Cash scarcity worsens as banks’ ‘upgraded’ digital platforms falter
• ATMs empty as PoS agents exploit customers
• No relief for customers after bank software upgrades
• Rural residents lament banks’ insensitivity
• Filling stations, supermarket fuelling crisis, mobile money agents insist
• Publish weekly reports on banks’ cash receipts, ASSBIFI challenges CBN
• Reps orders probe into cash scarcity, tasks CBN on intervention
A few months after most banks claimed to have upgraded their digital infrastructure to serve their customers better, their services have deteriorated with users experiencing what appear to be the worst offerings seen so far.
Sadly, over-the-counter (OTC) services have not offered any solace with most banks restricting cash withdrawal per transaction to N10,000. This has triggered another round of cash scarcity across the country, pushing up agent banks’ charges by as much as 100 per cent or more in some cases.
These rising challenges come barely 15 days to Christmas and just when the Central Bank of Nigeria (CBN) warned that it would begin to sanction banks that have failed to upscale their capacity to service the fast-growing population of online banking customers.
Data from the Nigeria Interbank Settlement System (NIBSS) showed that cashless transactions in Nigeria rose by 84.37 per cent to N572.63 trillion in the first seven months of 2024, suggesting that the digital banking space is busier than ever before.
This growth showed the growing reliance on digital payments in a country. As of the end of 2023, cashless payments grew to N611.06 trillion from N395.38 trillion in 2022, with experts saying the numbers would hit unprecedented levels in 2024.
But as it is, the payment platforms of banks are currently jaundiced bringing several harrowing experiences to customers in the last three months heading into the yuletide season.
Before the widespread system upgrade, which primarily sought to improve customer experience, banks had over the years relied on foreign companies to manage their IT infrastructure, spending significant amounts on maintenance in foreign currencies.
The big digital infrastructure spending continued in the first half of 2024 when five major Nigerian banks collectively invested N178.77 billion in enhancing their information technology infrastructure, according to the analysis of their financial statements.
But checks by The Guardian showed that since banks claim to have completed their migration to new core banking platforms as of last month, which initially caused a total service shutdown dating back to September, there is still no respite for customers, who continually besiege banking halls to resolve one complaint or the other.
On Monday, thousands of customers resumed at banking premises as early as 7a.m. to register complaints about failed transactions. Banking premises across the Lagos metropolis were crowd-packed with disgruntled customers who lamented about their personal and business losses to sluggish or compromised electronic channels.
From a deluge of failed transactions to disappearing account balances, reversal of transferred funds to failed ATMs or PoS transactions, customers have become apprehensive about how the next 20 days will be, especially as Christmas and New Year celebration spending peaks.
Another development that came to the fore in the last week has been salary reversal. Affected staff members of a major organisation who shared confidential transaction information with The Guardian complained that after getting salary alerts for November, only to discover that the payments were reversed minutes after the credit alerts.
Close to half a dozen banks are involved in the latest glitch with some of the banks saying they are currently working to fix the problem. In many cases, the recipient accounts would have credit with the money accessible only for the accounts to be debited a few minutes later.
There are concerns that the strange dimension of the old challenge could cause substantial financial losses as transactions could have been completed and services or merchandise exchanged only for payment to be reversed.
This possibility is seriously creating apprehension in the marketplace with some merchants declining the electronic payment option. Last month, GTBank was in the middle payment crisis which appealed to its teeming customers, saying it was resolving challenges that emanated from its recent transition to a new core banking system, Finacle Suite of Core Banking Application Systems, which disrupted services and brought pains to users.
GTB in a letter, titled: ‘Thank You,’ sent to its customers, acknowledged the inconveniences experienced by customers and expressed gratitude for their patience and continued support during the challenging period.
Other banks have similarly appealed to the customers. But despite the appeals and assurances, customers are still having serious issues completing simple transactions.
An official of one of the banks explained that the process of upgrade, especially from one software application to another, is tedious and may take a while for any bank to stabilise after the migration.
According to her, complete migration could take between two weeks and one month, but to stabilise and return to normal, “this could take extra six weeks or two months. This is also based on the infrastructure of the banks and the number of customers and categories.
“In some cases, a bank may not need to move customer transaction data. However, for every change, the banks will need to integrate with their various channels such as ATM, USSD, Internet banking, and so on and this is why it takes time for them to stabilise.”
While the challenge remains, no respite from agent banking operators as they have been accused of exploiting these loopholes to swindle customers. They have also been accused of charging arbitrarily for cash.
Recently, Vice-President Kashim Shettima urged banks to tackle the menace. He made the call at the 2024 Bankers’ Committee Retreat, noting that the unwholesome practices agents are impeding the availability of cash.
According to him, the scarcity of cash impedes financial inclusion.
“We would like to take this opportunity to appeal strongly to the committee to urgently clear up thorny issues in the sector, some of which are impeding the efforts at financial and economic inclusion.
“Nigerians complain about high and arbitrary charges and exploitation by rogue agents, which we are sure you will be able to tackle with concerted efforts,” he said.
Shettima, who was represented by the Special Adviser on Economic Affairs, Office of the Vice-President, Tope Fasua, urged banks to ensure seamless availability of Naira notes to the banking public.
The CBN Governor, Yemi Cardoso, had similarly directed deposit money banks (DMBs) to scale up their operation and resolve disputes timely while arming customers, who he charged to report erring operators for sanctions.
Still, customers across states are lamenting over the deterioration in service and spike in charges, which are attributed to the recent extension of the N50 electronic money transfer levy (EMTL) to digital-first banks with fear that the challenges would assume a crisis level in the coming days.
Sharing her experience with The Guardian, a fabric merchant, Temitope Ajayi, said she had visited the bank to withdraw N200,000 to buy some goods but was told she could only withdraw N20,000 as the officials were out of cash. For her, the alternative would be the ATM. But the machine could only dispense N5,000.
“Some goods came that I needed to buy urgently. I could not transfer as my bank had network glitches and I visited my bank to make withdrawals, but I became so angry when I was told that I could only get N20,000 out of N200,000. I went to PoS operators where I withdrew N150,000 after paying cut-throat charges.” she narrated.
When The Guardian visited some of the banks and ATMs in Lagos, most ATMs were not dispensing cash as customers only used them to check the accounts balance.
Amidst the crisis, the National President of the Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI), Olusoji Oluwole, faulted the CBN’s memo to banks, demanding that the CBN should begin to publish weekly or monthly reports of how much cash it gives to each bank. He said the memo gives a kind of impression that banks are either producing cash or are the primary sources of cash.
The sad reality, he said, is that outside the CBN, banks had relied on retail outlets like the big supermarkets and the fueling stations for cash. He said: “What is happening now, and I stand to be corrected, is that the same retail sources are the ones that are supplying PoS operators because it is more profitable for them. Who will now be the ones providing the cash to people who want to withdraw cash at a profit? So now, it means that the scarcity is from the retailers, and CBN is not giving enough.
“I did a little survey last week, and what I found is that while CBN is saying that every bank must ensure that they have cash for people to draw across the counter and in ATMs, the reality is that the cash that CBN is even giving them, if they distribute evenly to all their branches in a particular location, maybe the maximum a branch will get is N5 million. One ATM will consume N8 million, and each bank is expected to have a minimum of two ATMs, that is N16 million, and then the same bank has to provide cash in the branch as well .
The National President of the Association of Mobile Money and Bank Agents in Nigeria, Fasasi Atanda, accused petrol stations, supermarket operators, traders and other businesses that handle large volumes of cash of contributing to the current cash scarcity.
Atanda alleged that instead of depositing their cash earnings into banks as expected, those entities hoarded the money and sold it at inflated rates to cash dealers.
“There is no reason for cash scarcity if there are no saboteurs. Today, we have saboteurs who are dealing in the sale of cash. They sell cash in bulk; they have their sources and they buy in bulk and sell. What you can’t get in the banks, you will get from cash dealers.
“We are aware of petrol stations, restaurants, supermarket operators, and others selling their cash instead of depositing it in banks,” he said.
MEANWHILE, the House of Representatives has ordered an immediate investigation into the ongoing cash scarcity across the country, citing its adverse effects on economic activities and citizens’ welfare.
The decision was taken during a plenary session yesterday, presided over by Speaker Tajudeen Abbas, following the adoption of a motion raised under matters of urgent public importance by Uguru Emmanuel.
The House directed its Committee on Banking Regulations to conduct the investigation and report back within one week. It also instructed the Central Bank of Nigeria (CBN) to urgently address the situation in the event it is not responsible for the cash crunch affecting commercial banks.
Emmanuel, while presenting the motion, expressed concern over the impact of the scarcity, noting that it had disrupted economic activities. He highlighted the plight of entrepreneurs, who spend hours or even days in bank queues only to withdraw as little as N10,000, resulting in significant loss of productivity.
The lawmaker also lamented the struggles of rural dwellers, many of whom return home empty-handed after fruitless trips to the bank. He stressed the dire consequences for vulnerable Nigerians, particularly those unable to afford healthcare or necessities due to the cash shortage.
Emmanuel further noted the disparity between commercial banks and Point of Sale (POS) operators, alleging that while banks claim to lack cash, POS operators seem to have access to substantial sums, sometimes up to N1 million in new notes.
Warning of a worsening situation as the yuletide season approaches, he called on the CBN to take immediate steps to ensure the availability of cash in commercial banks to prevent further hardship for citizens and businesses.
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