the banking industry - as it cuts time and cheques to their central clearing departments through bullion vans or unnecessary human costs," said Mr dispatch riders. With the new system, Jayatheerthan at the sideline of a road banks can now start the process straight show seminar. With the support of PFS, the Central Bank of Nigeria (CBN) cheque from their branch. Thus, reducing the time wasted on collating and truncation system is now live in Lagos photocopying usually associated with the and Abuja. The project is part of the CBN's continued efforts at shortening the process. cheque settlement cycle to a day. The

financialtechnology

January 2013

AfricaReview

APP APPEAL WHO HAS THE BEST M-BANKING APP IN SA?

he world has changed, and it is going to keep changing. Mobile revolution is the spectre. Even laptops are losing their lustre in light of the mobile revolution. No one seems to talk about the dependable desktop computer anymore. Android, iPhone, iPad, BlackBerry, Tablet are the new kids on the block. There is a lot of buzz about the mobile revolution particularly in Africa. Access to web has never been this good thanks to mobile phone revolution. Even in South Africa [SA] where internet penetration via computer was good, people are beginning the permanent switch from accessing Web content on stationary devices to accessing it whenever and wherever they are. SA currently has an estimated 25% smartphone penetration, which, according to information technology Banking Services

Nedbank FNB

research company, Gartner, will ramp up to 80% by 2014. Global sales of Tablet computers and smartphones are predicted to exceed PC, notebooks and netbooks in 2011. Buoyed by the fast uptake of smartphones and tablets in the country, mobile banking apps have seen phenomenal growth and acceptance by bank customers in SA. The App market is predicted to grow by 60% in 2013. FNB was the first bank to launch a mobile banking application into the market. Nedbank, RMB, Standard Bank and Absa have since joined the train. So, which bank has the best one? Liron Segev, the influential IT blogger and consultant set out to find out by comparing the features of the various apps. The award-winning blogger grouped the features into different sections and scores each one. Every feature is scored 1 while zero is for the feature they do not have. Segev then totalled all to get an overall score. We reproduced the score below:

RMB

Std Bank

ABSA

Lead forms

Nedbank FNB

RMB

Std Bank

ABSA

Corporate Banking

Leads to open account

Section Score

Locator

Nedbank FNB

RMB

Std Bank

ABSA

View balances / statements; Authorise payments; Authorise e-bill payments; Authorise transfers; Authorise collections; Authorise Y beneficiaries; Authorise users; Change password Section Score

Locate your nearest branch or ATM

Get directions to branch and ATM locations from where you are

Other Services

Section Score

ABSA

View account balances and transaction history Y

Once off payments

Payments to your recipients

Future-dated transaction

Recurring transactions

Add beneficiaries

Update, view and delete beneficiary details

Transfers

Show account info in a graph

Net balance of all accounts

Stop payment

Multiple transactions

E-bills

SMS notification per login

Multi-user access

Add beneficiary's picture

Forex

Nedbank FNB

RMB

Std Bank

Forex rates table

Section Score

Calculators

Nedbank FNB

RMB

Std Bank

ABSA

Home loan

Add favourite transactions

Vehicle finance

Section Score

Personal loan

Purchase Additional Services

Nedbank FNB

RMB

Std Bank

ABSA

Forex calc

Goal save

Buy prepaid airtime (Vodacom, MTN, Cell C, 8.ta, Y Virgin Mobile)

Investment

Buy prepaid data and SMS

Section Score

Buy prepaid electricity

Buy Lotto

Section Score

Wallets

Nedbank FNB

RMB

Std Bank

ABSA

Proximity payments

Money send: Nedbank - mPesa Standard Bank - wallet

Share trading

Nedbank FNB

RMB

Std Bank

ABSA

Viewing share portfolio; Placing trades; Cancelling trades; Viewing order book; Change Y password

Section Score

Contacts

Nedbank FNB

RMB

Std Bank

ABSA

Branch contact numbers

Make FREE calls to call centres

Allows other banks' customers access

List of important contact details

Section Score

FNB

â&#x20AC;&#x201C;

wallet

RMB

Std Bank

ABSA

Nedbank FNB

RMB

Std Bank

ABSA

Secure message to bank

View videos in app

Banners inside the app

Change to different language options in the app -

Section Score

Platforms

Nedbank FNB

RMB

Std Bank

ABSA

Android

Ios

BlackBerry

BlackBerry 10

Nokia

Windows Phone

Feature Phone

Section Score

Nedbank FNB

32 TOTAL SCORES

25 23 21

financialtechnology

January 2013

TransactionsChannels Interswitch Eases Cash Deposit with BeyondBranches Solution

igerian bank customers do not need to reach the banks before making deposits, as they can make deposits at any bank branch and the beneficiaries' accounts will be credited. It is like making cash withdrawal from any

ATM.

BeyondBranches, a value added service platform developed by Interswitch, the largest integrated payment processing service provider in Nigeria is behind this innovation. BeyondBranches has developed the payment ecosystem further by enabling customers to make cash deposit into any Nigerian bank account or an agent. Through this approach, BeyondBranches has brought the bank within the reach of those who need to deposit cash quickly and securely.

Nedbank using Social Media Analysis to win Over Rival Bank Customers

outh Africa's Nedbank is using social media analytics tools to win customers from rival banks by monitoring their chatter on popular forums such as Twitter and Facebook. Nedbank partnered IBM and local supplier Olrac spSolutions to develop a predictive modeling system that integrates social media analytics into the bank's systems. Whereas before the bank used a number of tools and external resources to mine social media for customer feedback purposes, the marketing team now have access to a visual dashboard of social chatter reflecting customer preferences, sentiment and satisfaction that can be used to craft and deliver more effective sales promotions and customer messages. Eugene Liebenberg, head of retail business intelligence solution science at Nedbank, says the bank has also been successful in setting up discussions with customers from rival banks and persuading them to move their accounts. Says Liebenberg: "Because we are tracking out competitors, we can target some of their customers and switch them across.”

Mansard Rides on MTN Platform for Mobile Life Insurance “Y'ello Cover”

TN Business, the Business-to-Business arm of MTN Nigeria, has launched “MTN Y'ello Cover” for the mass market. MTN Y'ello Cover, an affordable, airtime-based life insurance service is offered to MTN subscribers in collaboration with Mansard Insurance. It is a simple and convenient way subscribers can access an affordable life protection plan directly from their mobile phones. For N15 daily, subscribers can enjoy a N350, 000 life insurance cover. The policy covers medical expenses incurred in case of accidents and pays benefits in the case of accidents resulting in permanent disability or demise. Chief Enterprise Solutions Officer, MTN Nigeria, Babatunde Osho, said, “The service would help make insurance available and accessible to a vast portion of the Nigerian uninsured population. Interestingly, this initiative would eliminate the seeming complexities and paperwork often associated with insurance and makes it attractive and convenient for Nigerians.”

financialtechnology

January 2013

TransactionsChannels GT Bank, FirstBank, others Select Clickatell for PINless Airtime Solutions

lickatell has announced that it aims to strengthen its position as a leading mobile enablement provider in Nigeria and be the largest PINless airtime provider by the end of the fiscal year. In 2013, five of the top ten Nigerian banks have chosen Clickatell for PINless airtime distribution.

“GTBank, First Bank, Ecobank, Sterling Bank and UBA are all switching their airtime strategies to a PINless future and have harnessed Clickatell's technology, expertise and in-depth understanding of the African landscape to tap into the revenue potential of value added services”, Clickatell Director of West Africa, Samson Isa, said. GTBank, that sells PINless airtime via their mobile app, has already been responsible for the fastest growing PINless sales in Nigeria. PINless Airtime enables real time top up of pre-paid mobile airtime at the point of sale without the need for PINs or printed vouchers. The benefits to end-users and resellers are numerous, and include no stock/inventory issues associated with prepaid cards, no risk of losing the pin or prepaid card, opportunity for new distribution channels, reduced risk of fraud, incidents of theft eliminated, no restrictive monetary denominations among others.

UK Govt to Enable Mobile Cheque Deposit

he UK government is to begin consultations on new legislation to permit the use of smartphones for remote cheque deposits. Under the proposals, UK banks will be able process cheque images for the first time, suspending the current requirement for banks to physically see the paper version before agreeing to honour the payment. The Treasury says the new rules should cut cheque-processing times from six to two days. Barclays Bank says it will begin pilot trials of remote cheque deposit technology 'early in the New year'. Steven Roberts, managing director at Barclays says: "We're excited to be the first bank to pilot this new technology and always welcome legislation which enables the whole industry to work together to make customers’ lives easier. When you can download a book or a film in seconds, we believe you should be able to deposit a cheque in the same way." Cheques remain a crucial part of the British payments landscape - nearly £840 billion of cheques were processed last year - accounting for 10% of all payments made by individuals. 23 million cheques were sent as gifts because they are still the most trusted method of sending money through the post.

CBN Switches on New Real-Time Gross Settlement

he Central Bank of Nigeria (CBN) has introduced a new payment system called RealTime Gross settlement (RTGS) as part of efforts to implement Payment System Vision (PSV) 2020 strategy. The new system became operational on December 16, 2013. RTGS was integrated with Scripless Security Settlement System (SSSS) and would replace the old payment system in use since seven years ago. “The SSSS, on the other hand, is a new initiative to issue, manage and settle government and other money market securities processed as electronic records in a Central Securities Depository (CSD) system,” a statement of the apex bank said. RTGS was an inter-bank payment infrastructure facilitating the real time settlement of electronic funds transfers on gross and irrevocable basis. The new RTGS is built on swift standards to allow safer, easier and faster inter connectivity with other payment system infrastructure locally and internationally. “It serves as the nucleus of the national payment system, as all payments finally settle in central bank money through settlement accounts maintained for designated financial institutions.” The SSSS facilitates the electronic management of the entire life cycle of securities transactions. The system would manage the primary and secondary market securities and facilitate efficient open market operations. RTGS and SSSS are major strategic move with lots of benefits.

financialtechnology

January 2013

ftBackPage

barry coetzee barrycoetzee@ftr-africa.com

Nations versus the World

trend that I am watching very closely is the steady rise in Financial Regulations pertaining to global issues. Typical here is national regulators wanting to tax internet transactions. Also, national regulators making rulings around Bitcoin. Bitcoin is designed to work across borders seamlessly. Bitcoin is in essence, electronic cash. However, cash is mostly created and ruled over by each nation state on the planet. So, will the rulers of this national cash allow someone, beyond their control, to operate another form of cash within their national territory. In most cases the answer is a simple and unequivocal NO. Politicians and Central Bankers are not keen to give up control of the cash in their countries. There are several good and valid reasons for this. Cash is an important part of the economy of a country. Note â&#x20AC;&#x153;economy of a countryâ&#x20AC;?. The nation state is defined. The economy is to be controlled within its borders. It is against every definition to take a portion of the economy and give this over to undefined and unregulated international organisation, or company, that by definition, is probably situated in another country. This is not an unreasonable position if you are a government. You should be able to regulate and manage the economy within your borders.

rules. This would be vastly unfair to the merchants within your borders that do (hopefully) obey the rules. Furthermore, these citizens are depriving the national wallet of the tax that they are not paying on their goods. No government likes this. This is already going on all over the world. Amazon and PayPal being the biggest drivers. By funding your PayPal account you are essentially taking cash out of your nation and placing it in an American owned company. You can then use this to buy goods from merchants all over the internet without paying any taxes to your nation. As you are not paying taxes on goods, their prices at internet merchants will definitely be cheaper than at national merchants who have to charge what the national laws dictate. This is a spiral of death for governments on certain merchants (especially books and music). It is also definitely unfair to not have even playing fields for business.

be allowed to. Especially if the product is not available in the country. However, this price difference could actually just be caused by evading local taxes. Tax evasion may be illegal.

So, national financial regulators are being motivated by their political masters to stop tax evasion by their These problems are obviously bigger in online citizens and stop the conversion nations where taxes are very high, or of local cash into electronic currencies where governments are very inefficient and wallets. Domestic merchants are and corrupt. It is questionable whether on the side of the regulators. They are these governments are serving their definitely losing out to the non tax citizens well and whether they deserve paying online stores. The tax the power and the income they get authorities are on the side of the from their citizens. regulators. Not only do they want to get their consumption tax from the sale This is what you were (hopefully) From a citizen point of view, the of goods, they would like to tax the elected to do by the majority of the situation is very different. Where there profits that these internet businesses citizens within your borders. It is your are unreasonable governments, citizens make from operating in their country. duty to do this. So if you have a system want to move their money to safer of consumption tax (VAT, GST, etc) places. Even if this means giving it to a That is the sad truth. With all our that is law within your borders, why company in a foreign country. borderless internet and globalised would you let some of your citizens Furthermore, if a citizen can buy a business, the economy of the planet is evade this by buying from merchants product cheaper on Amazon compared still defined by the business that goes on the internet which do not obey your to a local merchant, then they should on in each nation state. The nations

that are ahead in these technologies are attracting a huge amount of business in states that are lagging, but giving the taxes to the states that they reside in. These losing nations are rising in opposition to this obvious imbalance and unfairness. The trouble is, the outcome of this uprising may not be good for anybody. The trouble is that the nation states that are benefitting from this process are promoting the borderless, taxless world that suits them without dealing with the inequality that their system is creating. We have seen this before, and it did not end nicely. I predict that 2014 is the year that the losers in this system will start fighting back. My only hope is that they will not focus their revenge on their citizens (easy to do), but the nations that are creating this imbalance (much more difficult).