Digital Finance in Nigeria Paper Example

ABSTRACT

Digital finance is one of the essential tools that lack in most societies that have reported a considerable lack of proper access to conventional banking infrastructure. Nigeria is not an exceptional case as in the recent decade there have been efforts by the various banking organizations to develop alternate delivery channels such as the ALAT platform developed by Wema bank. This dissertation will aim to critically review the impact that the adoption of alternative service delivery channels such as the ALAT system offered by the Wema Bank has on the financial inclusion in Nigeria. The dissertation adopted both a descriptive and an illustrative approach which helped in gaining insight into the understanding of several items of interests. The target population for the dissertation was the general public as well as employees within the Wema bank who were interviewed to give insights into the impacts that the adoption of alternate delivery channels such as the ALAT system has had on the financial inclusion in Nigeria. As a result of the complex nature of the subject under study, the dissertation research methodology sought to employ the use of the ten step standard mixed research methodology which applies both quantitative and qualitative research techniques in utilizing the methodological triangulation that comprises of literature review, analysis of content, as well as interviews. The study sought to answer the central research question through the application of the monarch ten-step standard mixed research method and will try to meet its goal via the triangulation of the literature review with information collected using both the qualitative as well as quantitative methodology. Measures of central tendencies will be employed to help illustrate the pattern of financial integration, customer retention and attraction, and some transactions completed on the alternate channels between 2010 and 2015. The data clusters will be analyzed some for more trend utilizing the Pearson Product Moment Correlation method while reactions from the questionnaires as well as interviews on different channel use and deployment will be coded and assessed using normal frequency counts and percentages. The study found out that a significant number of respondents have a neutral thought regarding the impact of the ALAT system of Wema Bank on financial inclusion with twenty-five percent of the respondents claim that the ALAT system is not helpful in enhancing financial inclusion situation in the country. Forty percent of the respondents supported the fact that the ALAT system and other service delivery channels help in improving the financial inclusions situation in Nigeria. It was concluded that improving the quality of the level of financial inclusion through systems like the ALAT that has been adopted by the Wema Bank is not the perfect solution to the problem of inadequate financial inclusion in Nigeria. However, the main issue is the perception as well as the education level of the people living within the country, insufficient funds to facilitate the inclusion operations as well as those laws that govern the bank operation in Nigeria. It was thus recommended that banks needed to carry out more research which will help them discover an alternate delivery channel that takes into consideration the needs of the people regardless of the backgrounds. Also, there was the need for the federal government to provide more funds to the banking sector which will help them in expanding their branches to all parts of the nation as these strategies would help improve the level financial inclusion in Nigeria.

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CHAPTER ONE: INTRODUCTION

This chapter presents the information background regarding the adoption of various alternate service delivery channels such as the ALAT platform by the Wema bank and the impact that such systems have had on the financial inclusion in Nigeria. Also, the statement of the problem is stated in this chapter which gives insights as to why it is important to carry out this study. Another element of this chapter is the main research question for this dissertation and the objectives that it aims at arriving at upon completion. The significance and rationale of the study are also covered in this chapter which provides the reasons as to why this dissertation is important. The final part of this chapter is the summary of how the dissertation will be done from the first chapter, the literature review, the methodology adopted, the data analysis techniques, findings, limitations of the dissertation as well as the conclusions.

Background Information

Digital finance has been noted to be one of the essential tools for a considerable number of societies that lack proper access to conventional banking infrastructure (Leeladhar, 2005). In most cases, clients, as well as banks in Nigeria, have always sought alternate delivery channels such as the ALAT system adopted by Wema Bank to try and provide boundless and branchless banking that helps in mitigating the financial barriers that are adversely affecting the lives of the people. ALAT system by Wema bank was established in May 2017 and has helped Wema Bank emerge as one of the highly digitalized banks in Nigeria. The ALAT system is designed to permit customers to carry out banking transactions without necessarily visiting any branch of the bank in the country. ALAT system was created to take care of the need for the modern day digital consumers who are in dire need of a banking system that entirely understands as well as matches the financial customer's lifestyle in consideration to the value for time and higher levels of responsiveness. Recently, researchers have established that digital banking help people to save more money and time that they would have used to gain access to the banks in various parts of the world (Mbutor and Uba, 2013). For instance, banking customers using the ALAT system can save a considerable amount of money with the simple automated saving plan incorporated in the system and earn over 10% yearly interest, which is almost three times the rate offered by the standard banks within Nigeria. Furthermore, alternate service delivery channels such as the ALAT system used by Wema bank help people to get financial loans on a short-term basis with no paperwork or collateral being provided before one can gain access to such services. Digital banking through such alternate delivery channels also allow consumers to carry out banking transactions such as personal savings, loans on objectives, card regulation, as well as the virtual dollar without having to visit the individual bank branches physically thus increasing the levels of financial inclusion among Nigerian households (Central Bank of Nigeria, 2013).

Additionally, studies by Mbutor and Uba (2013) have shown that gaining a proper understanding of the significant link between finance inclusion and the growth of the economy remains the chief concern for economists and as a logical and professional extension of such form of inquiry, economists have increasingly shown interest in the various financial inclusion (Huefner and Bykere, 2015). Also, economic policymakers have broadly embraced such lines of inquiry with urgency following the economic as well as financial crises which have made them seek to understand the factors augmenting participation in the financial system and those deterring the efficient utilization of financial services by all populations regardless of their financial status. It is as a result of such inquiry that Leeladhar (2005) suggests that economic policies that tend to target the well-being of the banking systems in any country are always active as compared to the targeted strategies.

Furthermore, recent surveys have also shown that the closure of high profile banks that had not invested in alternate service delivery channels has brought about a lower chance of people using core financial products over a specified duration (Mbutor and Uba, 2013). In support of this observation by Mbutor and Uba (2013), Huefner and Bykere (2015) noted that financial inclusion in nations with considerably well-established banking systems affect access to commercial goods as the access to such alternate delivery channels happen to raise with the amount of income earned, employment opportunities, levels of education, ownership of a stable bank account, high level of knowledge about money, as well as proximity to different financial institutions in the nation. However, according to Mbutor and Uba (2013) financial inclusion is enhanced today by the possession of a mobile phone, interest in monetary issues, the status of joblessness, but falls with the urbanization levels in the region. In the studies by Mbutor and Uba (2013) also suggest that inefficient supervision of the banking sector in Nigeria has been the leading cause of poor financial inclusion in the nation. However, they note that the national government and the financial organizations within Nigeria are doing their best to adopt international strategies being utilized in other countries to enhance economic integration so that there can be an improvement in the levels of financial inclusion in Nigeria.

Nigeria being a country with a large number of youths as well as an active adult population, the ALAT system adopted by Wema bank will remain the solution to this demographics financial needs. This is due to the fact that the ALAT system meets such needs in the banking sector because it is an innovative platform that is designed for the youthful generation in the world today (Central Bank of Nigeria, 2013). Thus, ALAT is appropriate for the students, young adults, youthful professionals, as well as businesspeople with an intention to try and ensure that they meet their dynamic financial needs in life a factor that has been important in improving the levels of financial inclusion in Nigeria. Also, most products offered by ALAT are an excellent tool that has been used to meet the eve...