E-Financial
Experts Worry Over Inability of Traditional Insurers to Leverage Technology
Experts in the Nigerian insurtech space have noted that traditional players have, so far, failed to leverage technology to increase insurance penetration across the country’s population.
This remark was delivered by leaders in the insurtech space, on the third day of the Nigeria Fintech Week, held on 26 October, 2023.
The session focusing on the theme ‘Diversification: Leveraging insurtech for inclusion and empowerment’, was hosted by Dr. Tunde Salako, MD, Africa Insurtech, who commented that insurance penetration is driven by affordability, accessibility and availability.
Michael Kalu, head, Heir’s Life Insurance, said there needs to be investment in ‘the systems that enable the industry to meet the demands of innovation’.
He noted that insurance should be made more user-friendly through technology applications that people use every day. He gave the examples that insurance can be sold on WhatsApp and through USSD.
Bode Pedro, CEO, Casava Inc, said that the traditional insurance companies tend to be stuck in comfort zones, fixated on what they know how to do, but said technology can improve efficiencies.
“If the insurance is inefficient at processing claims, it’s going to cost them again. Elimination of fraudulent claims using AI and machine learning will be more effective. You use AI and machine learning to detect fraudulent claims,” he added.
Speaking on the sidelines of the event, Dr. Oluwatomi Oromosele, GM, EfiNA agreed that there is a need to extend insurance services to the underserved through the adoption of modern technologies.
“The underserved are not just people in the rural areas, we are the underserved. The underserved are 97% of Nigerians. Traditional players are not efficient. Technology has set in, but some traditional players have failed to adopt it,” she said.
She said the COVID-19 pandemic, increased digitalisation across the continent, with 16% of adult Nigerians in 2018 having used digital financial services, in 2018, but the figure jumped to 28% in 2020.
Oromosele added that the country’s banking sector had made improvements in access to financial services products, thanks to technology.
“There has been a lot of technological integration with banks; insurance companies are not even close. There is a need to deepen inclusion. There is a need for insurance companies to work on applications as this will better the cause of the underserved,” she said.
Titan Trust Bank has selected Oracle FSS for its core and digital banking technology, it is understood.
The start-up bank recently obtained its license by the Central Bank of Nigeria (CBN).
It’s understood that Temenos and Infosys also competed for the deal.
The shortlist came down to the two most widely installed international core systems in Nigeria, Infosys’ Finacle and Oracle FSS’s Flexcube.
The Nigerian banking sector has seen a great deal of upheaval over the years, with many mergers, start-ups and closures. Flexcube is a well respected name since the late 1990s (the pioneer was Access Bank, now one of the country’s top five banks) and has been a commonly selected platform since then.
The new bank is believed to be one of five to have gained regulatory approval of late (Globus Bank is another).
Local media sources say the new licences stem from the Central Bank’s desire to attract new investments into the sector and better serve the country’s 50 million+ unbanked and under-banked citizens.
Titan Bank is said to be headed by a former executive director of Heritage Bank (which is a Finacle user).
Oracle FSS did not respond to request for comment.
International Monetary Fund (IMF), has appointed Tony Elumelu, Nigerian billionaire and group chairman of Heirs Holdings, owners of United Bank of Africa, to its advisory council on entrepreneurship and growth, convened by Kristalina Georgieva, the fund managing director.
The announcement was disclosed in a statement on Friday.
According to the statement, the IMF advisory council comprises global business leaders, policymakers, and academics dedicated to identifying and addressing regulatory barriers to entrepreneurship.
The IMF said Elumelu will be instrumental in ensuring that Africa’s entrepreneurship is central in policy making.
“Elumelu, Africa’s leading advocate of entrepreneurship and whose Foundation has funded, mentored, and trained over 25,000 African entrepreneurs since 2015, champions entrepreneurship as the engine for the economic transformation of Africa,” the statement reads.
“A self-made entrepreneur, Elumelu’s embracing of entrepreneurship is fundamental to his concept of Africapitalism, his belief that Africa’s private sector can and must play a leading role in the continent’s development, making long-term investments that deliver social and economic value.
“Elumelu will be instrumental in ensuring that Africa’s entrepreneurial potential is central to global economic policy making.”
Speaking at the inaugural meeting of the advisory council on March 26, Georgieva said the appointees would share their experiences on how macroeconomic and financial policies “can provide a supportive environment for innovation, entrepreneurship, and productivity — key ingredients for a thriving private sector and strong economic growth”.
Africa’s Micro, Small, and Medium Enterprises, fintech industry, scaling remittances, and cross-border payments will be the driving forces behind the continent’s digital ballooning payments system, which is estimated to reach $1.5 trillion by 2030.
This is according to a MasterCard-commissioned study by Genesis Analytics, which states that the digital payments economy is growing faster on the continent.
This comes as the World Bank says Sub-Saharan Africa has shown significant growth in financial inclusion over the past decade, much of it driven by mobile money account adoption.
Dimitrios Dosis, president, Eastern Europe, Middle East and Africa at MasterCard, comments: “Africa is filled with immense possibilities, and its people have the potential to shape the global economy in the decades ahead.
“MasterCard remains deeply committed to driving digital transformation across the continent, working closely with entrepreneurs, merchants, banks, start-ups, telcos, and governments. By increasing our investments, expanding innovation, and fostering inclusion, we are helping build a more connected and accessible digital future.”
The payment technology company went on to say as a longstanding technology partner to Africa, its continues to strengthen its commitment to the continent’s digital growth through strategic investments, public-private partnerships, and innovation initiatives that drive financial health and economic growth.
In addition, it says trends in Africa signal a strong shift towards digital transactions, with businesses and consumers increasingly embracing contactless solutions, further accelerating economic participation and financial accessibility across the region.
“For over five decades, MasterCard has worked alongside African governments, businesses, and communities to advance financial inclusion and economic development.
“With Africa projected to host nine of the world’s 20 fastest-growing economies, we are focused on leveraging our expertise and a technology to support the continent’s continued digital transformation.
“Our investments today will help build a more resilient economy for the future,” says Mark Elliott, division president, Africa, MasterCard
By fostering collaboration with key stakeholders, MasterCard says it aims to enhance digital connectivity, expand economic opportunities, and enable millions of people and businesses to thrive in the digital economy.
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