A day with Frank Atat, one of the masterminds behind the fintech-bank collaboration in Nigeria

Frant Atat was one of the few Nigerian banking executives in fintech before it became a fad. When he started, it was different from what fintech is today; back then, it was called business solutions. 

Most Nigerian fintech founders who’ve had to integrate with traditional banks have encountered Frank Atat, first at Providus Bank or now at First City Monument Bank, where he currently serves as the Divisional Head of Payment and Solutions. He has been instrumental in changing the digital landscape and making FCMB a renowned force in Electronic Banking. In addition, as the former Group Head of e-business, his leadership earned Providus Bank the “Best Bank in POS Transactions Acquiring Efficiency Award” in 2019 and, just before he left, the “Fintech Bank of the Year 2022”. 

With more than 20 years of experience in the Nigerian banking industry, Frank Atat specialises in payments, digital products and services. In this interview, I got to sit down with this remarkable man and learn about his early career and entry into tech, his philosophy on working with founders and the early days of fintech.

Ben: My first question is, how did you get into the banking space? When I looked through your profile, I saw you have 20 years of banking experience. That’s incredible. So tell me, how did your banking journey begin?

Frank: Getting into the banking space was by accident. I originally wanted to be a researcher because of my background in Sociology and Anthropology. I thought that was what I was going to do. But as a young man looking to create a niche, you take advantage of any opportunity that comes your way. I got into the banking space and jumped right into payments.

First, there was Valucard. A pre-funded card scheme that allows funds to be preloaded onto a card from a bank and utilised at a merchant’s location. Soon after, I joined Gulf Bank, now UBA, when the evolution of electronic payments started between 2004/5. 

A lot of banks were interested in the electronic banking business back then. We started deploying terminals and ATMs, especially when Interswitch came on board, totally changing the entire ecosystem. Next was a move to Equitorial Trust Bank and from there to Skye Bank, where the evolution of the e-banking business truly took off. So, what we see today as fintech was called business solutions back in the day. 

We designed solutions for different businesses. Digitalisation wasn’t a word then; we called it Optimisation. After a while, I ventured into mobile banking, POS and ATMs for a bit - touching on different aspects of the business; I acquired those skills and tried to specialise in them. So, when I moved to FCMB to facilitate mobile banking, these skills came in handy at the time. FCMB was looking to drive customers to alternative channels, which were the channels that were available then.

The bank was also trying to reduce queues in the banking hall and increase customer onboarding on these channels. Before you knew it, I was visiting schools to run campaigns, meeting businesses to talk about Optimisation, and contacting technology companies to provide enterprise solutions; everything was becoming exciting, so I got interested. All of these crystallised into fintech today because people/payment were evolving into different verticals. 

As a result, banks started investing a lot in payment solutions. At a point, banks were building owned payment solutions for various businesses and schools that desired electronic payments and portals for students to make payments. At that time, Intercontinental Bank was seriously at the forefront of these changes. A few other banks were also following in and being part of these changes. So, long history, but a lot has changed. 

Ben: You mentioned partnering with a bank to roll out a card; that’s what fintechs do today. So, what was the Valucard at the time?

Frank: What you have as Visa and Mastercard today was what Valucard was at the time. It was a scheme that connected all the banks to provide all the infrastructure for card issuance.

Ben: Did CBN have any licences at that time?

Frank: There was no licence then to run payment by technology partners. It was more for the scheme owners who were there to connect with all the banks and provide the service leveraging the infrastructure. So, most banks connected to value cards for that purpose. It was pretty rudimentary because, for every card the bank issued, they had to have a device on the system to pre-fund those cards for customers. Then, customers will take those cards to the POS to make payments. At one point, an ATM that allows one to get cash from a pre-funded card was launched. I don’t think that took off until the digital revolution in the banking industry took off, and then Interswitch came in.

Ben: My most recent engagement with you was at your former employment with Providus Bank. I remember that, around 2018, when I started working with fintechs, Eyowo partnered with them. While working at Stitch, we partnered, too. And so many other fintechs were partnering with your current employer, too. What do you think has made them and FCMB the preferred banking partner of fintechs?

Frank: It came first from understanding the ecosystem, analysing what was lacking, and being able to provide the proper support and solution that everyone desired. It was also quite insightful that you can converse with young people interested in providing financial solutions and get the sense that they genuinely understand what they mean. That’s what makes us different. Because when you are conversing with these guys, there’s always openness. We tried to understand what they were saying and be open-minded about what solution they wanted to provide. It took off from there.

The feedback we got afterwards was that people came for our meeting, expecting to spend one to three hours, but understood what they wanted in 20 minutes and were happy to help them. That agility, that straightforward understanding, and the insight to provide the solution they needed put us ahead of competitors. Because, they say to us, we went to this bank, three hours they could not crack what we wanted. Even when they do, the layer of request approvals is bureaucratic. Here, we are talking to Frank Atat, and he’s able to make a decision immediately and make that work. That sort of put them at ease, gave them the comfort they desired, and allowed them to see that whatever they discussed with us would happen as stated. That was how we launched. From one person to the other, to the next, next and the next, nothing changed. It was always the same experience.

Ben: How many fintechs would you have worked with so far if you could do a rough estimation?

Frank: Over a thousand; I mean, in different forms. I don’t want to use the word fintech loosely, but many people came up with other things, and as soon as they found out that this was the bank to speak to, it was easy. It was also striking that they never came and left the same.

Because even if they come up with a solution, there’s an understanding of what works and what doesn’t work, having worked with so many people. It made it easy for them to have a conversation with us. When they speak to their partners, who referred them to us, whether at FCMB or Providus, there’s a fair understanding that when you come, the conversation will be different, or you get some advice on what to do next. Also, we didn’t claim to own any of the solutions, which they were not happy about with the other banks they were talking with. We could do everything they wanted and use us as a testing ground. When that is done, we can go to the market together. It was on the back of that that they were happy to talk to us. At that time, I was taking meetings at 7 or 8 at night, talking to different partners. And sometimes, it could go on to as late as 10 pm, especially with partners outside the country. It was pretty interesting that all of that was happening because we were open, decision-making was agile, and there were no blockers regarding what was required as long as it was within the regulatory framework.

Sometimes, there were products we would discuss, and I would say no, the market was not ready for this product. Because I understood our cultural behaviour towards technology, even though it was payment-related, you don’t want to support someone who would go and cause problems. Those problems eventually came, and it was as if you were anticipating all that. So yeah, it was interesting.

Ben: We also noted that compared to the FUGAZ or the Tier 1 banks, FCMB and Providus seemed more willing to learn, relearn and adapt to the current environment. How has that affected your bottom line or the transactions you do? You can also give a rough estimation of what the relationship between fintechs and banks has produced.

Frank: It’s significant that at the height of the attention we were getting from Fintechs, we are processing transactions that drove the industry mad in volume. I don’t want to call a number, but to be honest, NIBSS took note because this was new, and they saw us doing from 100 million to some billions and were wondering how. In the first few years before other banks caught up, the transactions we were doing were so significant that NIBBS eventually called us and realised that partnerships with fintech were driving all the transactions. We probably lost out to the big banks when they realised this was a money pot for them and came dangling incentives to those guys. I mean, we couldn’t keep up. But those first few months were quite significant. Using the vocabulary they used today, we were doing from 1x to about 15x in a matter of months, which kept NIBSS awake.

It was the same way when we were deploying terminal and client transactions. We moved from the 18th to about the 4th or 5th bank in the ranking of NIBSS transactions, winning the NIBSS award for the most efficient bank on POS transactions.

Ben: For the fintech founders and entrepreneurs coming on board, what will you tell them to look out for specifically when selecting a banking partner? I know you’ve already explained how you made your employers stand out, which are understanding the existing ecosystem, response agility to future requests, openness and insights, but if you stop and think from the lens of a founder who is just launching a new fintech, how would you recommend that they go about selecting their banking partner?

Frank: I recommend they look for a very flexible partner when it comes to understanding the scope of your business. Look for one that can provide you with the kind of coverage the business needs and shield it from regulatory issues, which means that they would have given you proper feedback and Advice on the way to go. Most importantly, look for a partner ready to support you with go-to-market support for that product. When conversing with any financial partner, you need to know whether they are in sync with you regarding the direction you want to go.

Decisions at the highest level are very critical, too. If you are speaking to a financial partner, ensure the Senior Executives understand what you want to do and can support you. It won’t make sense to start a meeting and then start carrying you from one table to another; reach out to that stakeholder who understands your business and can support it. As I said, that was what worked for my team then and even now at FCMB. There weren’t layers because the decision-making was agile. I could take those meetings, agree on what to do, and move forward to execute it. I think that was what they were crazy about back then and what made some people who they are today. So, any new founder who has an exciting product and wants to partner with a bank needs to find an influential stakeholder to take that thing to the execution stage straight; there is no need to start going from table to table. Financial partners today are looking for agility, flexibility, and decision-making at the top level that will help them scale.

Ben: If I wanted to paint a journey for a founder, let’s say they’ve found the bank they want to work with, how do they go about reaching out? What are some of the stages you expect them to go through? For instance, should they go to the partnerships team? Should they expect to go through KYC?

Frank: Most banks now have a partnership team, but know in your mind that you are going to go through a compliance process, a risk assessment process, and a product review process (to know if the product you are bringing carries the weight that you think it carries and if the market will accept it). Once you are done with those three things and can scale, having probably asked for some relationship, they can move you to tech to start the integration process. Prepare everything that will make it easy for you to have a conversation, meaning that you have all the documentation available if you are a registered business.

If you are going through a compliance process, you must understand whether that business requires a license. If it doesn’t, you are transparent enough to say, “Advice me here: I don’t have a licence for this business. What do you suggest we do,” or “What can we work around? Do we sign an MOU or a standard agreement? Do we have the terms of the agreement in place?”

Those things will make things easy because the licence comes with AIP, and AIP expects you to have done some transactions already. So you say, “Oh! I have an AIP in process, but you know that part of the condition is that I must be able to do some transactions to show. So, In that period, can that licence suffice for now, or is there any way you can give me a 2-month moratorium for me to go live?” At that level, compliance will say this business is not risky enough to warrant us not giving you those two months’ moratorium to run. So, clarifying your journey to get that licence would be best. But if it’s not, you also convince and educate them to say, “Oh! This business is consumer-facing; it doesn’t require a licence. I only need a connection with the payment process to make accepting payments easy. Therefore, I think it’s something we can run.”

Because compliance looks at things from different angles, from experience, anytime I have a conversation with my compliance team, they always find a way to provide some clarity around the business, whether I should make sure those guys get licences or proceed or provide alternatives, making it easy for me because I already have experience and can point to areas where those licences will be optional. But for a founder who is going to the bank for the first time, you also must have a global perspective around what type of business you are running and how risky or not risky it is so that when they ask you questions, you can answer them quickly and move on with it.

Ben: In terms of disputes, how do you manage it? From the banking side, how is that relationship managed if a dispute arises with one of your partners?

Frank: What we do is to set up support groups for businesses. Partners need to do the same so that the support groups then liaise with each other to provide the kind of resolution we require. But there is a standard resolution matrix already that those partners also need to key into. But what helps sometimes is if you don’t have complete clarity around that, you can get the bank to support you with training. That’s what we do, too. I don’t think most banks did it back then. Sometimes, we do compliance and support training to share some of what you might expect on feedback that might disrupt your business and how prepared you are to handle them. We set up a support group for each of those businesses or have a general support team available to support the business. Today, it runs 24/7 and is accessible via specialised support email groups. Then we run on maybe Skype/Slack groups where people can log in all of those requests immediately and get feedback. But there are different channels to use now, to be honest.

Ben: What are some of the pitfalls banks face when partnering with fintechs, and are there ways to avoid those challenges?

Frank: Some businesses are unsecured, while others are risky. Because banks are highly regulated, they are cautious with the kind of partnerships they go into. FX today is a no-no. You can’t define fully what that is. Remittance is another thing. It could get you into trouble if you don’t understand it clearly. The regulators say you can’t do remittance if you are not licenced.

There are many risky businesses, but you won’t know until things crystallise. Some partners will come to you saying they are trading and it’s risk-free, but in the end, it turns out to be a Ponzi scheme to defraud customers. Because they were carrying a bank ID, customers would go after the banks to say it was the account they used. I remember before CBN banned crypto, people who were doing POS business went into crypto. We didn’t know because payments were still being made. At the end of the day, when CBN shut it down, we started sifting and filtering all the businesses. We realised that those who came and said I was doing merchant registration and POS business were also into crypto. We also had to shut them down and not use those accounts.

There are many pitfalls, but the most important thing is that the MEMART (Memorandum and Articles of Association) is critical in registering the partner. If you feel this is what you will do next, why don’t you update your MEMART and register another business that will handle that? Today, getting a licence is not as difficult as before. But make room for at least 10% or 20% of a real risk situation because it will crystallise when you don’t know it. When it does, you need to have been prepared for it. You must also constantly review your partnership businesses because their transactions will show you whether what they say they are doing is true or not. Somebody says he is selling airtime; you don’t expect that guy to be doing 20 million every day. You got to ask him, guy, what are you doing? If he’s honest enough and tells you, you can advise and tell him what next to do. Then everybody is happy.

Ben: That’s true. Constant review is necessary because people switch after getting everything they need from the bank. Let’s examine the regulator’s stance toward the fintech and bank partnership. Are they pro, neutral, or against? Please give us some real-life insights into that.

Frank: Are they pro? Of course. Are they against it? No. They want things done correctly and adequately, that’s all! I think they are empowering and encouraging a lot of the partnerships. They want you to work with them. Let them know what you are doing; they are happy they get the kind of cooperation that will allow them to have insights into these numbers. They want to be able to say the system accounts for X number, and yes, we can track it to this level. Remember that you can also use this process to do money laundering, terrorism financing and all of that, so they want to be able to track to the last mile that your transactions are genuine. They are not against it; they are pro. What needs to happen is some further stretching of the collaboration between everyone so that communication can be shared totally and transparently for everybody to be happy. I used to think, “Oh! These guys don’t get it”, but I understand now that from the economic perspective, they need these numbers to tell them what they want to see so that they can plan.

Ben: If you could choose between these two things, which would it be: start a fintech or a bank, and why?

Frank: I would start a fintech because I understand it and can leverage my banking experience to make it work. My end goal would probably be to start a bank, though, because a bank would help manage the liquidity. However, I’ll start with a fintech because the regulation is less stiff than a bank’s. So it’s easy for me to do a lot of the iterating I want to do around solutions I’m sending into the market.

Ben: That’s interesting! Let’s look at fraud in the banking and payment industry and the scale of the fraudulent transactions. Can you contextualise the types and areas where frauds are prevalent?

Frank: Ah, I’ll try not to generalise, although that will be tough for me not to. The fraud is not really from the fintech; it’s because certain loopholes in the system are not adequately taken care of, or the system does not have the necessary security features to protect it against fraud. The worst I’ve seen is when somebody wants to enter a new business, say agency banking, and hasn’t properly assessed the system or done due diligence. Some people wait for that system to go live so they can hack into it to take out funds. I think that’s the one primary reason that creates a lot of setbacks for those businesses, and many people doing agency banking have fallen for those kinds of hacking. It happened last year to a major agent banking company. The same scene and mode of operation: they waited for them to go live, knowing that they would not have done proper due diligence, and took advantage to siphon funds out of that system.

Another loophole is the due diligence that the fintechs don’t do with their customers. The customer will say this is what I’m doing and then create a Ponzi scheme that people will fall for. They will use the fintech platform to perpetrate those frauds, and the banks will pay for it. That, again, is major. 

The other one that is very critical is what happens from the bank’s side, where people take advantage of customers’ ignorance. They believe it’s a bank; they leave their information lying around, and it’s picked up. Sometimes, banks start to confess to having taken advantage of that.

I’ll give you a very critical example. I’m not sure anybody in the industry knows this, but it happened to a second-tier bank. A young man walked into the bank’s branch. He smuggled a register out of the bank - You know, the register a bank keeps for people who paid money into their accounts, where depositors would write their names and account numbers and sign off on it. He used the registers to do permutations and started debiting people’s accounts because there’s an account number, name, and probably a phone number, too. I mean, those three parameters are enough for you to create some synonyms or fake identities. So you’ll say it is that bank’s fault because the physical security wasn’t great? Yeah! But at the same time, who would have thought that someone would smuggle the register? The bank kept the record to validate the people who paid in money and confirm the transaction status, but someone else thought about that as a way to deal with customers. 

Sometimes, people are free with personal details because they trust a friend or loved one. A husband took the wife’s card to the ATM, withdrew money, came back, and put the card back where the wife thought she had kept it safe from the husband. The woman went to the bank and was screaming. After checking the ATM camera, they discovered it was the husband. To her, it was unbelievable because she never thought her husband would do that. Someone took the father’s card, made withdrawals and put it back. The father came to the bank and began to threaten the staff. Bank officials showed him the camera, and he saw the son there. But the son will claim he doesn’t know anything. There are so many instances of people who stole their loved one’s chequebook, tore off a leaf from the middle to withdraw, and the man doesn’t know. Yeah, what can the bank do? So, when I hear people discuss in public, I smile.

Today, with cybersecurity and two-factor authentication, the onus is on the bank/fintech to educate their customers on protecting their information. Many people are doing that now, but it still won’t stop fraud.

Today, steps are being taken through further collaboration with different entities to prevent fraud. BVN has come in to stay - it is now the authenticator for payment; perhaps that will further reduce the fraud.

Ben: there are even loopholes in BVN as well.

Frank: People have 5, 6, or 7 BVNs in different banks because the system still needs to be centralised enough to pick duplicated identities. It’s a serious problem with payment. As payment continues to expand, those things will become very critical. NIN has come in again; maybe it will solve these issues, but we don’t know yet. But I think NIN will play a consequential role in significantly reducing fraud and fraudulent activities if we can centralise it with BVN, as it can remove all the duplication in BVN today. We need a think tank to look at that. I think the fintech has a significant role to play by working with the bank to ensure that onboarding customers is strictly how it should be done. Sometimes, you can’t even trace the person you have onboarded from the fintech side because they are faceless. So, there’s a lot that we need to do to reduce fraud. 

Ben: Geographically, I know from the fintech I’ve worked with that some parts of the Middle Belt and the North - like Nasarawa or Kano, are notorious for some of the frauds we see. I don’t know if it’s because of their numbers. How are they able to do all of these things? It presents a dichotomy of what we are claiming: in those places, the level of literacy is low, but then they are literate enough to perpetrate fraud based on some of the data I’ve seen in the past. Do you have any insights on that?

Frank: You’ve said it. You might think it’s a question of illiteracy, but no, it’s not. It’s a common, sensible way of finding and exploiting people’s weaknesses. You don’t need to be educated or intelligent to know that this person who is always coming to me and calling his PIN in the presence of everybody can be taken advantage of. There’s even more trust in the community than outside because once they feel that you are the go-to person, they can hand over their lives to you and expect that you treat them the same way. But someone who wants to do you harm will not think that way. The thing is constant education from even the people around.

Proper financial inclusion will require engaging the village heads and making them responsible for anything that happens. I’ve seen this happen in some markets where associations sit together and decide that if you collect a loan and defraud, you know that you will not get it any more. To solve that issue, they ensure they can authenticate that the person collecting the loan can repay it. If not, it becomes their responsibility to pay that loan so that they continue to enjoy that service.

It’s the same way, making the village heads responsible. I’m sure you know that they will fish out the culprit one way or the other. That’s why, in the North, it’s that prevalent because of trust. Some people work in Lagos and send money to their families in the North. They trust somebody in that place. They go to an agent and ask him to transfer to another agent, and then ask their family to use their card to collect the money from the agent. Suppose you can identify those people and incentivise them to pass on the necessary information. In that case, it will reduce in the North.

Ben: My final question is, what do you think is an untapped area in the banking and fintech space? On the back of that, you can now talk about your predictions and the trends you expect to see in the coming years.

Frank: There’s Agric, and there’s distribution. Distribution here are the FMCGs who are everywhere today. There are also the market women who need their processes to be digitalised so we can bring them upstream, and the informal businesses such as the panel beaters, mechanics, hawkers, etc. It’s interesting because if you can digitalise payments and bring those people on board. You’ll see how much change will happen in the economy.

On the bedrock of that, my prediction will be that cash will not go away based on the CBN policy. It will still be there but won’t be as wild as in the last couple of years. Many FMCG businesses will come upstream, meaning they will try to digitalise their cash-based businesses so they don’t have to pay all of these costs. Stockbroking will enjoy a lot of patronage because they would have to digitalise their process and pick it up again.

People will look for different avenues to invest their money because they’ve been beaten black and blue by Ponzi schemes, going back to better-performing stocks. I say that because even the Trove and Bamboo of this world will benefit because people can access local and international stock markets. Informal sectors will pick up because many agents will now turn from agency banking to providing other services. I think that’s where we also need to focus on. How do we leverage the network to offer other banking services that will make these guys bring more people to the agency locations and then find a way to open accounts for them? 

Maybe farming and Agriculture will pick up as well. You can see that many farming schemes have created credit using products or produce as collateral for them. There will likely be food shortages because of the environment. However, people will still eat and wear clothes, and fashion will remain steadfast. 

Final thoughts

We talked about how founders need to be better prepared. The investors’ environment has become slightly stiff, but people will still write checks, and the investors will demand more. So, the KPIs have to be very stringent and solid. It won’t be just the numbers alone. Any investor who wants to come in will make money; they will see significant progress in investment because we will be thinking more about empowering the different businesses that need to come upstream.

If you are looking into supporting the farmers, that’s a huge space that requires a lot of payment processes to happen. A lot of produce still goes to waste because of storage; it’s a struggle. People want to eat meat, and the guy selling cattle no longer wants to carry cash. How does he digitalise that process so that when Benjamin wants a cow in Lagos, he can get one and pay the inner rural cattle rearer seamlessly? From what is happening, you can see how much the Chinese enjoy making headway in Agriculture and how the Portuguese enjoy making headway in the fruit market because of this experience. All of that needs to come upstream. 

How do they come upstream? Both fintech and banks need to start thinking about that and making investments in the technology that will drive all that process. We need to be able to make payments to a merchant in Kano from a customer in Lagos without anyone leaving their home or farm, making doing business a lot more enjoyable for everyone.