Customers have embraced mobile money platforms as a result of the naira crisis and banks’ inability to respond appropriately. In her article, Funmi FABUNMI describes how this has resulted in a flourishing fintech industry.
Many people and organizations have found it challenging to carry out their daily tasks as a result of the crisis that the redesign of the naira notes caused. Nigeria’s economy nearly collapsed in February as a result of a cash shortage, sparking nationwide protests. As a result, the government put the outdated N200 notes back into circulation, bringing the deadline for their elimination to April 10 forward by 60 days.
Nigerians’ migration to mobile and digital banking has put a strain on traditional banks’ platforms, and the lack of cash that has characterized the naira redesign has made it difficult for them to handle the pressure.
Due to angry customers protesting their inability to withdraw money, banks were forced to shut their doors to customers. Banks’ digital platforms were overloaded as automated teller machines were disabled and over-the-counter transactions were nonexistent. Since they couldn’t complete their transactions, many bank customers were left in a bind.
Increasingly erratic digital banking services caused transfers that typically took minutes to complete to take days. Adedeji Owonibi, the founder and chief operating officer of Convexity, shared with The PUNCH a story about a payment he made through a digital banking platform that was delayed for about a week.
A customer of Guaranty Trust Bank, who only gave her name as Bolanle, bemoaned the unreliable network and how it had impacted her.
Since last Friday, my bank app has not been able to open. Thank God for my loyal customers who are willing to extend me credit. If not, I am unsure of my next course of action.
Many banks have added more staff to customer services in response to the rising number of failed transactions on their platforms in order to address customer complaints.
Before the naira crisis, banks were already experiencing problems. Due to “japa syndrome,” many of them have been losing their best employees (local slang for migration). The shortage of skilled IT personnel in the banking industry has been highlighted by the naira crisis. Many of them have relocated to industrialized nations.
According to a source close to a human resource consultant, the bank is prepared to hire an expatriate at any cost because the situation is embarrassing and the board is losing patience. But for obvious reasons, not many people are currently overly enthusiastic about Nigeria.
The most reasonable course of action is to consider younger talents who could be developed over time while also looking for smart guys to poach in order to stabilize the system.
Seun Kuti-George, vice president of the Nigerian Association of Small Scale Industrialists, stated that while the switch to online payments is technically feasible, service glitches are a major cause for concern. The technical problems that come with the new payment method, transfer, are making things worse.
“For instance, I paid someone in the morning, but the person still hasn’t gotten the notification. I had to leave the goods there until the following morning in the hopes that the man would become conscious by then. I would have lost that if it were an emergency, a matter of life or death, or a matter of a contract that would be cancelled. But they will all disappear as well.
The United Bank for Africa source who spoke on the condition of anonymity because he was not authorized to discuss the matter attributed the network issues to the high volume of online payments. “Online traffic is causing service hiccups,” he declared.
Similarly, a representative from Access Bank told The PUNCH under the condition of anonymity that although network issues do occur, “you might need to visit the bank for help if it persists for more than one day.” I’m referring to the possibility that your network service provider is at fault when a banking app occasionally refuses to launch. However, if these circumstances continue, it could become a serious issue that requires a trip to the bank.
You know that banks don’t offer network services, according to Dr. Uju Ogunbunka, president of the Bank Customers Association of Nigeria. According to what we learned, the network system had a failure. And the pressure was enormous. Regardless of whether it was necessary or not, everyone came to the bank to complete some sort of task. The pressure became too much as people raced to meet the deadline for the redesigned naira notes. Sadly, some of these systems are still under construction. They lack the same strength. And you don’t anticipate a miracle. These issues have human origins.
“We heard that the banks weren’t the main cause of the network collapse. Just that it showed up in the banking industry. Even those of us who don’t work at the bank were able to see the phone network issue. I will not concur that the banks were the issue. It simply materialized within that context. We noticed it very prominently because it appeared in many other locations while the banking system was the focus of attention.
He clarified that a poor network might be to blame for the problem with remitted transfers. “The majority of missing money incidents are caused by network issues. Even in those days when we used the post office and telegram and there was a breakdown in the system, if I am sending money, it won’t arrive on the day and at the time you anticipate. Sometimes cash disappears not because it was stolen but because it got stuck somewhere. Additionally, you can still find it if it was tracked.
On occasion, it turns into a problem where some people try to defraud the system by manipulating it. We have a lot of fraud experts in this country, and regrettably, no matter how the system is set up, they still find a way to undermine it, according to Ogunbunka.
He claimed, “That is why you will see quite a few fraudulent activities in the financial service industry when you look at the reports of the CBN, NDIC, and even the banks.
It’s unfortunate that some people have dedicated their entire lives to looking for loopholes they can exploit. It is pathetic that so many people, who are jobless, have chosen to engage in all of these unhealthy habits that cause other people trouble and headaches. This, in my opinion, is a component of the lacking fund. The majority of these missing funds, however, were brought on by unsuccessful transactions, which are recoupable. And, to the best of my knowledge, a good number of them have been found.
Additionally, Victor Olojo, the national president of the Association of Mobile Money Agents in Nigeria, stated: “The fact is that the sector is experiencing a lot of issues and pressure that is very well-connected to the CBN policy, so a number of the banks are overstretched in terms of their IT, affecting the banks’ capabilities to handle the traffic and pressure on all of their platforms.”
The naira redesign has put a lot of pressure on banks, but fintech companies, also known as financial technology companies, have been doing extremely well. Many former bank customers now use fintech for their regular transactions.
Customers now rely on fintech companies like Kuda, PalmPay, Moniepoint, Parallex, and others for online payments as the naira crisis continues, making them household names in the nation.
“Also, we can say that this time has been quite difficult, from the CBN policy to the state of the country to the attacks on banks, but just to add that the fintech, like Opay, Kuda, PalmPay and others, have come to save the day, and many Nigerians have turned to this fintech that was previously known as the underdogs,”
He advised banks to increase the capacity building of their infrastructural foundation.
“They need to do more in some of these areas because some of these applications were probably not functioning because their capacities were overextended. You would realize that the banks can no longer meet all of their demands, so I believe the federal government needs to make sure that fintech has a lot of room to grow.
According to the president of the association of mobile money agents, fintech has many roles to play in addressing the current issues.
Owonibi added that even though the naira crisis has benefited fintech, they must switch to blockchain in order to prevent system failure caused by the rising traffic on their networks.
