E-Financial
NAICOM Tasks Insurers, Banks to Explore Opportunities Outside Traditional Channels
The National Insurance Commission (NAICOM), has counselled practitioners in the banking and insurance sectors on the need to explore other paths to wealth creation than sticking to traditional distribution channels.
Mr Sunday Thomas, Commissioner for Insurance, while speaking at a virtual forum on the topic: “Bancassurance in Nigeria – unlocking growth for Banks and Insurers”, organised by Ernst and Young Nigeria (EY) in Lagos, said such alternatives would support them to deepen penetration.
Bancassurance is a relationship between a bank and an insurance company that is aimed at offering insurance products or benefits to the bank’s customers.
In such partnership, all the bank’s sales channels become a point of sale and contact for the customer.
According to Thomas, insurance penetration in Nigeria currently stands at .5 per cent.
“We believe that we should begin to look beyond the traditional distribution channels for the purpose of reaching out to the unreached, insurance wise.
“Not just people in the sense of national population, but an organised set of people who have the capability of meeting the requirements for insurance purposes.
“As at December 2020, about 111.5 million active bank accounts exist in Nigeria; when you look at these numbers, compare to the number of people that have one form of insurance or the other.
“By my record, it is less than 10 million; it’s a far cry! It portends a great opportunity for the insurance sector to be able to reach out to deliver insurance benefits to the people,” he said.
The insurance commissioner said that with Bancassurance, he believed that working together with the banking sector, stakeholders could reach out to more people.
He also advised operators to adopt the referral models of Bancassurance for the purpose of distribution, saying that other models would require issuance of special licenses and certificates.
Thomas said it would allow them make contact and leverage the data base of the banking sector for the purpose of distribution.
He said that it was a model which the present structure and relationship within the financial services sector and principally between NAICOM and the Central Bank of Nigeria allowed.
The insurance commissioner supported deepened retail market, noting that it was the future of insurance sector.
He said that the corporate account was good to build portfolio, but in terms of sustainability, operators needed retail business.
Mr Rotimi Okpaise, Partner and Insurance Sector Leader, EY West Africa, mentioned three success factors that would transform the industry.
“Moving from a low level of penetration now to where we want will require a transformative spirit of mindset.
“First is having an active client centricity, where people actually understand what insurance is and what the benefits are.
“The second and third are having both plans toward distribution channels and retaining and attracting talents with regards to clients centricity,” Okpaise said.
Dr Tosin Oshinubi, Director, Business Consulting, EY West Africa, urged Nigeria to join countries using Bancassurance to scale and do well, particularly in retail expansion, as benefits were immense.
“To the insurer, you have access to active market; an insurance company is able to quickly scale and spread their tentacles to areas where they do not have strong geographical presence leveraging the distribution channels of the banks among others.
“To the banks, while the benefits of the commission may not be juicy as they want it, it is still a way to diversify their revenue base because they already have the channels and the customers.
“So, this is just like an added income on what they currently have today, and so on.
“To the economy at large, the benefit is that it helps to improve insurance penetration and then more lives and goods are covered,” Oshinubi 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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