Mrs.Hope Martins, a civil servant with the federal ministry of Agriculture has lost confidence in Nigerian banks.
As a matter of fact, she has resolved to demand that her salaries be paid by cash as part of her decision to do away with electronic banking, which she says forced her to eat from the trashcan earlier this year and “has continued to prove ineffective to me.” Mrs. Martins lost her N15,000 monthly income to electronic transaction through an Automated Teller Machine channel in Abuja earlier this year.
She has N15,000 left to her every month after a loan repayment deductions by a co-operative union in her office. “I tried to withdraw N15,000 in an Access bank machine in early February only to get the biggest disappointment of my life,” Martins recounted. “The machine came up with a message: ‘insufficient funds’ and failed to dispense cash to me. They (bank) deducted the money without actually paying me! It was very traumatic for me,” she said in lamentation while narrating her ordeal to this Reporter.
Six months on, the money is still trapped between the issuer – Ecobank and, Access Bank, the acquiring bank. Her hope was to use the said money for self-sustenance after the Christmas festive expenses, she said. Nigeria’s Consumer Protection Council, which she resorted to after claims and denials between her and the banks, would not help to retrieve the money either.
From “out of service”, “unable to dispense cash” to “transaction error” and “insufficient funds” all the ATM machines, like an organized crime function mostly but to swindle bank customers of their hard earned monies. Whereas it’s written: “24 hours banking service,” in an ATM gallery of six units for instance, if any, only one or two occasionally function in most cases.
Though Mrs. Martins is forced to the point of hopelessness in the possible refund of her missing N15,000, Mr. Tony Egbelefu, another victim of ATM mal-function in Nasarawa state wants her to draw hope from his just ended nightmare in the hands of the failing electronic transaction machines.
For Egbelefu, his experience is an indication that the cashless policy and financial inclusion drive of the Central Bank of Nigeria (CBN) in union with the commercial banks is on trial. His confidence failed when, trusting the well-proclaimed electronic banking system in the country, he proceeded to an ATM in the Mararaba axis of the state and made a N40,000 withdrawal command. “The machine counted and refused to dispense,” he said. “But I needed the money desperately. So, I imputed another N40,000; it started counting again and did not dispense. Lo and behold, I was debited N80, 000!,” Tony said, looking still dumbfounded.
He told me that when he lodged complain to Fidelity bank, the acquiring bank, he was told to contact his issuer – First bank for retrieval. Expectedly, several efforts to retrieve the money from his bank failed him. Unlike Mrs. Martins, Egbelefu would later leverage on his professional contact at CBN to have the transaction reversed 10-months later.
Most of the ATM galleries across Nigeria are indeed centres of frustration, unending nightmare, pain and delays. Like a thunderbolt, Nigerians groan under the harsh effect of the poorly managed machines. If there are illusions as to how serious and discouraging electronic transactions, particularly via ATM channels have become in recently times, the event that took place in Benue state recently should serve to dissipate them.
Her face riddled with goose pimples, enveloped in bids of sweat that calmly described how frustrated and exhausted she was on an ATM queue of over 50 people with just a single dispensing machine, heavily pregnant middle-aged Salamatu Mantu (not real name) took a sit on a nearby laughing stone at a Zenith bank-operated ATM, restlessly panting while waiting for her turn. It was very Sunny in the North-Bank area of the state where there was no roof to provide shade for the bank customers on the queue who streamed into the only working ATM to make e-transactions.
No love for fellow man would make anyone on the queue to have pity on Mrs. Mantu to give her the chance to make cash withdrawal and continue her trip to hospital for antenatal services. The unexpected happened when child labour came calling before she was hurriedly taken to a nearby maternity amidst labour throes. Like Mrs. Mantu, most people in the Nigerian banking community have sour tales to tell about the ineffective ATMs across the country.
On the scale of profitability and propriety, the Nigerian banking community is losing to the failure of the banks as reflected in the cases of insensitivity and carelessness to their predicaments on one side, and internet fraud stars on the other.
According to a recent report by the Nigeria Electronic Fraud Forum (NeFF), Nigeria recorded N2, 19,509,038.78 billion loss in money terms in 19,531 reported fraud cases in 2016. ATM transactions recorded the highest volume of fraud followed by mobile. ATM recorded 9,522 fraud volumes, with N464.514 million in the year alone. There is a steady rise in the figure over the years. For example, while N2,688,669,2 million was lost to the rampaging fraudsters in 2014 through ATM channels, the number increased to N355,892,20 million in 2015, according to official data.
The experience of Mrs. Ogundiran Adebisi of Ogun state summarises some of the cases of ATM frauds in 2016. Had Mrs. Adebisi suspected that her ATM card could be manipulated by unscrupulous people, she would have taken some possible steps to prevent the loss of N60,000 within a period of 30 minutes. The money was reportedly withdrawn by an unknown person in Imo state, particularly in Imo Polytechnic even though her debit card was right with her in Ogun state.
She suspects that the staff of Skye Bank Plc at its Sango Ota branch of Ogun who attended to her on Wednesday, May 4, 2016 when she requested for a new card could have hand in the invasion on her account. “Unlike what I knew to be the practice where customers with new ATM cards were issued with new Personal Identification Number (PIN) in sealed envelopes, the bank’s staff who attended to me informed me that the One Time Password would be sent to my phone. And just as I was told, I received the password at 5:36 pm the same day after which I followed the activation procedures I was given,” she recalled.
Although there is a general agreement that the automated machines have made banking transactions easier in recent years, there are still concerns over the steady rise in the cases of dispensing error in transactions done through ATM channels.
According to general manager of Microsoft Nigeria, Kabelo Makwane, 95 per cent of all ATMs that run on Windows XP operating system are susceptible to hacking. He reportedly said machines that run on outdated operating systems do not receive security updates are the easiest to hack by fraudsters.
It costs between N1000 and N1050 to get a new debit card in Nigeria. Most disturbing is the fact that in a situation where one has his/her card seized by a machine different from the issuing bank, it is destroyed automatically and the customer made to pay for a new one.
From N100 annually, the central bank increased electronic card maintenance charges to N50 monthly in May 2017. The implication is that it now costs N600 to maintain every active card annually as against the N100 charged previously for the same period. According to the Nigeria Inter Bank Settlement System (NIBSS) in 2016, Nigeria had 29.24 million active cards being used by over 63 million active bank customers in the country. By that, active card holders pay N1.462 billion monthly and N17.544 billion in a year. Evidence shows that the customers obviously do not get near service equivalence of that charges or sacrifices.
LEADERSHIP findings showed that bank customers spend an average 50 minutes to 1hour on queues to perform transactions through the automated machines on week days in the cities where most of the banks are located. The situation is even worse at weekends and festive periods when between 2-3 hours are spent in the rain or under the Sun to make a simple cash withdrawal/transfer or other minor electronic transactions. It is a common site to find long lines of people waiting to carry out different transactions on daily basis. At the last count, deployment of ATMs by commercial banks in the country was in deficit of 72.33 per cent, with about 17,000 units in circulation.
For rural duelers or those in the hinterlands, poor service is better than none. Most villages in Nigeria do not have access to ATMs. They still have to travel long distances to access bank services across the country. LEADERSHIP learnt for instance that most people have to carry huge cash along with them from the cities whenever they are embarking on journeys to their villages at a time the monetary authorities are campaigning for a cashless Nigeria. Public watchers say situation is responsible for the sustained rate of armed robbery cases in the country.
For experts, the trend is adversary to global financial inclusion drive to which the CBN and by extension, the banking sector is a signatory. “Effort to entrench financial inclusiveness or cashless society in Nigeria by the authorities is now under major threat as major aid channel like the ATM machines have become instruments of manacle instead of driving wheels,” financial analyst, Jibril Usman said.
The problems are multifaceted. Head of devices and tokens in Interswitch, an integrated digital payments and commerce company Mr. Michael Popoola says “many of the ATMs are out of age,” adding, “Ideally, you should take off an ATM after five years. But if you are able to manage them well, some could last for eight years. If you check the age of most of the ATMs, a lot of them are already beyond 10-years. Because of the fact that they are out of age, the tendency to breakdown often, comes up.”
The banks are indeed in a dilemma. LEADERSHIP learnt that it cost between N3.8 million and N5 million to purchase and install a unit of ATM – whether GPRS or Visat brand. Before the current dollar crisis in Nigeria, it cost a maximum of N3.5 million to buy an ATM, depending on the brand. Subscription or recurring fee for a GPRS brand of ATM is between N100,000 and N200,000 per annum. While subscription fee for a Visat for a year is said to be from N100,000 to N1.2 million yearly. The Visat is much more reliable than the GPRS modem commonly used by the Nigerian banks. The banks are also faced with the problem of high cost of rent on ATMs locations outside the banks’ branches. Some banks pay as high as N5 million for ATM space in an airport or shopping mall.
Sources at the banks told LEADERSHIP that a lot of the banks now shying away from heavily investing in the ATMs because they do not generate revenue enough to measure up to the amount spent on purchase and maintenance (including power generation) of the ATMs.
Beyond that, Popoola blamed the incessant cases of cash jam across the ATMs on scarcity of fit notes in the banks. He explained that because an ATM has electrical components that are induced by electronic circuitry, it’s easily affected by dirty or weak money notes. Because of its mechanical components, the counting of notes generates a lot of dust which block the sensors in the ATM. And so the ATM starts misbehaving. “If you put clean or mint notes in the ATM, it will work longer before you have issues of cash jam,” he asserted.
There are a lot of dirty cash in circulation. To get mint cash is a major challenge in Nigerian banking sector. Whereas mint naira notes are scarce in the banks, they are hawked on the nation’s streets and parties. Most of the banks are having serious challenge getting mint notes that are required for ATM use. “If they put any kind of note inside, the ATMs will be breaking down. That is mostly responsible for why customers often complain of debiting their accounts without payment,” Mr. Popoola explained.
To address the issue of late response to customers’ complaints, InterSwitch had created a complaint settlement platform called Habitat. It is designed to quickly address customers’ complaints immediately the issuing bank log in the complaint on the platform within 72hours. Experience has also shown that most of the technical partners of the banks on ATMs management either lack expertise to effectively manage the machines for good performance or lack the needed facilities to produce the desired result.
The current economic crisis affecting return on investments in the banking sector, and by extension all sectors of the economy, makes it difficult for anyone to project when things would change for the Nigerian banking community.
The advice is that the banks, CBN and the federal government need to work together to address the monetary, power and other infrastructural issues threatening the survival of the e-banking system. “The CBN needs to revisit data IAD model,” Popoola said, adding, that the CBN also “needs to look out for competent companies that have the expertise and understand the ATM business and merge them with experts with the facts to craft policy that will really help.
The understanding is that the banks will always look at ATM deployment from a business point of view; a situation many say distracts them from giving the right attention to ATM management. Experts believe that for the banks to go bullish, they need to increase their personnel cost, invest in capacity building and employ more staff.
“The CBN also needs to work. They need to perhaps, print ATM fit cash. They’ve not been releasing mint to the banks. As long as they keep getting these mutilated notes, it will damage the ATMs. It will cause a lot of frequent jams,” Mr. Popoola said, while urging the CBN to recall most of the cash in circulation and release new notes that will help the ATMs to function better.
On the other side, there is a general agreement among the experts and the banking operators that the federal government should help reduce the huge amount ATM acquirers are spending on their maintenance by providing key infrastructures as power. To provide a strong framework for electronic transactions in the country, experts call for a policy regulatory framework around the age of the ATMs to proscribe the use of an ATM above 10-years of operation, and licensing of experienced integrated digital payment companies.
Worried by a barrage of complaints from bank customers who allayed frustrations in completing their transactions at the various ATM branches occasioned by system failures or poor network connectivity, the CBN had asked the banks to either shape up or close shops. Director of Banking and Payment System Department at the CBN, Dipo Fatokun who made the call, described the inefficiencies as unacceptable. “Yes, there could be system issues, but it should be the exception and not the norm,” he said.
Already, there are indications that the nation’s banking industry is fast on the lane of getting overloaded with all kinds of avoidable challenges ranging from malfunctioning of core banking software, software inadequacy, lack of well trained personnel and negligence.