ABOUT 60 percent of respondents are unsatisfied with the challenges associated with Automated Teller Machine (ATM) debit without cash dispensed and the corresponding transaction reversal waiting period.
This is according to the Phillips Consulting (PCL) 2023 banking channels survey seen by Nigerian Tribune.
Titled, ‘Eliminating Transaction Reversal Problems: Exploring the Shift to a Service-Before-Pay Model in Nigeria’s Banking Landscape,’ the Phillips Consulting survey observed that the recent currency redesign and cash scarcity in Nigeria have mirrored the state of digital infrastructure in Nigeria’s banking space.
In most cases, it noted, the problem has always been a technical glitch in technology infrastructure along the value chain.
While the reversal period efficiency has dramatically improved since the 24 and 48 hours Central Bank of Nigeria (CBN) transaction reversal policy for on-us and not-on-us, respectively, customers’ experiences still vary across different banks, the report noted.
It regretted that the reality for many customers is that sometimes the failure is on their last money needed for an obligation that cannot wait for 24 or 48 hours.
According to PCL, the problem is a design choice rather than a technical challenge.
‘Pay before service’ is a household slogan in the Nigerian marketplace, and it is the same model the banks default to during transaction setup. “This model is where a customer is made to release his money before accessing a service or having a desired product. This is the language on the street presumably understood by Nigerians, so our banks have designed their ATM withdrawal services and other money transfer services to follow suit.
“The failure of technology to accomplish the debit of a customer account can be internal (on-us – customer using ATM card on their bank’s ATM) or external (not-on-us – customer using their ATM card on another bank’s ATM). Transaction reconciliation is a tedious operational process, especially in retail banking. However, the banks can improve the processes by automating them and deploying software robots.
“Service quality is a measure of your quality delivery against customer expectations. It impacts organisational reputation and eventual profitability. The major differentiator in the banking and financial services industry soon would be hinged on service quality.
“Consequently, time is running out on the pay-before-service model on which our core banking systems are wired. In the working world, no one expects to part with their money without getting promised service, let alone waiting days for the reversal of funds,” the survey report further stated.
PCL believes that Nigeria can safely transition into this new world through a well-crafted policy by the CBN and a revolutionary new business model, likely to be driven by fintech startups.
It noted that the customer-focused CBN can move the bar a notch higher from the current transaction reversal policy by adopting the service-before-pay model, which would insulate the customers from the financial services practitioners’ internal and external bureaucracies and shortcomings.
“A holistic and robust policy in this direction will open the industry to more innovative solutions that would create more opportunities and deepen the government’s financial inclusion drive.
“It is no longer news that with their disruptive innovations, Nigerian fintech startups are wiping out old traditional business models through modern technologies and witty inventions. Nigeria’s most valued financial services entities are the new fintech players under 10 years old. The players in this space can be trusted to unlock the vast potentials trapped in the service-before-pay model through the innovative application of emerging technology tools in the domains of Artificial Intelligence (AI), Robotic Process Automation (RPA), Blockchain, Big Data, Cloud Computing, etc. to assess and mitigate associated risks,” the report stated.
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