By Collins NwezeBank account ownership is quite compulsory in many developed countries of the world. Research shows that nearly half of the worlds unbanked population live in developing countries.Though China and India have relatively high bank account ownership, they have some of the largest numbers of the unbanked population globally due to their population size.Findings showed that China has the largest number of unbanked people at 225 million adults followed by Indias 190 million. Pakistan has an unbanked population of 100 million and Indonesia has 95 million unbanked persons.These four countries together with Nigeria, Mexico and Bangladesh are home to nearly half the worlds unbanked population.According to a World Bank reportthe Global Findex Database 2017, nearly half of about 1.7 billion unbanked population in the world live in just seven developing economies: Bangladesh, China, India, Indonesia, Mexico, Nigeria and Pakistan.To address this anomaly, Payment Service Banks (PSB) were established.These banks are a stripped version of commercial banks with small scale operations, an absence of credit risk facilities and no foreign exchange operations. PSBs were first established in 2013 in India in a bid to reduce the number of Indian citizens without bank accounts.In Nigeria, PSBs were introduced on October 26, 2018, with the issuance of guidelines for licensing of payment service banks by the Central Bank of Nigeria (CBN).This was done in a bid to promote and enhance financial services for low-income earners and the unbanked population in Nigeria. The guidelines issued aim to ensure that more than 80 per cent of bankable adults in Nigeria have access to financial services by 2020.The main objective of establishing PSBs is to enable high and low volume transactions in remittances, micro-saving and withdrawals leveraging technology as a platform to render these services to carter especially to persons in rural areas requiring financial inclusion.PSBs operate their banking services through physical access points or digital interfaces, including mobile or internet-enabled platforms. The guidelines issued by CBN stipulate that PSBs will operate mainly in rural centres and unbanked locations and must have at least 25 per cent of their presence in these areas.Also, they can deploy automated teller machines, operate through banking agents following the CBN guidelines and use other channels, including electronic platforms, to reach out to customers.To be eligible to acquire a licence for operation, the CBN has given a list of operators that can apply for a licence. They include banking agents, telecoms companies (through subsidiaries), retail chains such as supermarkets, mobile money operators, postal services providers and courier companies, FinTech companies, financial holding companies, switching companies and other entities that the CBN may consider eligible.So far, three firms have been licensed to operate as PSB namely; Moneymaster PSB Limited (a subsidiary of Glo Mobile), 9PSB Limited (owned by 9Mobile) and Hope PSBank Limited.Hope PSBank Limited is a subsidiary of Unified Payments Services Limited (UP) a company with a proven track record in the Payment Service sector owning innovative brands such as PayAttitude.The scope of operations for PSBs include accepting deposits from individuals and small businesses, carrying out payment and remittance services through various channels within Nigeria, issuing debit and pre-paid cards, operating electronic wallets, rendering financial advisory services, investing in the Federal Government and CBN securities and carrying out such other activities as may be prescribed by the CBN.Their limitations include; granting any form of loan, advance and guarantee directly or indirectly, trading in foreign exchange markets; except as permitted when carrying out certain services, undertaking insurance underwriting or any other transactions which are not prescribed by the guidelines, accepting any closed scheme electronic value (e.g. airtime) as a form of deposit or payment and establishing a subsidiary, except as prescribed in the CBN regulation.The future of PSBs in Nigeria looks promising because due to their size and flexibility, PSBs can improve on longstanding traditional banking models in Nigeria. They can respond to changing market trends faster and prove themselves to be more attractive to potential customers.Ultimately, the success and longevity of PSBs will largely depend on their business approach to the market, successful integration of technology into their business model and their customercentric value propositions and in time, they will prove an indispensable element in reducing the unbanked population in Nigeria.
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