Connect with us

Business

Nigeria drifting towards digital banking amid COVID19 pandemic

Published

on

Amos Dam, a civil servant, is disappointed after a two-hour wait at a bank in the Nigerian capital Abuja. He is one of about 20 people sitting on plastic chairs under a canopy to protect them from the sun on the sidewalk between a busy street and the bank.

“It has become much more tedious trying to carry out any transactions in the bank,” said Dam, referring to the impact of social distancing measures reducing numbers inside branches to halt the spread of the new coronavirus.

The pandemic has led to increased use of digital banking in Nigeria, where restrictions on dollar withdrawals have also increased waiting times as some people have to travel more than once to obtain foreign currency.

The new type of digital bank without physical branches will be driven by the pandemic.

Kuda Bank which is the only digital bank launched in August 2019, with 500 customers, said it tripled the number of its daily customers from late March to early May, a trend that began during the closure of Nigeria’s major cities, such as Lagos and Abuja.

The bank’s Chief Executive Officer, President Babs Ogundeyi stated that he received about 3000 clients per day in April compared to almost 1000 on the previous day.

Internet connection issues

“We expect the growth to remain,” said Ogundeyi, adding the pandemic forced many to overcome concerns about the safety of online transactions in a culture where a fear of financial internet scams has made people wary of abandoning cash.

Uzoma Dozie, CEO of digital bank Sparkle, launched in June 2019, said the purely digital business model is less costly to operate.

“Seeing the impact of COVID-19 and the fact that we might see a second wave or other pandemics tells us that we need to build resilience into our businesses, and that means being digital,” he said.

But, he said, lenders are working with “brick and mortar banks” to use ATMs.

Traditional banks in Nigeria have also seen an increase in digital transactions.

Fidelity bank said 87 percent of transactions in the second quarter of this year were through its digital platforms, up from 82 percent in all of 2019.

Also, Guarantee Trust Bank reported that the number of people making payments by codes sent via SMS between December and June increased from 6.1 million to 6.7 million.

Peter Mushangwe, a banking analyst at Moody’s, said that Nigerian banks are “pushing digitization with great energy” to attract more deposits and thereby increase their share of commission income, as interest accounts for about 70 percent of their total income.

In a conversation with Abuja’s bank, which breathes transport gas, Dam said he was there because the ATM did not issue cash, but his account was written off.

He said he preferred to use bank applications, but was not free from stress because of his poor Internet connection.
“When the banking network is bad. a deal that can be done all day,” he said.

Adam Abubakar is a renowned writer and poet. He Specializes in Writing Political News. He worked for five years as a writer and editor at the national news magazine.

Continue Reading
Advertisement
Click to comment

Leave a Reply