After decades of unsuccessful efforts to modernise its operations and business processes to meet global banking standards, it is remarkable that the Federal Mortgage Bank of Nigeria (FMBN) has finally broken the technology migration jinx and is now set to go fully digital.

And it took the last month of the year 2020 to kick-start this historic process. On December 3, 2020, the Minister of Works & Housing, Mr. Babatunde Fashola, announced the approval of the Federal Executive Council (FEC) for the FMBN to procure and deploy a core banking software application at the cost of N487.39 million from Messrs. Fintrak Software Solution.

The implementation of the banking system would be significant and far reaching. Once operational, it would help the FMBN to create an integrated technology-driven platform to activate its operations.

On the back of the digital service provisioning eco-system, the bank would then tackle the many systemic challenges that it has had to contend with over the years due to the largely manual nature of its operations.

Real-time access to NHF Transactions

Top on the list is fixing the longstanding inability of the Bank to update, in real-time, subscribers’ monthly contributions to the National Housing Fund (NHF) Scheme.

As manager of the NHF Scheme, a pool of funds comprising 2.5 per cent of subscribers’ monthly salaries that is deployed towards delivery of affordable housing, the FMBN has drawn much flak from workers, stakeholders, and the general public regarding its handling of the scheme.

Much of this is because of the multi-stakeholder structure of the NHF operations. Ideally, employers in the public and private sectors are expected to deduct 2.5 per cent of monthly income of workers who are registered with the NHF Scheme and remit same to the Bank.

However, the reality is different. Subscriber complaints and investigations over the years have shown that many employers are dutiful and prompt in shaving off the 2.5 per cent of worker’s monthly salaries but sluggish and unwilling to remit same to the FMBN.

There have been several cases of workers who after years of working and seeing the monthly deductions from their pay checks, are heartbroken to discover that only a paltry sum has been credited to their accounts with the National Housing Fund because their employer has either failed to remit or remitted only a portion of what was deducted

These have resulted in instances of subscribers complaining that deductions made by their employers from their salaries are not reflected in their NHF accounts due to non-remittances by their employers to FMBN as well as inability to promptly access details and information on the status of subscriber accounts.

The good news is that these issues would be history once the core banking software is fully functional. The FinTrak Subscriber Management Component of the application was specifically designed to fix them to ensure a smooth subscriber and customer experience for all workers that contribute to the NHF Scheme.

This means seamless back-end integration with employers in a way that makes deductions from workers’ salaries and remittances to the FMBN more transparent to all stakeholders.

NHF subscribers will now get real time alerts on all transactions on their NHF Accounts and stay informed on the status of their accounts.

Reduced Turnaround time for mortgage loan applications

Another equally important issue that is vital to the operations of the FMBN that the core banking system would help to redress is the time it takes for subscribers to access credit from the bank and in the process upgrading the overall customer experience of NHF subscribers.

Before 2017, when the Ahmed Musa Dangiwa-led Management of the bank took office, it used to take as much as twelve months or more before eligible NHF loan applications were fully processed, approved, and disbursed to applicants to enable them to purchase their homes.

Much of the delays were caused by the manual process of documenting and performing due diligence on loan applications that defined the relationship with Primary Mortgage Banks, which FMBN, operating as a wholesale back-end mortgage finance institution, uses as fronts to lend to NHF subscribers.

These are some of the systemic issues that the FinTrak Credit Risk Management System, an integral component of the core banking system, is designed to resolve.

The FMBN management projects that the software application would streamline the multi-layered mortgage loan process steps and eventually crash the time it takes NHF subscribers to access credit to less than two weeks when implemented.

This implies faster Mortgage loan application processing and disbursements as well as enhanced customer satisfaction and experience.

Besides that, the attainment of a two-week turnaround time for processing mortgage loan applications would be an outstanding addition to the progress already made by the Dangiwa-led management in this direction over the past three years.

Since assuming office in 2017, Dangiwa and his team had rated improving turnaround time as a top Management priority. Within the first twelve months in office, the FMBN Management organized a Management Retreat in Kano with the primary goal of exploring ways to cut down loan processing red tape.

The retreat witnessed a comprehensive review of existing processes, identified redundant areas and ways to make them more efficient.

This was followed by a slew of process improvements that helped to shorten the loan processing time to about three months. The improvement from over 12 months to three months was in itself, a significant leap forward.

By taking it further down to two weeks, the banking system would cap this achievement and solidify the legacy of the Dangiwa-led management as having done the most to improve FMBN Business and Customer experience and satisfaction at the nation’s apex mortgage bank.

Seamless Business Transactions

Besides improving turnaround time, the FinTrak Credit Risk Management System by eliminating laborious manual documentation in the credit application and processing brings several other operational improvements to FMBN operations.

This includes aiding digital credit scoring and appraisal for improved accuracy; improving visibility of NHF subscribers’ credit performance in the records of Primary Mortgage Banks; as well as ensuring early warning to Primary Mortgage Banks where likelihood of delinquency is observed on specific subscriber loans.

Equally noteworthy would be its ability to ensure better management of credit collaterals and online interactions with stakeholders and collateral valuation entries and alerts.

The application also includes the ability to help the bank to achieve efficient document management systems by enabling it work paperless in loan documentation, appraisal, and disbursement, remediation, and loan recovery processes.

Standardisation of Financial Reporting

Standardising financial reporting is another key improvement that the core banking solution would help the bank achieve. For an exceedingly long time, FMBN owners including its regulator, the Central Bank of Nigeria (CBN), the investing community and other key stakeholders in the housing sector saw the FMBN as not an ongoing concern.

This was because previous managements had stacked up years of unaudited accounts. This impacted negatively on the bank’s reputation, soured investor, and stakeholder confidence in the Bank’s ability to account for funds under its care.

It is important to state that the Dangiwa led Management have done a sterling job of fixing the financial books of the bank. As of 2017, when the new Management took office, FMBN’s financial accounts for the period 2013 right onto 2017 were left unaudited.

Today, 2013 to 2015 accounts are already approved by the CBN while those for 2016 and 2017 have been concluded and submitted to the CBN for approval. The FMBN Board has already approved the bank’s 2018 financial accounts and audit is set to commence for 2019.

This is remarkable work that must have taken so much effort due to the largely manual mode of financial reporting that the FinTrak Finance Module, another key component of the banking system is set to fix.

Once implemented it will aid the bank to keep proper records of its financial transaction of payments and receipts, general ledger etc that will provide the base for financial reporting.

Standardization of reporting requirements give business entities the same leverage international companies have as well as greater level of confidence by market operators, potential investors, and analysts.

This Integrated solution will allow for quick decision making by management by providing various management and financial reports in record time. The automation of financial reporting would eliminate many of the mundane and time-consuming processes associated with manual accounting.

It would help to improve audit readiness, promote reliable consolidation of financial statements, team sharing and optimized collaborations, electronic review and monitoring while ensuring transparency and credibility of financial data.

The entire process of preparing accounts becomes faster and reports can be generated instantly at the click of a button.

Internet Banking Capabilities, Improved Treasury Management and Business Intelligence

Other notable components of the system include the FinTrak Internet Banking System that will provide seamless NHF customer contributions and loan activities from the comfort of their homes.

It will allow NHF Customers to make remittances to the Bank by leveraging on Internet technology to make the payments through the use of digital platforms such as Mobile phones, laptops, tablets, Personal Computers (PC) etc.

Others include the FinTrak Treasury Management System for better management of the bank’s activities as it relates to investment and Data Warehousing and Business Intelligence Platform to drive business analytics and provide data driven decision-making process using our Big Data to achieve insight to key business objects and trends for better strategic management and profitability

The Treasury Management Module of the Core Banking is particularly important because it will help in aggregating financial and investment data and improves its accuracy, reduce the Bank’s exposure to credit and market risk and strengthen security.

Commenting on this development, the Managing Director/Chief Executive Officer of the FMBN, Arc. Ahmed Musa Dangiwa, who has led his Management team to achieve this historic feat said,

“I am really excited that we have finally secured the approval of the Federal Executive Council (FEC) to engage the vendor and begin implementation of this important core banking application that would redefine and underpin the future of FMBN corporate and business operations. I wish to sincerely thank the Hon.

Minister of Works and Housing Babatunde Fashola, SAN for his commitment to fixing FMBN and his strong support of our efforts to put technology at the core of a new and reformed FMBN that is more responsive to our subscribers, owners, and stakeholders.

This particular aspect of the system, the Subscriber Management Component, will fix longstanding issues that impinge our capacity for optimal performance, totally alter the way we manage subscribers and help us to give them a brand-new experience when they engage with us.

It is comprehensive because it will also enable employers, who are registered with the NHF scheme, to seamlessly remit NHF contributions by their staff and submit the respective remittance schedules electronically on monthly basis which will be electronically credited to subscribers accounts without manual intervention”

John T. Ikyaave is a housing policy analyst based in Abuja

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