‘Moneybox will transform financial services delivery in Africa’

The future they said is mobile, this is more than true with MoneyBox introduction in Nigeria to save the under-bank from total neglect. And to comfort those that are banked. For the first time in Nigeria, bank accounts will be made available to everyone, with a mobile phone - anywhere, anytime, on any network, and w ith any bank. Thus, anyone can have an account package and immediately or shortly after, start transactions in a fast reliable and convenient manner.
With a click of a mobile phone key, Banke Adeola makes the transfer – sending funds instantly from his residence in a sprawling Lagos slum to his wife, who holds down their rural family farm some 250 miles away.

Mr. Adeleke, a security guard who works the night shift, used to risk carrying cash on infrequent, slow trips to his hometown or pay high rates to send money through the post office.
Most banks have found it far too costly to set up branches for the millions of people in developing states and towns. But with MoneyBox branchless banking, which eliminates most administrative costs, banks could soon find it worth their while to serve the poor. In a country with more than 40 million mobile phone users – double what it had just two years ago, MoneyBox could completely change the way banking and other financial services are delivered to Africans.

MoneyBox entrance into Nigeria market is a significant development within the financial and telecommunication industry is the subject of a roundtable interview with the Chief Executive officer. Mr. Adeniyi Elumaro, in this interview, explains the concept and how it promises to change the face of financial service delivery across the African continent.

Explain what Moneybox is all about?
MoneyBox is all about mobilising money and enabling dynamic possibilities in financial transactions through the mobile phone. Our goal is to be the largest enabler of mobile financial transactions in Africa.  Basically, it is a system that enables the delivery of financial services to anyone with any mobile phone anywhere, anytime and on any network. It is a savings and payment system based on scratch cards. It is enabled by any mobile phone. It allows people to pay and transfer money. The Moneybox customer is the customer of any telecommunications company or bank with a mobile phone who is not required to go through the complicated Know-Your –Customer requirement of banks or download mechanism of telecom firms before enjoying Moneybox services.

With Moneybox, you can top up your bank account just as you top up your mobile phone from the comfort of your home. You can send money to friends and loved ones. You can receive money, pay merchants, buy insurance policies and even send buy and sell instructions to your stock broker from the comfort of your home. One can basically carry out basic financial services on the mobile phone. It is a new world of possibilities.

So we believe that we can bring financial services to the poor people. We believe that we can help Nigerians and in fact all Africans achieve the Millennium Development Goals, especially as it relates to giving people access to financial services. Microfinance banks will no longer have to invest in expensive technology. Moneybox has technology partners that will freely allow them install world class banking systems at little or no cost and  through MoneyBox, subscribing MFI’s can link their front-end to the entire banking system including electronic payment platforms such as Etranzact and Interswitch.

This will allow Microfinance banks deliver services without the huge cost associated with current banking service. Through Moneybox, for the first time in the history of this country, people will be able to purchase bank accounts on the streets the same way they buy scratch cards.

What are the requirements for use of Moneybox service?
Unlike banks that insist that you cannot do most transactions with them except you are a customer, you do not have to be a customer of Moneybox to use Moneybox. It is very easy. If I want to send money to someone that perhaps I have bought something from or if I want to order for a product even at 1a.m. from a company that does 24 hours service, I can text the payment to the company’s bank account or to its Moneybox account. So I do not really have to be a Moneybox customer to do this.

If I want to transfer money to someone, provided the person has a bank account, once I remember the person’s account, I can send the money to the person. Even when the person that I want to transfer money to does not have an account number, it can still be done, as long as I can remember the person’s phone number. I will buy a recharge card of the value that I want to send to that person and text it to his phone. Moneybox will then automatically create an account using that phone number. The person that has the key can then come and claim the money.

But for people that really want to have a bank account, they will have to register with Moneybox as customers. Registration is very simple. It is just like buying a starter pack of any mobile operator. Moneybox account will be packaged like any other starter pack. When a customer gets it, an Interswitch-enabled ATM card will be printed and handed over to the person. The pack comes with N2,000 free cash, though buying it costs N2,000 as well.

To complete a Moneybox account requires a person to text the card number and PIN number to Moneybox database. This registration is once and for all and will allow a customer to have a Moneybox account.

Where the value of a transaction that one wants to carry out on a Moneybox account is more than N50, 000, the customer will have to complete the Know Your Customer registration. This is very easy. KYC can happen physically by completing a form. It can also happen on the telephone, in which case, a Moneybox agent will take the photograph of the customer and send to the database.  It can also happen on PoS terminals which have been programmed to recognise biometrics. So anytime a person wants to withdraw money, he simply goes to any of our agent locations to do that. Our agents such as mobile telco agents, petrol stations, retail stores or supermarkets, pharmacies, already handles a lot of cash by selling goods and services. They will now add deposit, withdrawal and money transfer or remittance services in addition to their regular product offerings.

How accessible will Moneybox service be to Nigerians?
The service will be very ubiquitous. All the banks that we have today in Nigeria have a total of about 4,500 branches and if you add all the 5,000 or less ATMs outside of branch locations in the country; it means that Nigerian banks are only available to people in about 10,000 locations. If you consider that Nigeria has about 150m people and you divide this by 10,000 locations, where one can carry out banking services, it means that you have at least 15,000 people to a banking location.
In the more developed countries, you do not have more than 1,000 persons to a financial service location. What Moneybox will do is that it allows all Nigerian banks deliver basic banking, insurance, and stockbrokerage transactions from any agent location.

Who are Moneybox agents?
They will be the people that already sell airtime cards or phones for telecom companies in the streets and other merchants. If we just license all those selling recharge cards for telecom operators, we will have at least 200,000 locations from where people can go and do basic banking and other financial services transactions. People can pay money into their accounts, they can withdraw money from their accounts and also do funds transfer or receive remmittances.
In short, a customer does not always need to go to an agent location to draw money from their accounts or do transfer. It can be done from the comfort of one’s home. But to withdraw money, one may have to go to an agent location that has cash to do this.

But for the agent to process the transaction, he must have credit in his Moneybox account. The way the system is set up to process a customer cash deposit at an agent location is to debit the agent’s Moneybox account and credit the customer’s account. All these happen very fast.  Our partners paybox Solutions AG  have perfected this technology in Germany and Austria where all these things are already working very well.  They are not just supplying the technology but are also backing us up to operate and implement it across Africa.  The will gradually transfer skills to a team, of young Nigerians already on board.

Moneybox is going to transform financial service-delivery in Africa. The performance  statistics of the two industries our ecosystems are converging are very revealing and paradoxical. (permit me to coin that word) . Banking in Nigeria has been around for over 100 years and yet we have less than 16 million bank accounts for all the banks put together. If you bear in mind that some individuals have over five bank accounts across several bank, the actual number of account holders are probably much less than half that number.

Meanwhile, mobile telephony has been around for less than eight years and based on the figures released by the Nigerian Communications Commission at the end of the first quarter 2008, Nigeria now has over 50 million mobile subscriptions.  The point is what can the banking and financial services sector learn from the young but fast growing telecommunications industry? How can we create a delivery architecture that will ensure that anybody that has a mobile phone also has access to financial services such as savings, insurance, stocks investments and other financial services? This is what Moneybox is all about.  In the first phase, we want to pilot and entrench this concept in Nigeria before spreading it to other parts of Africa. We believe that this will help reduce the volume of money outside the banking system. We understand that there is over N450 billion outside the formal banking sector. We want to bring this money into the banking sector. But remember that Moneybox is just an agent of banks-both macro and microfinance banks. We do not actually have accounts on our own but we will bring more efficiency to the banking system.
Firstly, we will increase the speed of clearing cheques. Today, clearing of cheques take about three days. But with MoneyBox is done immediately. Therefore, for anyone that has the need for immediate value for his cash there is no better way to do it than Moneybox. Deals can be closed very fast and payment completed at the speed of SMS.

We expect big banks, Microfinance banks, insurance firms and stock brokers to sign on to Moneybox to optimise their float. We will assist them in raising the team they need to operate the scheme. We do not charge a lot of money to use Moneybox. On a more macro level, MoneyBox will support  CBN person to person payment vision . It will  reduce the cost of managing money in circulation and also increase the velocity of money in circulation to improve economic benefits. The goal of MoneyBox board is to partner with CBN national switch to build a national mobile switching infrastructure for the country in a way that will create a national ecosystem connected to all telcos, all banks, other switches, all merchants and all agents. And with that, the platform for national mobile commerce is set for Nigeria as a hub.  This hub will be extended in the first phase to West Africa to create a sub-regional ecosystem that will bring to life the dreams of ECOWAS thus facilitating trade and commerce and free flow of people within the subregion. The next frontier for financial services, stock broking and insurance is going to be on the mobile phone. The mobile channel adoption or penetration rate  is the highest in the history of technology uptake and we hope that people in Nigeria can take advantage of Moneybox so that Nigeria can become the payment powerhouse for Africa.  Moneybox will start a pilot in Nigeria and  quickly spread the technology across the West African region bringing to life the dreams of ECOWAS founding fathers to promote regional integration. Once we capture West Africa, we will then extend Moneybox to the rest of Africa.