NIBSS Launches Technology to Clear Cheques in Hours

The Nigeria Interbank Payment & Settling Systems (NIBSS) has launched a technology in partnership with Precise Financial Systems to enable Deposit Money Banks (DMBs) clear customer cheques within hours rather than the normal two days it takes. This Technology has been in a Beta testing phase for 11weeks by Pilot Banks with a total of 10million transactions worth a whooping 5trillion naira processed.

Mr. Ade Shonubi the Managing Director of the NIBSS at a meeting in Lagos to discuss the process says that the collaboration has being in the works for 18months, saying the technology will enable financial institutions to achieve payment and non-payment transactions. Comparing the status quo of currently only four (4) clearing sessions that exists, he says the advantage of having multiple clearing sessions is that the net amount against each bank is smaller and risks can be better managed, “With the new system, a cheque can be cleared within six hours, four hour or at whatever duration we agree”

The Managing Director of Precise Financial System, the Company behind the NACS software, Dr. Yemi Okeremi explained that the process of clearing cheques has been simplified across all Nigerian Banks with the introduction of this application and that successful deployment of the application across DMBs will open the door for other technology companies to tackle other problems Nigeria faces through Financial Technology.

Dr. Yemi Okeremi in commending the smooth working relationship between PFS & NIBSS said “The new system allows bank customers to achieve the benefits of shorter cheque clearing cycles, as it reduces the operational cost of the banks because the clearing department of the banks can work smarter and close earlier.

NIBSS wanted a system that can be incorporated with the Bank Verification Number [BVN]. They also wanted a situation where they would have a session-less system that would always be online such that banks could transmit their transactions as soon as they happen rather than a batch system that opens up at specific times and closes after stipulated time frames”

Mr. Kolawole Aminu, Head of Domestic Payments & Collections at Union Bank said “over N5 trillion that has been processed on the new platform just within 11 weeks. We are talking of over 10 million in terms of the volume of cheques. That tells you how much we do with this mode of payment.”

Dr. Okeremi in explaining the benefits of this to National Security said “As MD of NIBSS have explained, what we have given the country is an infrastructure. It is a switch. It can switch anything. I look forward to when that infrastructure can be used for other transactions. When a country talks about independent, sovereignty, these are some of the things that matter. How much of your services are internal to you? Are you breathing through the nose of other countries and you claim you are independent? These are some of the things that make one happy and we can say that Nigeria’s problems are being gradually solved. There is a big road ahead. do what we could have done for ourselves, we export prosperity and import poverty.

If you go to any developed country, they would not allow foreigners to have access to certain critical infrastructure in their country. So why do we keep exposing our country to such sovereign risks. I think the fact that NIBSS has led the way in this direction, I expect other organizations to follow suit. The new solution is conceived and developed by Nigerians thereby saving some capital flight for the country”.

 

 

Kelvin Emmanuel

About Kelvin Emmanuel

The Oil producing Angola in the Southern part of Africa faces what Nigeria faced 12months ago; a distortion in its exchange rate with a difference between the official markets and the parallel black markets. One dollar through the official window buys you 166 kwanza, while one dollar through the black market buys you 400 kwanza. Nigeria faced the same challenge 12months ago, when the distortion between the official and black markets was as much as the official markets trading at 306 with the parallel market ranging from 450 through to 510. The Central Bank Governor of Angola, Jose de Massano Junior announced in Luanda “We will stop having a fixed foreign exchange, we will adopt a floating regime of foreign exchange”. Angola faces exactly the same challenges and has been applying the exact same responses to an exchange rate crisis like using its foreign reserves that was sitting at $26bn to defend the currency kwanza, with no success so far, even though the external reserves has dropped to $14bn. Angola relies on Oil receipts for 80% of its government revenue, 90% of its inflow and 50% of its GDP. Angola is a $194bn economy that has been growing at an average of 10% on the back of rising oil prices since 2002 when its 27 year old civil war that started in 1975 ended. The state national oil company Sonangol reports that it produces up to 1.8m barrels of crude oil daily, however the government that until now has being led by the family dynasty Jose Eduardo dos Santos until recently when succession saw power transferred to Joao Lourenco, reports that the oil price rout in 2015/2016 that saw prices drop to as low as $28 per barrel caused ripples across the economic structures of the government, upsetting government revenues, its ability to fund its budget, capital project funding, foreign direct investments into the economy as a result of a currency crisis that was driven by the widening of gap between the official and street window of the kwanza, that until now has been pegged in a fixed exchange rate regime to the US Dollar.