Interswitch: Infrastructure Alone Won’t Fix Nigeria’s Un- and Underbanked Problem

Accelerating financial inclusion and bringing un- and underbanked populations into the formal financial sector is increasingly on the agenda of several governments and policymakers in emerging markets.

In Nigeria, where an estimated 38 million people, or 36% of adults, remain financially excluded, the government has set a target of 95% financial inclusion by 2024 — an ambitious goal that will require institutions to re-strategize initiatives and policies to accelerate the delivery of financial inclusion services.

Lagos-based FinTech unicorn Interswitch seems to have heeded that call, leveraging its position as a market leader in digital payment services to bridge that gap and help bring as many people into the financial and economic fold as possible.

Through its Quickteller Paypoint online payments platform, a service under Interswitch Financial Inclusion Services (IFIS), the Africa-focused firm has created a robust network of banking agents — often referred to as “human ATMs” — in locations across all 36 states in Nigeria, offering bill payments, airtime recharge, funds transfer and remittance services to customers.

Titilola Shogaolu, head of financial inclusion at Interswitch, said that the agency banking model — which is widely popular across the West African country today — has played a key role in driving the financial inclusion agenda, transforming the lives of these agents due to the increase in their retail store foot traffic and the positive impact it has on their income and bottom lines.

“They’ve become socially relevant within their community because they are now the go-to person for all financial services needs that people in their local communities have,” Shogaolu told PYMNTS in an interview. “And beyond financial services transactions, they also tend to offer other non-financial services transactions at their location so invariably, they become a one-stop shop [for all their customers’ needs].”

Partnerships Are Key

As infrastructure can be a challenge for businesses like Interswitch that rely on connectivity to work effectively, Shogaolu said collaborating with industry stakeholders to build out telecom infrastructure or partnering with other organizations to set up offline payments solutions, for example, is critical to drive financial inclusion.

When it comes to finding and onboarding new agents, ensuring know your customer (KYC) procedures can be challenging to navigate alone, but a partner can help make this process more seamless.

“We’re able to bridge that gap and have discussions [with partners] to see where agent locations could also serve as points or where persons could get registered, [and in some cases] the national identity can be used as a means of ID to onboard an agent,” she added.

Blockchain: Just Not Yet

In an interview with PYMNTS last December, Interswitch CEO Mitchell Elegbe spoke about the potential blockchain technology has to disrupt industries and solve many of Africa’s challenges, including in payments and in other adjacent industries.

Read Interswitch CEO Interview: Blockchain Technology Could Solve Many Challenges in Africa’s Payments Space

It’s the reason why the Lagos-based company has partnered with Interstellar, an Africa-focused blockchain organization, to develop blockchain-powered infrastructure services and solutions across the region.

See also: Microsoft, Interswitch Introduce Blockchain Trade Finance In Nigeria

Prior to that, the pan-African digital payments and commerce firm had collaborated with Microsoft to develop a blockchain-powered supply chain finance solution for small- to medium-sized businesses (SMBs) in the country.

Asked whether blockchain technology would play a role in accelerating and deepening financial inclusion in Nigeria, Shogaolu said that it is something they are considering, but it will take time to materialize.

She explained that while the billers and corporate organizations they work with might be using blockchain-based solutions, getting their products and services into the hands of consumers will still have to ride through the agent network, which are not currently adapted to these newer technologies.

“So, will blockchain be relevant? Definitely, and it’s something that we are looking towards sometime in the future,” Shogaolu said.

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