The Chairman of Union Bank of Nigeria Plc, Mr Farouk Gumel, has said the decision of Nigerian banks to shut down their branches, especially in rural areas, would widen non-financial inclusion in the country.
Speaking at the annual Banking and Finance Conference organized by the Chartered Institute of Bankers of Nigeria (CIBN), yesterday in Abuja, Gumel stated that banks only served a fraction of the 200 million people in the country and the closure of bank branches due to inefficiency only reduced the amount of people they served.
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With the occasion themed ‘Repositioning the Financial Services Industry for an Evolving Global Context,’ he said efforts to drive financial inclusion in the country could succeed when banks have physical presence in rural areas for the existence of trust.
“We need more physical presence even though there is a lot of talk on the need to shutdown branches to be efficient, but it is about rebranching; you don’t need a big branch, you just need a rural branch that is targeted to rural people.
“This is because you need to be next to somebody to be able to convince him to trust you and I think that is how the banking sector should look at it. Efficiency comes, but you have to be inefficient when you are dealing with people in rural areas.”
“Our systems and processes have made it exceptionally easy for our elite to bank globally and for global elites to bank in Nigeria. Let me put it in a different way, an investor in Norway will find it easier to use a Nigerian bank than a farmer in Ningi Local Government.”
He said the neglect of rural dwellers in financial inclusion has led to a missed opportunity for Nigeria’s financial services industry to help create the growth that lifts us all to collective prosperity.
“This is why we are still talking about financial inclusion and how to bank the unbanked – after nearly 130 years since First Bank commenced operations in Nigeria.
“As leaders in banking, we are often drawn to focus on the latest global forces that are reshaping our industry; we connect with like-minded colleagues and debate how best to adapt the most recent global best practices and trends.
“We discuss how to address the challenges of the fintech revolution; we deliberate over how to draw the talent from a new generation that is more mobile and discerning in the workplace.”
On his part, President Muhammadu Buhari said the financial sector provides opportunities to create SME start-ups, expand existing business interests and create more jobs for local brands overseas to frontier markets.
He said the repositioning of the finance services industry would help the Nigerian financial sector to promote financial inclusion and the diversification of the nation’s economy through deepening the market and expanding product offerings across the various segments of the industry.
He harped on “Leveraging on the growing Non-Banking Financial Institutions (NBFIs) in the country to crowd in capital from pension funds and insurance assets through well-structured and risk-mitigated financial instruments to broaden and deepen the country’s financial markets.
“Deploying innovations in Fintech for the extension of financial services to the under-served population as well as expanding the product space by taking advantage of the opportunities provided by other digital trading platforms such as warehousing, collateral management and crowdfunding.”
The president/chairman of CIBN, Ken Opara, said the global pandemic has been a wake-up call for the financial services industry by exposing gaps in digital service provision and cost structures.