Checking In: Digital Innovations at Diamond Bank and NMB Bank

Monday 16th July 2018

Digital innovationDigital solutions for product distribution are rapidly increasing banks’ ability to reach the unbanked – a segment disproportionately made up of women. During the recent All-Stars Academy in South Africa, GBA heard from two members who are making huge strides in this area: Diamond Bank of Nigeria and NMB Bank of Tanzania.

Diamond Bank

With 70 percent of adult women in Nigeria still unbanked, Diamond Bank sees financial inclusion for women as a growth market. Launched in 2013, their BETA Proposition seeks to address the convenience and access issues cited by many women in Nigeria as barriers to entry into formal financial services. The BETA Proposition leverages the West African concept of “Alaajo,” wherein agents come to clients to collect small, fixed deposits on a regular basis. These mobile sales and service agents are known as BETA Friends and also provide account holders with access to withdrawal services and information on the bank’s offerings to help clients better understand financial services. Once their accounts have been opened – which can be done nearly instantly from anywhere there is mobile access – customers also have access to ATMs and branches across the country.

Users of the BETA Proposition tend to be women who operate very small enterprises in the marketplace and value saving but feel they cannot leave their stalls. To encourage additional uptake by women in the country, Diamond increased the number of female BETA Friends, noting that women felt more comfortable talking to other women about financial services. The bank has seen strong results from the BETA Proposition, with more than 600,000 accounts opened since launch.

The success of BETA Friends confirmed to Diamond Bank that branch growth alone would not suffice to expand its customer base. In 2016 the bank introduced its agency banking model, CLOSA, to allow customers to deposit, withdraw and do other transactions in shops in their communities using mobile technology. Diamond Bank selects these agents from its micro- and small-enterprise client base, a large portion of whom are women. Agents appreciate the prestige of being associated with the bank, and having the opportunity to serve their communities and to earn an additional revenue stream from commissions on banking transactions. Compared to traditional brick-and-mortar branches, the agents are lower-cost channels that make it possible for the bank to expand its footprint and serve lower-income clients sustainably. Based on Diamond Bank’s research, low-income women, in particular, value the convenience of the agents and trust their security. To date Diamond Bank has opened 400 new channels via CLOSA agents.

Another result of the strong uptake of the BETA Proposition, the bank is currently piloting the BETA Kwik loan in 15 Diamond Bank branches in partnership with microfinance institution Letshego, which has a presence across the continent. The BETA Kwik loan offers pre-approved loans in small amounts [maximum of 50,000 NGN ($150.00 USD)] with a 30-day repayment term. This gives low-income women loans to help sustain and grow their businesses or to support them during emergencies. To qualify, clients must have been BETA Savings clients for at least 6 months, must have accounts that have been active in the last 3 months, and must maintain a minimum balance of 500 NGN ($1.50 USD). Loan offers and acceptances are initiated and concluded through mobile devices, and the loan disbursement is transacted through the client’s BETA account. The bank’s BETA Friends play a key role, disbursing funds and receiving the loan payments as well as educating clients about the importance of on-time repayment. All the clients who have taken the Kwik loan product have repaid the full amount disbursed on time. Diamond believes that offering these short-term loans helps clients feel more comfortable in taking larger bank loans in the future. The pilot program has also offered the bank a chance to learn more about the market segment and its behavior.

Another high-performing digital innovation from the bank, in 2014, Diamond Bank launched a partnership with telecommunications giant MTN that also sought to reach more unbanked individuals. Dubbed the Diamond Y’ello Account, the offering combines financial and telecoms services with a loyalty scheme. Active MTN customers can subscribe to the account from their mobile phones by dialing *710# and begin receiving benefits like mobile bank account opening, funds transfer, balance checks and bill payments. So far 10 million Nigerians have signed up for the account.

NMB Bank

In Tanzania, 66 percent of the population of 51.5 million lives in rural areas that are often a great distance from bank branches. Noting that its female customer base was already at 34 percent and growing faster than men, yet women also had a higher rate of account dormancy, NMB Bank Tanzania sought to make its banking services more accessible by bringing them close to women regardless of where they are. The bank recently launched mobile phone banking for its group accounts, which in Tanzania are dominated by cooperative women’s groups who save money together. Group members can then take out loans from the group fund when they need it. The app enables 24/7 access to digital banking for these transactions.

Seeking to further enable access for the millions living in more remote locations, NMB developed the Chap Chap Account, which features doorstep banking services via 7,000 agents operating across the country. Customers will soon be able to open a Chap Chap account remotely without the need for an agent present. Like the BETA Proposition, these solutions are helping women across the country access financial services they could not reach previously – and helping the bank succeed as well: NMB notes that its female customers tend to have lower non-performing loans, better savings rates and a higher sense of loyalty.

NMB believes that offering access to financial services for everyone in Tanzania in a scalable, efficient way will require further digital solutions. Mobile network operators (MNOs) have increasingly entered the financial services space in recent years, offering basic mobile wallet products that are extremely popular with many individuals who live a great distance from bank branches. The bank intends to collaborate with these MNOs to innovate additional solutions. NMB is planning to digitize most of its financial products – especially in the retail segment – to directly solve the issue of cost, convenience and access to financial services in the country and help ensure all Tanzanians get access to formal financial services. With this strategy, the bank sees an opportunity to more than double its customer base over the next 4 years.

Many thanks to Karimot Tukur of Diamond Bank and Stephen Adili of NMB Bank Tanzania for sharing their work at the All-Stars Academy in June. The 2018 GBA Summit will continue to explore these solutions and more innovations that are helping women better access financial services under the theme “The Future of Financial Services for Women.” Visit the Summit hub to learn more.