The financial services sector in Nigeria has passed through many phases of development within the last decade as a result of the Central Bank of Nigeria (CBN)’s active development and supervisory initiatives to evolve a stronger and more dynamic banking system.
These include a review of the Know Your Customer (KYC) guidelines, a gradual reduction in commission on turnover (COT) and other measures.
However, despite all the efforts, only an insignificant percentage of the more than 170 million Nigerians are currently banked. This is alarming and grossly unimpressive considering the need for effective monitoring and control as well as planning of the economy by both the government and the CBN.
Besides the high illiteracy level and low confidence in the financial system, a major reason for this relatively small number of account holders is the inter-bank reference bottleneck which makes it difficult for new accounts to be opened speedily.
At times, the prospective bank customers get frustrated and eventually abandon the process of opening a new bank account. A caterer, Mrs Akanbi, who explained to Leadership that she abandoned the idea of opening a current account in one of the banks to deposit cheques from her clients. She said she but had to abandon the idea after a lot of stress and delays.
She said that apart from the large file of forms she had to fill, there was the issue of reference. Akanbi explained that she was told that to make the process faster and easier, she had to bring references that had current account with the bank she wanted to open an account with, a task she could not achieve. Eventually, she had to abandon the idea and continue cashing cheques over the counter.
As a measure to bring an end to such occurrences and further enhance the efficiency of the payment systems in the country, the CBN last week issued the guidelines on the implementation of the electronic reference (e-Reference) portal by the industry which is to be implemented with immediate effect.
The e-reference system is a web-based automated document management system designed to process customer account references, and is capable of eliminating the inefficiencies characteristic of the old ways of manual reference processing system. By it, one entity can send documents electronically (e-documents) to the other within the Nigeria Banking System. It is designed, most importantly, for timely interbank reference processing.
The implementation of this solution ensures that interbank references become faster, more efficient and traceable by both the presenting and receiving banks. It is also designed to enhance compliance with the existing KYC directives.
The e-Reference portal, which is hosted by the Nigeria Inter-bank Settlement System (NIBSS) Plc, requires that recieving banks respond to inward references within three working days. Other operational details are contained in the attached guidelines for e-reference operations.
The NIBSS, in fulfillment of her shared-service mandate and in conjunction with the Committee of Heads of Bank Operations (CHBO), agreed to develop an electronic reference (e-Reference) portal such that account opening processes of banks can be fast-tracked with regards to interbank referencing.
The e-Reference Portal is targeted at eliminating the manual process of inter-bank reference forms exchange, enhancing the efficiency of reference clearing in Nigeria and ensuring accountability of reference documents.
It will also help reduce the turn-around time for confirming references for new accounts, provide a common secure web-based platform for the exchange of documents within the Financial Services Industry, whilst reducing the cost of printing manual reference for the whole industry.
The secure web-based platform will ensure that there will be no direct interconnection requirements among banks and will be for the clearing of paper-based not-for-value interbank items. Also a bank user from any branch will be able to upload scanned completed reference forms as well as any other document for the attention of another bank, while a presenting bank user will be able to search, view, download e-documents and forms approved or rejected by the receiving bank.
Likewise the receiving bank user will be able to search, view, download and treat incoming e-documents and forms from other banks, while there would be on-line-real-time follow-up and approval by the presenting and receiving bank respectively. It will also allow regulatory authorities to be able to monitor defaulting receiving banks.
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