COVID-19: A CATALYST FOR IMPROVED DIGITAL BANKING SERVICES IN SIERRA LEONE?

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COVID 19 A CATALYST FOR IMPROVED BANKING SERVICES IN SIERRA LEONE - COVENANT NEWSPAPER

Digital Transformation is suddenly a necessity and no longer an option during this COVID-19 pandemic. As such, Digital Payment Systems are now the in thing. WHO has advised people to do more contactless banking and if they have to use banknotes for transactions they must if possible quarantine these notes for at least five days or sanitize both hands and the banknotes. The risk of banknotes during this crisis is a concern that both commercial banks and the central banks of various countries worldwide are looking into. The nagging question now is “How much has Sierra Leone done as a country on contactless banking and digital payment systems?”

During this three days lockdown of the whole country only a few services can be paid for by using totally contactless means; electricity, mobile airtime, DSTV, etc. These are the most popular and can be paid for via contactless end-to-end transactions. Online card payment services have also been effective due to the international gateway provided by either VISA or MasterCard. However, during the current lockdown these card payment services have only been effective in Sierra Leone for payment of online services and not goods. The international delivery services systems are faced with serious challenges whilst our local services have been nonfunctional during this period. The stay at home exercise has completely shut down these international delivery systems and their services in Sierra Leone.

The innovation around an effective payment system service has been challenged due to the lack of a National Switch to facilitate interoperability and also bad competition practices amongst the financial services players. Financial Inclusion means getting more people to access your financial services even if they are not your direct customers. If we continue to build products that are only close-looped, we would be working against making positive contributions to increase the financial inclusion rate.

During total lockdown, COVID-19 is only friendly to online payment platforms and in Sierra Leone this is a very limited service area. Going through the news and social media reports on the challenges of the lockdown, it is obvious that people cannot access essential services and food. Water in particular was the major challenge. The cluster around taps to get drinking water is a high risk to the COVID-19 infection. Social distancing could be hardly adhered to and hence people had to be dispersed. If the majority of the water bottling and sachet companies were online, most people could have just paid online for drinking water to be delivered at their doorsteps. The Government could have easily given passes to these companies to deliver safe drinking water to the majority of the populace. A lot more innovation can be done around several other essential services and most people can easily stay at home and depend on the delivery system to operate a door-to-door service in the proper protective regalia to avoid the spread of this infectious disease.

Beyond a total lockdown and the COVID-19 pandemic, payment system innovation in Sierra Leone has to look at more ways to introduce contactless payments for goods and services across various sectors of the economy. The heavy cash-based transactions are mostly done with petty traders, market women, transportation services, etc. These are the people that interact the highest with the populace and can spread this infectious disease much quicker through the use of banknotes.

Banks should also play their part in protecting their staff during the current crisis, especially for frontline staff who interact with customers on a daily basis. Branchless banking could be our COVID-19 reality. Our systems must be designed to have such functionalities and hence reduce the amount of staff in the bank during such a crisis. Only essential bank staff who manage and monitor transactions and platforms relating to digital banking processes should go to work.

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Local banks are most challenged when it comes to digital infrastructure expenditure as all the cost will be incurred wholly and locally whilst the foreign banks mostly get ready-made solutions from their group offices with the cost shared amongst their various country offices. It is worthy to note that these banks may leave should these types of crises escalate beyond the imaginable. The civil war was a clear case study, even during Ebola most foreign offices shutdown and some executives left or relocated.

The achievement of a cashless or cash-light society in Sierra Leone is without any doubt an uphill task as the economy is still struggling and banks are not making much profit to easily allocate funding to deploy digital banking infrastructure. The government should, therefore, look at ways to partner with local Sierra Leone banks to reduce some of these costs so that an effective, reliable and sustainable contactless banking infrastructure platform can be implemented.

The next Coronavirus disruption should meet us fully ready for business. Experts say there is going to be another likely global pandemic worse than the current one in a few years. Now is the time to think through to help save our people and the economy from the impact of such potential risk. Regulators must embrace, encourage and review several contactless and digital banking solutions to place the country on the right track before we fall short again. More than three days of quarantine cannot be sustainable for both human lives and the economy should we fail to prepare earlier than later.

It is better to have the solutions and not needed than to need the solutions and not have them.

© Sallieu Kabba

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