e-Payment Transaction Failures: Why Bankers Are To Blame

A list of banks' recent disappointing showing will invariably include malfunctioning POS processors, dysfunctional ATM cash dispensers, disappointing USSD transfers, inactive bank apps, overwhelmed bank personnel, etc. In all of these, two negative features easily crystallize namely the fact that bank operators were not proactive enough to envisage arising capacity-building and capacity-expansion issues.

Capacity-building comes in here to illustrate banks' failures to develop redundancies around certain personnel technical skills.

When critical technical skills are heaped upon one personnel such that the day that personnel is not available, there will be a total system collapse.

Recently, Nigeria's banking sector, amongst others, has been witnessing a mass exodus or brain drain (identified locally as the 'japa' syndrome) of highly skilled technical staff migrating to greener-pasture countries.

On the other hand, capacity-expansion challenges are occurring amongst the banks because the explosion in online transactions witnessed lately as a result of the CBN cashless policy has stretched existing IT infrastructure beyond their design capacities.

In all of these scenarios, it is clear that bank management across the Nigerian banking sector all share one thing in common: a lack of foresight.

The much-touted intelligence of bankers and their owners has excluded watertight planning in spite of yearly declarations of astronomical profits after tax.

Even the worst moronic strategist can easily envisage stress tests to bolster preparations against eventualities compared to the case of Nigeria's bank operators.

The present cash transaction experiences of Nigerians are shocking and embarrassing, to say the least.

Imagine that in the midst of huge financial turnover recorded in the first three quarters of 2022 by banks in the country and claims of N100 billion investment in electronic channels, digital banking has remained very challenging for many Nigerians in the last few weeks since the introduction of the new cash policy.

The events of the last six weeks, where access to cash has remained increasingly limited, compounded by the inability of the Automated Teller Machines (ATMs) to dispense cash and spiral failures of Point of Sales (PoS) machines as well as prolonged downtime in Internet banking, have reiterated the need for aggressive investments in the ePayment space of the banking sector.

Indeed, in 2022, the financial statements of some 10 banks revealed that in the first nine months, they recorded N900.92 billion in Profit Before Tax (PBT) despite a slow economic performance in the nation.

The N900.92 billion was a 21.40 per cent increase from the N742.95 billion PBT recorded in the same period of 2021.

While the banks smiled as profits continue to rise astronomically, Nigerians have in the last six weeks borne the brunt of negligence on the part of the banks and the regulator, the Central Bank of Nigeria (CBN).

Amid this crisis, the Association of Corporate Affairs Managers of Banks (ACAMB) had, in a statement on the naira redesign, revealed that from Internet banking to mobile apps, ATMs, PoS merchants, mobile wallets, Unstructured Supplementary Service Data (USSD) codes, agents and digital franchises, among others, no less than 80 per cent of Nigerians now enjoy one form of digital or cashless transaction or another, powered by investments of over N100 billion by banks.

ACAMB, in the statement by its President, Rasheed Bolarinwa, noted that these commitments by Deposit Money Banks (DMBs) have seen Nigeria rising steadily and recognized as having arguably Africa’s most advanced digital financial services industry and one of the world’s top 10 real-time payment markets.

Despite ACAMB’s claims, the CBN policies were a testament that there was no prior stress test on banks’ infrastructure to check their capacity to sustain the cashless policy.

Recall that the drive for digital banking was part of CBN’s cashless policy introduced in 2011.

At the onset of the cashless policy, the total number of ATMs across Nigerian banks was 10,000, which grew to 17,000 in 2015 and 18,000 in 2017, before reaching 22,500 as of December 2022, according to statistics from CBN.

The number of PoS terminals rose from around 155,000 to 1.1 million as of April 2022, while the number of active banking agents is over 1.9 million, going to data from Shared Agent Network Expansion Facilities (SANEF).

These digital infrastructures have, however, been overstretched by the 45 per cent banked population across the country.

Failure of ATMs to dispense cash, exorbitant charges by PoS agents, and inability to get cash over the counter in banking halls, lately, has made Nigerians increase their use of USSD and bank apps.

With the hope that USSD platforms would help to reduce the pressure, it turned out to be a nightmare for most users as transactions collapsed.

Efforts to get the views of Nigeria Inter-Bank Settlement System Plc (NIBSS) on the challenges were fruitless as of press time.

NIBSS is responsible for the infrastructure that enhances funds transfer.

Their speciality is in automated processing, fund transfer instructions, and settlement of payments.