More customers are embracing digital banking platforms
igeria’s total number of bank accounts increased to 160.04million at the end of May 2020 from 143.19million in March, even though Coronavirus lockdown restriction imposed by government, which significantly impacted banking operations in major cities across the country, was in place during the period, findings by New Telegraph show.
According to the “Industry Customer Bank Account Data” for the months of March, April and May 2020, released by the Nigeria Interbank Settlement System (NIBSS), at the weekend, the total number of bank accounts, which stood at 143.19 million at the end of March, increased slightly to 143.38 million in April and went up to 160.04 million at the end of May. This means that the total number of bank accounts increased by 16.85million (11.8 per cent) during the period.
Nigeria’s largest city, Lagos, and national capital, Abuja, had first entered lockdowns to tame the spread of Coronavirus pandemic on March 30.
However, as the number of cases increased, the authorities extended the lockdown to other cities across the country, including Port Harcourt and Kano.
Although a gradual easing of the lockdown commenced in Lagos and Abuja on May 4 and state authorities, whenever it suited them, also frequently lifted lockdown restrictions in some cities, the first two months of Q2’20 went by with lenders not being able to really operate at full capacity.
For instance, despite the gradual easing of the lockdown in Lagos and Abuja on May 4, most DMBs, which had temporarily shut down all their physical branches (they advised their customers to use electronic payment channels) throughout April, did not immediately reopen all such branches.
Indeed, New Telegraph had reported that even before the government locked down Lagos and Abuja on March 30, the rising number of Coronavirus cases in the country had led many lenders to start sending emails to their customers, announcing the temporary closure of some of their branches and advising customers affected by such closures to use the lenders’ e-payments’ channels. Furthermore, for branches that remained open, the banks reduced the hours of operations from the original 8am to 4pm or 5pm, to between 9 am and 2pm or 3pm.
The financial institutions explained at the time the measures were to enable them comply with government regulations to contain the spread of the virus.
Particularly, they cited the Nigeria Centre for Disease Control (NCDC) recommendations for curbing the spread of the pandemic, such as maintaining two meter physical distancing and avoiding mass gathering of not more than 20 people outside of a workplace.
New Telegraph’s analysis of the NIBSS data shows that for the month of April, for instance, when aggressive lockdown measures were in place and banks generally did not open physical branches to the public, the number of total bank accounts stood at 143.38million compared with 143.186million in the previous month. This means that only 194,000 new bank accounts were opened during the period.
A further breakdown of the NIBSS figures indicates that total active bank accounts which stood at 97.32 million at the end of March, increased to 97.49 million in April and rose to 111.54 million in May.
Also, the total number of savings accounts, which stood at 113.95 milliion at the end of March, went up to 114.13 million in April and increased to 129.91 million in May.
Similarly, the total number of current accounts increased from 24.29 million at the end of March to 24.3 million and 25.17 million in April and May respectively.
New Telegraph’s investigations show that fierce competition for customer deposits among banks is pushing up the number of new bank accounts in the industry.
Specifically, NIBSS figures indicate that the total number of bank accounts grew from 124.8million at the end of last year to 143.19million at the end of March 2020.
This means that a total of 18.3 million new bank accounts were opened in the industry in the three-month period.
Equally, the number of active bank accounts increased from 79.3 million in December last year to 97.32 million at the end of March 2020. This means that the number of active bank accounts grew by 22.72 per cent in the first quarter of this year.
According to industry sources, the increase in the total number of bank accounts despite lockdown restrictions is mainly a result of many bank customers, who are worried about contracting the coronavirus, opting for digital banking platforms.
In addition, lenders’ efforts to maintain the two meter physical distancing and prevent mass gathering of not more than 20 people outside of a workplace, recommended by the Nigeria Centre for Disease Control (NCDC), have made visiting banking halls a daunting task for a lot of bank customers, as they often waste hours waiting to be admitted to financial institutions’ premises to carry out transactions that ordinarily should not take more than fifteen minutes of their time.
New Telegraph gathered that the development had not only forced many customers, who were initially reluctant to adopt digital banking platforms, to apply to be on such platforms, but it also pushed lenders into stepping up their digital banking services.
The Head of Operations at an Abuja branch of a Tier 1 bank, who spoke on condition of anonymity, told New Telegraph that many customers seem to have realised that they could get a lot of banking services, including opening accounts by using digital banking platforms.
The bank official said: “Unlike prior to the coronavirus lockdown when bank staff had to spend a lot of time in persuading some customers to apply for digital banking services, such customers, having wasted more than two hours before entering the banking hall, are now eager to use electronic banking platforms.”
In fact, several DMBs have, in recent times, organised virtual press conferences to announce measures they are taking to promote digital finance access to financial services.
Speaking at one of such conferences, the Group Head, Consumer and Retail Banking at the United Bank for Africa (UBA), Mr. Jude Anele, said the difficulties experienced by a lot of people during the lockdown had highlighted the need for cultivating a savings culture.
He said that it was in order to promote the savings culture that UBA had designed saving accounts for kids, teens and the NextGen.
According to him, a positive effect of the pandemic is that it could lead to an increase in financial inclusion levels on the continent given that the virus will result in more people embracing digital banking, especially mobile banking, which is the most effective way of boosting financial inclusion.
He said: “I believe that what COVID-19 has done for Africa, from a positive perspective, is that it would actually hasten the adoption of digital banking which is actually the most cost-effective way to reach the unbanked.”