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FirstBank Fintech Summit 5.0: How Open Banking Can Address Market Frictions, Grow Nigeria’s GDP to $3 Trillion by 2035 – Ndubuisi Ekekwe

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Professor Ndubuisi Ekekwe, the Chairman of FASMICRO Group and the lead Faculty in Tekedia Institute, on Thursday discussed how financial institutions can use open banking access to address market frictions, improve the standard of living, further economic productivity and transform the Nigerian society into an innovative society.

Speaking at the virtual FirstBank Fintech Summit 5.0 on Open Banking: The Grand Unification of Application Utility Age, Prof. Ekekwe posited that if according to Pythagoras the world is made up of numbers, then ‘it means the business of humanity is nothing but the business of numbers’. Meaning, if a doctor understands the numbers around the human system, he/she will become a better doctor, it is the same for banks and other businesses. Therefore, the quest to getting better in any industry or society is to build a solid data system that allows operators to better understand the numbers around that industry or society.

The Prof break this down by using the inherent imperfect market systems that impede big businesses from understanding the needs of those in the rural areas, therefore, making it impossible to profer solutions that could help further these companies’ missions and visions, fast track their growth and help humanity at large.

Using a chart titled ‘the Mission of Firms’, Prof Ekekwe stated that because the demand knows something that supply does not know and vice versa, it is cogent for businesses to acquire capabilities that enable them to bring demand and supply to an equilibrium point where supply can succinctly address demand.

Banks, Restaurants, Fintechs, etc must acquire capabilities that help them understand societal needs before they can profer solutions necessary to make transactions happen. Professor Ekekwe cited the bank’s position as a depository and also a lender, this he said makes it possible for borrowers willing to pay a certain percentage as an interest to approach banks for loans while those not presently in need of their money can equally deposit it in the bank for a fraction of the interest paid by borrowers. By addressing this market friction, the bank was able to make transactions happen, support borrowers’ business and satisfy the need of depositors.

However, because companies that only serve the needs of customers will never be great. It is important to understand not just customers’ needs but expectations and perceptions. This, Prof Ekekwe said can be achieved through the insights provided by the improved data of open banking, saying open banking offers promise to have a better insight into the future of customers.

Therefore, to unlock new growth, financial services providers must become an operating system through shared APIs for all sectors. More data will translate to better insights and more market opportunities that could bolster Nigeria’s Gross Domestic Product (GDP) to $3 trillion by 2035 as other companies will have access to those customers through APIs.

Using the chart below, Prof Ekekwe revealed how banks can access data from all sectors through Open Banking innovation and use this information to understand what businesses and customers in the agriculture, healthcare, technology, real estate and education sectors expect of them.

According to him, the knowledge system the bank can acquire from open banking ordinance will not only affect the financial services but also have the capability to impact mortgage business,  real estate business and other businesses in our society.

He further stated that the effective implementation of open banking will increase available opportunities in each sector by a factor of six, bolstering Nigeria’s GDP to $3 trillion by 2035. Explaining how this can be achieved, he said banks and other businesses with data from APIs will be able to expand their offerings by understanding the needs of those in the rural areas, therefore, sharing progress and prosperity in abundance across rural regions.

Bringing it all together, open banking takes banks beyond financial services to become Operating System (OS) of economies by providing retail customers with necessary analytics, viable credit systems that provide insights into their activities and encourage intelligent lending while Small and Medium Enterprises (SMEs) would have an integrated tax and accounting interface that empowers them to understand their own business, cashflow and deposit better.

Other sectors like real estate, Oil and Gas, etc perform better with Open Banking, and even compliance with regulatory guidelines become better and improve with a well-thought-out and executed open banking architecture.  This, Professor Ekekwe concluded would transform Nigerian society into an innovative society.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Flutterwave Celebrates Inclusion in CNBC’s Top 250 Global Fintechs

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Flutterwave has been recognized as one of the Top 250 Fintech companies globally by CNBC and Statista.

Joining the ranks of industry giants like Ali Pay, Klarna, Piggyvest, and Mastercard, this accolade underscores Flutterwave’s impact on the financial technology sector.

This honor follows Flutterwave’s recent inclusion in Fast Company’s Most Innovative Companies list, highlighting the company’s pivotal role in transforming Africa’s payment landscape.

The recognition is a testament to Flutterwave’s dedication to innovation and excellence in providing seamless payment solutions across the continent.

Expressing gratitude, Flutterwave acknowledged its talented team, supportive board, reliable partners, and loyal customers for contributing to this success.

The company continues to drive progress in the fintech industry, reinforcing its commitment to enhancing financial accessibility and inclusion in Africa and beyond.

Flutterwave’s recognition on these prestigious lists marks a proud moment and a significant milestone in its journey, reflecting the company’s growing influence and leadership in the global fintech arena.

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Nigeria Sees 31% Increase in POS Fraud Amid Rising Terminal Adoption

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Moniepoint

The prevalence of fraud and forgery in Nigeria’s payment system has shown a significant shift in the first quarter of 2024, with Point-of-Sale (POS) transactions experiencing the highest increase in fraudulent activities.

According to the “Fraud and Forgeries Report in Nigerian Banks” for Q1 2024 by the Financial Institutions Training Centre (FITC), POS fraud cases surged by 31.12%.

In Q4 2023, there were 2,683 reported cases of fraud associated with POS terminals. However, this number escalated to 3,518 cases by Q1 2024.

POS fraud cases made up 30.67% of the total fraud cases (11,472) recorded in the quarter under review.

Financial Impact of POS Fraud

While there was a rise in fraud cases, the amount of money involved in POS fraud declined. In Q4 2023, the total amount involved in POS fraud was NGN604.91 million.

This amount decreased by 37.74% to NGN376.59 million by Q1 2024.

Also, the amount of money lost to POS fraud saw a significant decline, falling from NGN14.62 million by 68.34% to NGN4.63 million on a quarterly basis.

The decrease in financial losses may indicate improved detection and prevention measures, but the overall rise in fraud cases highlights the need for continued vigilance.

Adoption of POS Terminals

The rise in POS fraud cases is attributed to the widespread adoption of these terminals by merchants and consumers alike.

As a cash-driven Nigerian economy, the convenience and efficiency of POS transactions have made them a popular choice.

However, this widespread adoption has also made them a target for fraudsters seeking to exploit vulnerabilities in the system.

In Q1 2023, the number of registered POS terminals increased by 218,475, from 2,318,947 in January 2023 to 2,537,422 by March 2023.

By the same quarter in 2024, the number of registered POS terminals had increased by 289,154, from 3,441,287 in January 2024 to 3,730,441 by March 2024.

Overall, between the end of Q1 2023 and Q1 2024, Nigeria witnessed an additional 1,193,019 POS terminals, marking a 47.02% increase.

Despite this increase in the number of registered POS terminals, the first quarter of 2024 saw POS transaction volumes reach 314 million, which is a significant drop of 73.81 million, or 19.03%, from the 387.81 million transactions recorded in the first quarter of 2023.

Regulatory Measures and Industry Response

The Corporate Affairs Commission (CAC) recently stated that POS agents of major fintechs in Nigeria, including OPay, Palmpay, and Moniepoint, among others, must have registered their businesses by July 7, 2024.

However, it extended the deadline by 60 days, giving operators until September 5, 2024. The CAC said the registration is aimed at safeguarding the businesses of fintechs and customers, as well as strengthening the economy.

Meanwhile, the Association of Mobile Money and Bank Agents in Nigeria (AMMBAN) condemned the mandated registration, describing it as an attempt to tax more Nigerians to generate revenue for the government.

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PalmPay Issues July 7 Deadline for POS Operators to Submit CAC Certificates

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PalmPay

PalmPay has announced a firm deadline of July 7, 2024, for all Point of Sale (POS) operators using its platform to register with the Corporate Affairs Commission (CAC) or submit their CAC certificates.

This mandate aims to ensure compliance with Section 863 (1) of the Companies and Allied Matters Act 2020 and the 2013 Central Bank of Nigeria (CBN) guidelines on Agent Banking.

In a statement released on Thursday, PalmPay emphasized the importance of adhering to these legal requirements.

“Following CAC’s directive for POS operators to register and submit their CAC details on or before July 7, 2024, PalmPay is encouraging its business users who have not yet complied with the directive to do so promptly,” the statement read.

This initiative comes in the wake of a two-month registration deadline issued by the Federal Government through the CAC, mandating POS companies to register their agents, merchants, and individuals.

The directive is part of broader efforts to bring regulatory compliance and transparency to Nigeria’s burgeoning fintech sector.

To facilitate the registration process, PalmPay has integrated the CAC registration portal into its Business App.

This integration allows operators to seamlessly register their businesses and submit the required documents, ensuring a smoother compliance process.

Umuteme Enakeno, Head of Marketing and Communication at PalmPay, reiterated the company’s support for the CAC directive.

“PalmPay fully supports the CAC’s directive. We provide 24/7 customer support and conduct weekly meetings to guide operators through the process,” Enakeno stated.

He also highlighted that operators can seek assistance through PalmPay’s customer support channels, including phone, email, or in-person visits to any of the 36 state offices across Nigeria.

PalmPay has urged all its business customers to submit or register their CAC details before the deadline.

“Register your business via the PalmPay Business App: Ensure that all necessary documents and information are provided accurately before submitting your application. Update your PalmPay account once you get the certificate to reflect your new corporate status,” Enakeno advised.

Failure to comply with the CAC registration requirement will result in the freezing of PalmPay accounts, the company warned.

This stringent measure underscores PalmPay’s commitment to aligning with national regulatory standards and fostering a compliant fintech ecosystem.

Meanwhile, the Association of Mobile Money and Bank Agents in Nigeria, representing POS operators, has indicated plans to challenge the mandatory CAC registration in court, questioning its legality and potential impact on their operations.

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