On April 22, it was reported by one of Nigerian dailies, The Punch newspaper that some customers of STANBIC IBTC were allegedly defrauded as active customers of the Bank enrolled for the esusu service which entails savings contributions through roaming agents that are acting on the behalf of the Bank.
The product esusu enables any low income person, traders and others like students to save money and enjoy basic financial services which with the use of a Bank card and a point of sale terminal provided by the Banking agents.
Banking through agents using same channel had recorded significant successes in other climes like Brazil and even some African nations till date.
Stanbic IBTC’s esusu is quite useful in a nation like Nigeria where millions of adult in urban and rural areas do not have access to basic financial services due to challenges of Bank Branch spread, lack of standard Know-Your-customer documentations and many others challenges that low income segments population are faced with when attempting to access basic financial services.
The esusu service was an innovative conception that was quite popular in some parts of Lagos when I conducted an independent assessment of the service to enable me learn more about how mobile financial services agency network can operate in same like manner in Nigeria.
Overall outcomes of the assessment proved beyond reasonable doubt that the Bank’s Brand and trust in the Bank played a key role in convincing the customers to sign up with the roaming agents and use the services with average customer using the services more than twice weekly in the minimum.
In essence, the Bank transferred the trust to the agents and the users trusted the agents as a representative of the Bank.
It could have been difficult for a non bank provider to achieve what was achieved with the esusu product.
The complaints reported by the customers as reported by Punch Newspaper ranged from interest not earned on the savings as promised by the agents and saved balances shortages.
What could have gone wrong with such novel concept that promises to bring financial access to the door steps of millions of Nigerians? An innovation that I secretly understudied and always refer to as ground breaking in Nigeria?
From my experiences of how Banking agency operates for mobile financial services , which is significantly different from what the Bank is offering is the use of roaming agents rather than fixed locations agents.
Roaming agents are more effective in signing users and building trusts in the early days of deployment.
However, providers should endeavor to transit roaming agents to fixed locations in those communities once they had achieved the mandate of signing up minimum users per community and had gained trust of users.
The advantage of fixed location agents is that tariff / service pricing can be placed on a wall in the booth, store or agent locations for customers to verify how much they are expected to pay for the services.
My assumption in the situation above was that the agents were eager to sign up customers and did not clearly educate customers on chargers for the services or interest payable on the savings.
The terms and condition of use of services might had been wrongly communicated or not at all by the roaming agents.
Terms and conditions of services is important to build confidence and manage expectations of the users.
However, most organization get it wrong when they make such prints almost unreadable by using the smallest printable character, not translating such for the benefit of the customer when He / She is not literate to read the print version.
Agents are also not able to educate the customers adequately before they commit to signing up for the service.
Banking services is strongly evidenced based service and it is rather awkward for customers to wait till the following day to get receipt for deposit made a day earlier with the agent as reported by one of the aggrieved customers.
If the service is designed that way, that is entirely wrong.
Depositors should be able to have instant fulfillment upon committing the transaction with agent and a paper based receipted issued in writing or printed out to keep as evidence or for future reconciliation purposes.
It could also be an ingenious method for the agents to short change the depositor by way of manipulating the receipt, given the time lag of 24hours for the receipting.
I know as a matter of fact that the Bank is stable and will be able to meet the demands of the savers on demand and the police was also reported by the Punch newspaper to have stepped into the issue and resolve some by arresting the guarantors of the agents.
However, it is a reputational issue for the Bank and may portend systemic risk for the entire industry that is actively developing agency Banking through the use of agents via recently licensed mobile money providers in Nigeria.
Getting the agents is only the baking of the cake, monitoring the agents is the icing on the cake and that is where most providers will drop the ball.
The lessons to be learnt is that providers should not transfer their trust to agents where control is lax and the only compensatory control over agents is the guarantor whom may not fully understand what they are guaranteeing or compensate the provider adequately when things wrong.
Emmanuel Okoegwale
Principal Associate, MobileMoneyAfrica
Emmanuel@mobilemoneyafrica.com