“USSD is a clumsy technology. It’s not state-of-the-art. The best way to have financial inclusion is to crash the cost of data so that data becomes more affordable. Then we can use what is a superior technology.”
Those were the words of Segun Agbaje, CEO of Guaranty Trust Holding Company as he presented the company’s FY 2022 and Q1 2023 reports.
Over the past decade, USSD has gone from a tool primarily used by telcos to one used by commercial banks in Nigeria as they attempt to reach a different class of users.
With it, users who do not have access to the smartphones on which digital banking apps run have been able to access banking services without walking into a banking hall. This now looks to be coming to an end courtesy of a protracted dispute between banks and telcos.
A long-standing dispute comes to a sorry end
Since 2019, both parties have been embroiled in a dispute, first over debts owed to telcos and later over who charges the customer for using USSD codes. In 2021, telcos even threatened to cut off access to USSD services for banks but the Nigerian Communications Commission (NCC) suspended the move.
After several attempts at a resolution failed, the NCC received approval to cut off USSD services from banks this month. That decision could have significant consequences on the CBN’s financial inclusion drive, something executives of financial institutions are quick to allude to.
Lowering data costs alone will not drive financial inclusion
Agbaje is right about one thing, USSD is hardly the best-looking technology out there. Performing transactions with it often takes longer than necessary. However, it’s important to point out two things; one, USSD technology works for the most part and that’s really all any bank customer desires.
The second is that virtually every mobile banking app offered by a Nigerian bank experiences frequent downtimes while network providers are not always reliable. CBN’s attempt to force a cashless policy on Nigerians laid bare all that is wrong with digital banking. USSD, on the other hand, has grown in popularity because it does not require an Internet connection to function, making it ideal for Nigerians of all social classes.
As a user who spoke to Techpoint Africa pointed out, “On a number of occasions, I exhaust my data meaning I cannot access my bank app to recharge and subscribe. USSD solves that problem.”
But beyond that, Agbaje’s claim that crashing the cost of data would drive financial inclusion is unfounded and ignores the reality of many Nigerians.
For one, it does not take into account the number of smartphone users in the country. Per Statista, the exact number of smartphone users in the country is hard to say. Estimates, however, put it between 25 and 40 million. Additionally, more than half of Africa’s phone shipments in 2022 were feature phones.
According to the Nigeria Inter-Bank Settlement System (NIBSS), there were 57,398,704 Bank Verification Numbers (BVNs) as of April 8, 2023.
A long-standing dispute comes to a sorry end
Since 2019, both parties have been embroiled in a dispute, first over debts owed to telcos and later over who charges the customer for using USSD codes. In 2021, telcos even threatened to cut off access to USSD services for banks but the Nigerian Communications Commission (NCC) suspended the move.
After several attempts at a resolution failed, the NCC received approval to cut off USSD services from banks this month. That decision could have significant consequences on the CBN’s financial inclusion drive, something executives of financial institutions are quick to allude to.
Lowering data costs alone will not drive financial inclusion
Agbaje is right about one thing, USSD is hardly the best-looking technology out there. Performing transactions with it often takes longer than necessary. However, it’s important to point out two things; one, USSD technology works for the most part and that’s really all any bank customer desires.
The second is that virtually every mobile banking app offered by a Nigerian bank experiences frequent downtimes while network providers are not always reliable. CBN’s attempt to force a cashless policy on Nigerians laid bare all that is wrong with digital banking. USSD, on the other hand, has grown in popularity because it does not require an Internet connection to function, making it ideal for Nigerians of all social classes.
As a user who spoke to Techpoint Africa pointed out, “On a number of occasions, I exhaust my data meaning I cannot access my bank app to recharge and subscribe. USSD solves that problem.”
But beyond that, Agbaje’s claim that crashing the cost of data would drive financial inclusion is unfounded and ignores the reality of many Nigerians.
For one, it does not take into account the number of smartphone users in the country. Per Statista, the exact number of smartphone users in the country is hard to say. Estimates, however, put it between 25 and 40 million. Additionally, more than half of Africa’s phone shipments in 2022 were feature phones.
According to the Nigeria Inter-Bank Settlement System (NIBSS), there were 57,398,704 Bank Verification Numbers (BVNs) as of April 8, 2023.
TECHPOINT
