Bank AI

The proliferation of Point of Sale (POS) businesses in major cities across Nigeria can only be described as exponential. For instance, in cities like Lagos, you could hardly find a street with less than one POS agent. The average is two, while some streets could have as many as five. 
This proliferation is even more pronounced when you move downtown from the city’s commercial centres. Every major bus stop is dotted with different banners of POS agents. However, in spite of the obvious ubiquity, <a href="https://technext24.com/2023/08/29/opay-flutterwave-andela-top-list-of-most-funded-nigeria-startups/">Opay’s</a> Regional Manager in Lagos, Chidum Aroh believes that the city needs more POS agents. 
In an interview with Technext, the Chidum explains that Lagos’s high population is dotted across a vast geographical spread. Yet, most of the banks in Lagos are concentrated in a few urban areas Alausa the Marina, where most of the businesses are located but an insignificant population of the citizens live. 
<blockquote class="wp-block-quote" data-beyondwords-marker="159d1067-e2af-46d6-a86e-b50068903cb9">
 “So if I stay somewhere like Okokomaiko or Iyana Sashi, there aren’t many banks in these areas. I have to get to Alaba to bank. And, each time I get to Alaba, the banks are always crowded. These are the problems that fintech platforms are now solving”, he adds.
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For him, POS agents solve two important problems: ease of transactions and time cost. 
“If I have POS agents in my locality, I can easily access the cash and pay them for their services. It would save me the cost of going to the bank, it has saved me the stress of being in a queue, and it has even saved me the stress of carrying cash all around Alaba” 
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 <img src="https://technext24.com/wp-content/uploads/2023/10/Chidum-Alor.jpg" alt="“We need more POS agents in Lagos, the market is far from saturated,” Opay Lagos chief Chidum Aroh" class="wp-image-219144" width="668" height="889">
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 Chidum Aroh
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According to a report on the&nbsp;<a href="https://intelpoint.co/report/the-nigerian-financial-services-market/" target="_blank" rel="noreferrer noopener">Nigerian Financial Services Market</a>&nbsp;by Intelpoint, Lagos has a total of 322,266 POS agents out of 1.5 million agents in Nigeria. This represents 21.4% of all POS agents in the country, leaving the other 35 states and the Federal Capital Territory, Abuja to share the remainder. 
According to the report, Opay has the largest network of them around the country with 563,262 POS agents out of a total of 1.5 million in the country. 
In spite of its market dominance, Chidum believes there’s still a lot of gap to cover in the state. 
“There is even more need for POS agents in Lagos. If there’s a holistic review you’ll find out that the sky is still wide enough for everyone to become a star,” he concludes. 
Arguing that the market has covered a large extent of the financial needs of Nigerians, he pointed out that, as many case studies have revealed, there is still space for innovation, expansion and growth. 
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 “In comparison with a country like Kenya where users can do a lot using MPESA. Farmers in Kenya use USSD to pay for loans, to pay for virtually everything. In Nigeria, our farmers and artisans are not USSD compliant. They are uncomfortable with using bank apps not to talk about trying out neo-banking options. It shows that we are still far from where we need to be”, he added.
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<h4 id="pos-agents-and-financial-inclusion-in-nigeria" data-beyondwords-marker="37bd5eb6-bb2e-478c-bb52-7a33e1f3200b">POS agents and financial inclusion in Nigeria</h4> 
<a href="https://technext24.com/2023/06/20/banking-apps-vs-fintech-apps-comparison/" data-type="post" data-id="197503">Financial inclusion</a> is a recurring theme with almost every Nigerian fintech company. Agency banking is one of the innovations that the Central Bank of Nigeria (CBN) believes would help drive financial inclusion across the country, especially in places that are significantly under-served and under-banked. 
As indicated earlier, there are 1.5 million POS agents around the country. However, this number is not enough to adequately bank 225 million Nigerians, especially given that most of the citizens heavily depend on cash transactions. 
Incidentally, many of these agents are located in major cities like Lagos, Abuja, Kano, Port Harcourt, Owerri, Ibadan, Kaduna, etc. This is counterintuitive given that the agency banking model was designed by the apex bank to achieve financial inclusion for the predominantly unbanked and underbanked population. 
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POS agents are supposed to cater to people living in places with fewer banks. But cities like Lagos are the country’s leading economic hubs. The volume of POS operators in cities such as Lagos isn’t necessarily a result of the need to bank the unbanked. It is owing to the chronic shortcomings of traditional banks. 
However, Chidum’s argument is premised on the fact that the majority of people living and working in cities like Lagos do not necessarily live in the urbanized parts. They mostly live in areas that are characterised by poor social infrastructure and low economic life. 
Take for instance, the top 7 most populated Local governments in Lagos, for instance, are Alimosho, Ajeromi-Ifelodun, Kosofe, Mushin, Oshodi-Isolo, Ojo and Badagry. These are not the core business areas of the state. The major business areas (housing the largest concentration of banks in the country) are Surulere, Amuwo-Odofin, Lagos Mainland, Ikeja, Etiosa, Apapa, Lagos Island and Ibeju Lekki. 
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 So, even as city dwellers, most Lagos citizens are significantly underbanked.
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See also: <a href="Investigation:%20Are%20bank%20staff%20colluding%20with%20PoS%20operators%20to%20rip%20off%20Nigerians?">Investigation: Are Bank Staff Colluding with PoS Operators to rip off Nigerians?</a> 
<h4 id="in-conclusion" data-beyondwords-marker="c7997601-d5da-438b-a46f-8698a55a4db4">In conclusion</h4> 
It isn’t surprising that a lot of Nigerians are embracing agency banking. 
Per findings in the Intelpoint report, a significant percentage of Nigerians (50.3 per cent) utilize a banking agent. These include mobile money or POS agents. They use their services to receive funds. 44.4 per cent rely on these agents to send money, while 2.9 per cent use them to pay bills. 
The above numbers indicate that there is still a lot of room for the population of POS agents to grow and for their services to thrive. And, Chidum says that the company has plans to meet the foreseen demand. 
First, they will ensure that new merchants are set up where there is a genuine need. 
<blockquote class="wp-block-quote" data-beyondwords-marker="f3c72aae-511c-467e-833e-d598ad28aeff">
 “To avoid the market being saturated, the business of prospective agents will be profiled to know where the business is located. A photograph of business premises and others will also be required. We need to be sure that this person needs a POS. For example, if your business will be located at a place with heavy human traffic we will be sure the person is setting up in a very good location,” he said.
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Finally, Chidum told Technext that the company is looking to go beyond agency banking as it has already dominated the merchant acquiring space. Opay presently owns the lion’s share of the total population of POS terminals being used by small, medium and large enterprises across Nigeria. 
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 “Before the end of the first quarter of 2024, we are looking at bringing onboard over 20,000 POS users,” he says.
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Lagos has 322,266 POS agents but most citizens are underbanked: A chat with Opay’s Chidum Aroh on the need for more

Technext.ng

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