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How ease of lockdown has shown Nigerians’ poor acceptance of online, digital banking system

ONLINE images of people crowded in banks in various parts of the country may have shown that Nigerians are yet to completely embrace digital and online banking system in Nigeria. 

After five weeks of lockdown in Lagos, Ogun and Federal Capital Territory (FCT), the federal government ordered the ease of lockdown on 4th May.

There are video footages of commercial banks in Abuja, Lagos and Ogun states that were packed full of customers, who appeared unmindful of social distance protocol.

Access Bank Ikotun, Lagos
Photo Credit: Tope Bisade /Twitter

Even micro-finance and development banks with fewer cutomer base recorded high number of visitors relative to their size.

Digital banking is part of the response to the cashless policy of the federal government.

The shift from traditional to digital banking has been gradual and remains ongoing, and is constituted by differing degrees of banking service digitisation.

Currently, in Nigeria, there are over 22 commercial banks that serve customers nationwide and all of which have mobile application platforms that serve customers from their location.

Currently more than 50 per cent of commercial banks today offer online services, including opening accounts online.

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But many customers still prefer face-to-face banking transaction, especially because of the increasing cases of cyber crimes.

The mass appearance of customers in various banks on Monday  has shown that Nigerians are yet to embrace digitisation in the banking sector.

Guaranty Trust Bank Area 3, Abuja
Uthman Samad /TheICIR

The world today is confronted by the emergence and necessity of digital banking in financial services.

In developed economies, fintech has posed a threat to established major retail banks as their speed to market and digitisation of banking services draw a large following due to their ability to make everyday banking more accessible.

In Nigeria, however, digital banking plays a much more significant role than fintech and retail banks.

Digital banking brings a world of opportunity to address pressing issues in access to finance, especially to a young and internet active population as well as growing middle class.

Both retail banks and fintech in Nigeria are using digital innovation in banking to solve problems in an exciting and modern way.

Peter Egun ATM officer for Zenith Bank Lagos who spoke to The ICIR said; ” Nigerians have always preferred to enter the bank for transactions. We daily educate them on the use of mobile applications but it is hard for them to just stop coming to the bank.”

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Fashina Adeleye Assistant Manager Keystone Bank said: “We have concluded after different survey that people like being attended to physically, there are cybercriminals online these days and our customers are scared of putting their card details online.

“So as a bank what we are currently doing is tightening our cybersecurity system, our customers’ details are safe online at the highest level.”

Cashless Policy in Nigeria

The Central Bank of Nigeria (CBN) introduced a new policy on cash-based transactions which stipulates a cash handling charge on daily cash withdrawals that exceed N500,000 for Individuals and N3,000,000 for corporate bodies.

The policy on cash-based transactions (withdrawals) in banks, aims at reducing (NOT ELIMINATING) the amount of physical cash (coins and notes) circulating in the economy and encouraging more electronic-based transactions (payments for goods, services, transfers, etc.)

The CBN said the aim for the policy is to drive development and modernisation of our payment system in line with Nigeria’s vision 2020 goal of being amongst the top 20 economies by the year 2020.

An efficient and modern payment system is positively correlated with economic development and is a key enabler for economic growth, to reduce the cost of banking services (including the cost of credit)

And drive financial inclusion by providing more efficient transaction options and greater reach, to improve the effectiveness of monetary policy in managing inflation and driving economic growth

Financial Inclusion

According to Stears Business, a financial reporting firm showed that the importance of access to finance cannot be understated; a well-functioning and inclusive financial system has the benefit of poverty reduction through the provision of financial safety-nets.

Yet, financial inclusion is still an issue in Nigeria—only 30 per cent of adults have a formal bank account.

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GTBank has had success on this front with its mobile money bank, Bank 737, where mobile phone customers can make payments without access to the internet by dialling 737 through USSD codes.

Similarly, in 2014, Diamond Bank partnered with mobile network MTN to provide mobile bank accounts. Diamond Bank gained 7 million new customers from this venture at a low cost by benefiting from several pre-existing MTN agent locations to act as money agents for Diamond’s Y’ello bank.

With the recent merger, Diamond’s success is now Access’s win.

WEMA Bank produced Nigeria’s first totally digital bank through the bank app ALAT, with no physical bank branches, customers submit all their details through the bank app and can create a bank account in minutes with a physical card delivered to them in a matter of days anywhere in Nigeria.

Digital innovation, like WEMA’s ALAT understands the growing appreciation for speed and a seamless banking experience amongst young adults in Nigeria.

Seventy nine per cent of ALAT’s customers are between the ages of 18 to 35 years, and only 6 per cent of their customers are above the age of 45.

Banks are continuing to provide alternatives to visiting branches.

United Bank of Africa’s artificial intelligence chatbot, Leo who checks balances and buys airtime is an example.

And a soon to be launched KudaBank is creating Nigeria’s second digital bank.

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