Nigerian Banks, ATMs and Customers: Matters Unending

The evolution of the Nigerian banking sector as a result of the Central Bank of Nigeria (CBN) reforms within the last couple of years with particular reference to recapitalisation was welcomed by Nigerians with motley opinions interlaced with a lot of cynicism and goodwill. The (re)capitalisation exercise which was just one of the various items of the reform agenda as spelt out by the professor at the helm of affairs of the Nigeria’s apex bank, generated a lot of moots (I think capitalisation was it because it could not be said that a lot of ‘banks’ were capitalised in the first place).

Debated arguments ensued from all facets and sectors of the Nigerian public as both professional and recreational economists were all assaying to outperform one another in demonstrating their (un)reasonable persuasions to buttress their stance and to buy the inexorable party over. The unfortunate Nigerian who could not get any opportunity to and/or did not participate in the squabble (either due to his ignorance, nonchalance, dispassion or total disbelief in the Nigerian system) so as to advise from his ‘wealth of experience’ notwithstanding, hoped for the best either way the pendulum of the recapitalisation exercise swung.

About 3 years after the process was initiated, 25 banks evolved either from mergers, acquisition, reconsolidation, repositioning, realigning, et cetera (the list of the recapitalisation patois is endless) out of over 80 banks which were adjudged to be a conglomerate of finance kiosks. With all the arguments and counter-arguments that characterised the recapitalisation exercise with its resulting resurgence of the 25 banks, the customer should be better for it. Irrespective of any school of thought about the new face of the Nigerian banking sector I believe both proponents and opponents of the reform and even the banks ultimately want to make sure “the customer is king”. The underlining fact that should inform any posit with respect to the CBN’s reform agenda is to enhance credibility of the banking sector, increase customers’ satisfaction, empower businesses at all levels, buoy the Nigerian economy at large even as the robust banks serve as the engines to drive the emerging economy.

While it is obvious that the banks have benefited immensely from the process they were reluctant to be a part of initially (going by the robust capital assets they have acquired by mopping enormous funds from the public), alas! much is left to be desired with regards to their corporate responsibility both to the Nigerian economy and their customers, as above-mentioned (Please read Ijeoma Nwogwugwu’s ‘My Mercedes is Bigger Than Yours’ published in ThisDay newspaper, 26th November 2007). The banking sector continues to dominate activities at the Nigeria Stock Exchange. One would naturally expect this to translate in tangible and visible economic developments and empowerment of businesses; however this is not the case. This can be explained by the continued stunted growth in the manufacturing sector. It goes without saying that until the growth in the manufacturing sector is considerably at par with that of its banking counterpart, ours will not cease to be a service-oriented, rent-seeking economy. The Nigerian banking sector lags behind in its responsibility to provide core banking services. Our banks today are witlessly still deposit-driven while they are ever-reluctant to take even the minimum of risks to empower the smallest scales of business, not to mention the lack of professionalism, etiquettes, and work ethics a lot of them still portray. This remains a discourse for another day.

The use of the Automated Teller Machines popularly known as the ATMs is not a new technology. This has been in use in most third world countries many years back. All thanks to the banking reforms which brought the use of ATMs to the doorstep of Nigerians. The use of these cash dispensers wherever they are being used in any country of the world is always a win-win situation both for the bank offering the service and the customers that make use of the machines. However, this is not the same in the post-reform Nigerian banks.

An obvious advantage of the use of ATMs is the decongestion of banking halls. Customers can withdraw cash and know account balances without having to enter their banks. I schooled in the Netherlands for almost 2 years. Throughout my stay I entered my bank only on three occasions. The first occasion was when I had to open the account; the second was necessitated to effect a change in my residential address for onward receipt of my account statements and other correspondences; while the third afforded me the opportunity to close my account. All transactions (purchase of groceries, shopping, cash withdrawals, local/international inter- and intra-bank funds transfers, et cetera) were done via my debit card and electronic banking. Cash deposit was even made possible using the ATM!

While I am not asking Nigerian banks to deploy this “state-of-the-art” technology at this point in time (because I am sure the response will be “…Rome wasn’t built in day, bla bla bla”), the salient point being made here is that the use of ATMs play a big role in decongesting banking halls while waiting to effect the least of all banking transactions. This is to the benefit of both the bank and its customers. The customers and the banking staff are afforded the opportunity to face more pressing businesses, withdrawal/cheque slips are hardly used (which saves both the bank and its customers money) and an atmosphere of credibility, effectiveness and professionalism is created, among other things.

To reiterate, this new development in the Nigerian banking sector should benefit both the bank and its customers and if there are any costs to be borne in the deployment of this service, both parties should knowingly, consciously and agreeably bear the costs. Nevertheless, this is not to bear on the Nigerian banking landscape. I will give some instances.

Intra-bank ATM transactions in all Nigerian banks attract a service charge of N100 (almost one dollar!) for every withdrawal. In simple terms, if I have a UBA debit card and I want to withdraw money (no matter how small) from, say an Oceanic bank ATM, the sum of N100 will be deducted from my account. This goes vice-versa for all the banks and for every withdrawal I make at any time, intra-bank using the ATM. This, I consider to be indurate and insensitive of both the banks and the service provider. During my sojourn in the Netherlands, intra-bank ATM withdrawals attracted no inordinate costs (if there were at all) to the customer. There was only a ceiling pegged to a daily withdrawal, using ATMs. Even if Nigerian banks are to charge their customers a la intra-bank reconciliation costs, interswitch service charges and other banking argots, I think N100 for every withdrawal is way too much for an average Nigerian customer to bear vis-à-vis the student, the market woman, the hawker et cetera who needs almost every penny to survive. It is mind-blowing to fathom the volume of transactions carried out daily via the ATMs. I hope an ignoramus like me will be spared details of rocket-science explanations that might follow this article.

Still on the cash machines matter, aside the intra-bank charges as above-discussed, some of the banks have taken a step further in the effrontery against its unsuspecting customers’ goodwill and appeal. These banks charge daily or monthly fees for ATM withdrawals. They likewise without conference to their customers knavishly charge for unsolicited SMS’s notifying their customers of any transaction actioned on their accounts.

While it is well understood that banks are not non-profit making outfits, banking should albeit be practised in a very professional and idealistic manner. Nigerian banks should desist from continuously devising means of ripping their unsuspecting customers of their deposits in trickles. Competent and professional banks make profits from core banking services and not from cunningly excogitated service charges. I wonder what happened to value-added services. If service costs are to be levied, they should be reasonable, low-priced and the customers’ consent should be solicited for some of these services.

Let the real and proficient banks arise!

Written by
Adewale Ajani
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