A current report by the Worldwide Financial Fund (IMF) has proven that Nigerian banks closed 234 branches and 649 Automated Teller Machines (ATMs) in 2020 resulting in a decline within the nation’s Monetary Entry Rating (FAS) to 4.44 final yr in opposition to 4.78 in 2019.
The worldwide monetary establishment disclosed this in its Monetary Entry Survey (FAS) 2021 Tendencies and Developments. IMF is understood to utilise two FAS indicators to observe an merchandise of the 2030 Sustainable Growth Targets (SDGs), which goals to extend home monetary establishments’ capability to advertise entry to banking and monetary companies.
The variety of business financial institution branches per 100,000 adults and the variety of ATMs per 100,000 adults are the 2 generally used FAS indicators. Based on particulars from the IMF report, Nigeria skilled reductions in these two FAS indicators, amongst others.
For certain, the pursuit of ‘monetary inclusion’ or “entry to banking and monetary companies” is a germane international coverage; however the IMF indicators are somewhat archaic and otiose. In a world of fast-paced digitisation of monetary companies, additional fast-tracked by the COVID-19 pandemic, making use of variety of (bodily) financial institution branches as indicator of progress (or in any other case) is only anachronistic. IMF says Nigeria skilled reductions in these two essential FAS indicators, and so went additional to spotlight and ‘justify’ how the nation has not fared properly on a specific SDG goal.
However, actually, Nigerian banks made quantum leaps in such efficiency indices as variety of financial institution prospects, quantity and worth of transactions up to now couple of years lined by the IMF survey. Like in lots of climes, one of many essential ‘good points’ from the COVID-19 outbreak was the huge embrace of e-Cost platforms, and digital transformation in Nigeria. Information from the Nationwide Bureau of Statistics (NBS) and the Nigeria Interbank Settlement System (NIBBS) Plc amply painting this development.
NIBSS’ knowledge present that worth of Nigeria’s e-payment (all channels: ATMs, POS, Cell, Internet, NIP and e-Payments) transactions elevated by over 85 per cent, from August 2020 to August 2021, to hit N172 trillion. Between January and August 2020, the determine rose by N93 trillion. It ought to be famous that these sharp will increase commenced successfully within the second quarter 2020—satirically through the ‘lockdown’ of elements of the economic system owing to the ravaging pandemic. And this development has been sustained.
This situation just isn’t remoted for Nigeria; certainly, it’s about the identical throughout the globe. Naturally, as extra individuals embraced the e-payment platform for his or her banking transactions, (bodily) financial institution branches had been virtually abandoned and deserted. In reality, many banks in Nigeria had, earlier than the onset of the Coronavirus pandemic, constructed quite a few branches in numerous areas throughout the nation. At present, many of those ‘new’ branches are but beneath lock and key; certainly, mendacity fallow. Additionally, some banks are identified to have shutdown many ‘loss making’ branches as a part of their value optimisation technique within the face of rising challenges within the native and international economic system.
Some comparative analyses will bear out the above situation. In the UK (UK), for example, the variety of ATMs peaked in 2015 at 70, 588, in accordance with a research by the Home of Commons’ Library (dated October 12, 2021). The report is titled: “Statistics on Entry to Money, Financial institution Branches and ATMs”. From that peak, it “has fallen every year since then to the July 2021 complete of 52, 951,” says the report written by Lorna Sales space. Going additional, “between July 2018 and July 2021, the variety of ATMs within the UK fell 12,986 or twenty per cent. There was a fall within the variety of ATMs in all areas and international locations of the UK,” the report asserted. The biggest fall was in London (-23 per cent); and the least fall was in Northern Eire (-15 per cent).
In america of America (USA), the variety of FDIC-insured financial institution branches declined from 78,196 in 2017 to 77,134 in 2018; and dropped additional to 76,837 in 2019. (Supply: https://www.fdic.gov
The Federal Deposit Insurance coverage Company (FDIC) is one in all two companies that present deposit insurance coverage to depositors in American depository establishments; the opposite being the Nationwide Credit score Union Administration, which regulates and insures credit score unions.
In these two superior economies (UK and USA), the variety of financial institution branches and ATMs have been dropping. It isn’t apparent why the IMF survey didn’t showcase this development in these main economies, however selected to spotlight Nigeria and others dropping on its so known as Monetary Entry Rating (FAS). Really, the drop in variety of financial institution branches and ATMs in Nigeria is strictly indicative of progress in ‘cashless economic system’ and monetary inclusion efforts. It somewhat attests to a report of feat of the Central Financial institution of Nigeria (CBN’s) insurance policies geared toward entrenching e-banking or digitisation, which is certainly the development, throughout the globe.
It ought to be identified that even the huge use of ATMs is a counterpoise to the efficient pursuit of ‘cashless economic system’—as most Nigerians use the ATMs to spew money for all method of transactions. However not-withstanding regardless of the IMF claims to be the intendments of its surveys, huge embrace of ATMs and ‘mushrooming’ of financial institution branches is retrogressive and antiquated. According to what banking ought to be within the ‘New Regular,’ yours sincerely had, in a current Webinar as a visitor speaker, articulated the way in which ahead in a presentation: “Creating Efficient Methods for Managing Monetary Establishments in Publish-COVID-19 pandemic period.”
Throughout this webinar organised by the Chartered Institute of Bankers of Nigeria (CIBN) Lagos Department, which recorded good patronage, I posited that gone had been the times of huge department community, imposing head workplace and department buildings and enormous fleet of selling vehicles as indices for dimension and rating within the banking world. Who wants extra financial institution branches, when a financial institution buyer can open a checking account (whereas dwelling) in Lagos and function it from wherever else in Nigeria; and even from exterior of the nation? Who wants imposing buildings and big workplace areas when many workers are being required to work from their houses (‘distant working’), and financial institution prospects would somewhat consummate their transactions from the consolation of their bedrooms? Has branchless banking not develop into a actuality? Really, crowded financial institution places of work and/or banking halls now belong to the very ugly previous of ‘brick and mortar’ banking period.
Total, somewhat than being pushed by the hackneyed FAS of the IMF and its ilk, banks in Nigeria ought to construct what Invoice Gates (in his guide: ‘Enterprise on the Velocity of Thought’) calls “Digital Nervous System” and join each exercise to it. This manner, they’ll guarantee constant effectivity and distinctive service supply underpinned by sustainability tenets. Not give attention to ‘primitive’ department growth feint!
Marcel Okeke, an economist, wrote from Lagos.