When the Central Bank of Nigeria launched its national financial inclusion strategy, it cited research from EFina that 36.9 million Nigerians are unbanked, majority of whom are women. Women, especially in Nigeria, want access to a bank account and a safe place to keep their money, but physical proximity to a branch, lack of trust, financial literacy, affordability and eligibility remain real obstacles.
“Establishing a financial inclusion division was not driven by a philanthropic mindset but with focus on serving low-income segment (especially women). This is an important part of our growth strategy. As a leading retail bank, when you see that many millions of people, you see a great opportunity to bank new customers” says Kayode Olubiyi, Financial Inclusion Divisional Head at Diamond Bank Plc.
And that is why despite an impending economic crisis in the country, Diamond Bank is full steam ahead with its financial inclusion activities, launching its agent banking product Closa in August 2016, as well as planned rollout of KWIK Loan, a short-term, instant approval loan program based on the clients’ savings history.
Diamond Bank has been in the innovation business for many years. Apart from being the only bank in the region with an explicit business line dedicated to the low-income segment, Diamond also pioneered the use of mobile banking app in Nigeria. They were also the first bank to implement mobile app fingerprint technology in Africa, eighth in the entire world. Thus, when the Central Bank set out its national strategy to bring more people into the formal financial sector in 2012, Diamond Bank was quick to recognize, and act on, the opportunity not just to expand their client base, but to be part of the national financial inclusion success story by being the bank that empowers low-income Nigerians.
Serving the unbanked, starting with women
Where is a good place to start? In many ways, the answer was sitting in front Diamond Bank branches all over the country: women in the marketplace. “In Nigeria, any time you see a market, there will be a lot of women there,” according to Mr. Olubiyi. The fact that women also made up the majority of the unbanked segment made it an easy decision with the bank to start their financial inclusion activities with women. It was at this time that Diamond Bank partnered with Women’s World Banking to develop BETA, a savings account that can be opened in less than five minutes and has no minimum balance and no fees. BETA was also designed as a convenient and accessible product for the market women. Agents known as BETA Friends visit the customers at their stalls in the market to open accounts and process transactions (deposits, withdrawals, bill pay etc.) using a mobile phone application.
The product (solely driven using digital financial services platform) was a tremendous success: more than 35,000 accounts were opened in the first six months alone, 40% by women. And nearly three-quarters of the accounts were being used on a regular basis. And this was only the beginning. Once the market women had access to a convenient savings account, they wanted more. According to Mr. Olubiyi, “we started hearing from our clients that they wanted a way to save for a specific goal like her child birth, child’s education, wedding, etc. Some had already started using the BETA Savings account like a current account and wanted another type of savings account, hence the introduction of the BETA Target Savers account.”
Building on success
Since then, Diamond Bank, together with Women’s World Banking has been building a robust and diverse set of product offerings to meet this segment’s growing financial needs. “After Target Savers, the same clients asked us, ‘don’t you have a loan product where you can give us credit or a small loan to expand a business or add a second shop?’ So we worked with Women’s World Banking to devise a way to use the client’s BETA savings history as a way to give them a credit score. The results of the pilot were profound; 100% repayment rate on the loans given out. We are getting ready to go live with this to extend credit as much as possible to this segment.”
Diamond Closa is the bank’s most recent initiative aimed at providing affordable and convenient products and services to the un(der)banked segment of the society. Diamond Closa is a network of fixed agent locations attached to existing businesses in the community. “With Diamond Closa, we are making sure that a Diamond Bank client can take care of their financial needs, wherever they are.” And with the introduction of Diamond Y’ello, a hybrid mobile savings account offered in partnership with MTN which affords customers a blend of banking services and telco benefits, Diamond customers can transact wherever and whenever they want.
The future for Diamond Bank’s financial inclusion strategy
“Our idea is to truly position financial inclusion as a real business,” revealed Mr. Olubiyi. The tough economic conditions facing Nigeria is actually proving this case: “at the end of the second quarter (2016), BETA accounts recorded the highest deposit volume since the launch of the product”. Mr. Olubiyi surmises this is because the downturn has hit salary earners harder, while the basic economy of the low-income market endures. “We are still profitable and continuing to grow, month over month. When I took over the division just this year, we had grown by more than 120,000 customers on BETA with deposit base growth from N3 billion to N4.5 billion; while Diamond Y’ello customers now about 7 million with over 1 million active accounts.”
Mr. Olubiyi is thoughtful as he reflects on how far Diamond Bank has invested in financial inclusion. It is perhaps fitting that the head of this dynamic, growing division came from information technology, another industry used to ongoing change. “Financial inclusion thrives mostly with collaborative effort, and we will keep on investing in this with our partners: Women’s World Banking, MTN, EFina and The Gates Foundation who have been key drivers in our success story. We want to build a platform to serve all customers in the society by making Diamond Bank the Bank for Everyone”.