Nigeria’s Banks and the Future May, 2017 Presented by MD/CEO, NIBSS - Adebisi Shonubi

Who is out there? 1

Where are the potential bank customers % Bank Penetration in Top 5 States by Population Kano 6% Lagos 50% Kaduna 13% Katsina 4% Oyo 20% Rivers 23% FCT Abuja 79% Population Distribution % % Cumulative 0 - 14 43.2% 15 - 24 19.3% 25 - 54 30.5% 49.8% 55 - 64 3.9% 53.7% >65 3.1% 56.8%

Mobile Penetration - % Households in Government Social Program State % Household with Mobile Phones Bauchi 17% Cross Rivers 76% Ekiti 69% Kogi 61% Kwara 100% Niger Osun Oyo

Africa Banking Industry Retail Customer Satisfaction Survey Sept 2016

0-14 years: 43.01% (male 39,960,275/female 38,123,266) 65 years and over: 3.11% (male 2,687,373/female 2,952,864) (2015 est.)

Banked 36,190,529 Active unbanked 74,309,471 Inactive 59,500,000

Electronic Payment Trends 2

Electronic Payments : NIP Analysis Unique Users by Account Type Jan- July 2016 Unique Users by Customer Segment Jan- July 2016

Trends between ACH and Instant payments

Average transaction values January – July 2016

Electronic Payments : Analysis TOP 5 Locations for PoS Transactions: Jan –July 2016

Fraud Statistics

MMM a Case Study

Then what? 3

Separation of Roles Holding Value – Mainly Banks Transaction Processing – Everyone Advice and Intelligent Thought - Everyone

Who is a Fintech? Your Global Financial Institutions Google, Facebook Will require locals because the Naira is not convertible

Block Chain is here to stay. Crypto currency will be niche at best. Just maybe the basis of regional currency……. Technology could lead to lower fees for consumers, better regulatory oversight and better preparedness against financial bubbles, but impact is likely to be mostly limited to the back-end of banking operations, with major disruption through innovations such as bitcoin less likely to transform the industry. 

Single Use In the first quadrant are low-novelty and low-coordination applications that create better, less costly, highly focused solutions. E-mail, a cheap alternative to phone calls, faxes, and snail mail, was a single-use application for TCP/IP (even though its value rose with the number of users). Bitcoin, too, falls into this quadrant. Even in its early days, bitcoin offered immediate value to the few people who used it simply as an alternative payment method. (You can think of it as a complex e-mail that transfers not just information but also actual value.) Localization The second quadrant comprises innovations that are relatively high in novelty but need only a limited number of users to create immediate value, so it’s still relatively easy to promote their adoption. If blockchain follows the path network technologies took in business, we can expect blockchain innovations to build on single-use applications to create local private networks on which multiple organizations are connected through a distributed ledger

Substitution The third quadrant contains applications that are relatively low in novelty because they build on existing single-use and localized applications, but are high in coordination needs because they involve broader and increasingly public uses. These innovations aim to replace entire ways of doing business. They face high barriers to adoption, however; not only do they require more coordination but the processes they hope to replace may be full-blown and deeply embedded within organizations and institutions. Transformation Into the last quadrant fall completely novel applications that, if successful, could change the very nature of economic, social, and political systems. They involve coordinating the activity of many actors and gaining institutional agreement on standards and processes. Their adoption will require major social, legal, and political change. “Smart contracts” may be the most transformative blockchain application at the moment. These automate payments and the transfer of currency or other assets as negotiated conditions are met.

Questions & Discussion Thank you !!! Questions & Discussion 4

THANK YOU Nigeria Inter-Bank Settlement System Plc 23 … Improving the Nigeria Payments System 1230b Ahmadu Bello Way Victoria Island, Lagos, Nigeria Tel: +234 1 2716071-4 www.nibss-plc.com.ng 23 23