Technology evolution has brought tremendous changes to many sectors of human life, ranging from banking, education, health, entertainment, governance and research, to mention a few. One major sector that has continued to be impacted by technology is the banking sector. Daily interactions and corporate transactions are being transformed by disruptive technology, and the future of global financial services will continue to be impacted by developments in banking technology. The banking sector is changing due to millennials’ and Zoomers’ (Generation Z) growing need for a technology-driven banking experience. Similarly, the increasing willingness of citizens to use digital channels to acquire financial services has sparked a boom in new banking innovations, reshaping the banking sector. Indeed, many banks and financial regulatory authorities globally, such as the Central Banks, are now reviewing their infrastructures and policies to reposition themselves to digitalization in banking better.
In Nigeria, the indispensable impact of technology in the banking sector in the country has influenced to a large extent, the activities of banks and some policies of their regulator-Central Bank of Nigeria (CBN). Many banks in Nigeria have introduced digital banking systems to render general and customized solutions to their customers. Similarly, the CBN has also granted approvals to some mobile money banking operators in Nigeria, including some leading telecommunication providers in the country, intending to facilitate the smooth migration of banking customers to digital banking.
Digital banking uses digital technologies to automate and improve banking operations, products, services, processes and customer experience via the internet and digital platforms. The success of digital baking is dependent upon many factors, including the use of Financial Technologies (Fintechs), such as smart devices and mobile apps that can provide near-seamless service delivery and improved customer experiences. The prospects of digital banking are numerous, and many financial institutions now leverage it to provide services such as mobile money transfers (deposits and withdrawals), account creation and management, bill payments, ticketing, loan management, account monitoring and other customer care services. Some other benefits of digital migration of banking customers include convenience, remote banking, cost reduction, accessibility and availability of bank services, data analytics and report generation, time management, faster marketing, more accurate accounting system and reconciliations, customer-centric banking, and handling of high influx of customers and transactions and revenue growth.
Digital banking is fast gaining acceptability in Nigeria, especially among the urban population. Most banks have digitalized their services and introduced mobile banking apps to drive digital migration. The migration of banking customers to digital banking in Nigeria was amplified by the current cashless policy of the Central Bank of Nigeria that limits cash withdrawals by both individuals and corporate bank customers. The CBN’s cashless policy is anchored on using digital technology for banking services. The directives by the CBN regarding the redesigning of currency, cash withdrawal policy and implementation of other cashless policies have attracted mixed reactions from various stakeholders in Nigeria, including those from the banking industry, academia, economic experts, Non-governmental Organizations (NGOs), Politicians and business community.
Digitalization of banking in Nigeria has expanded the scope and access to banking and created millions of jobs among the population. This is evidenced by the number of Point of Sale (POS) operators and other mobile money agents spread across the country. It has brought a lot of improvements in the quality of banking services and delivery. However, the concerns mentioned earlier by the banking customers on their migration to digital banking in Nigeria appear real and can be maddening for consumers. Still, those challenges can be surmounted with the right support from the banks and regulators/government.
While some thought the cashless policy could help reduce corruption in Nigeria, others insist that the policy needs to be better timed and needs more stakeholders’ involvement. The critics of the policy argued that the country still struggles with the basic requirements, such as good network access and other supportive infrastructures that are pivotal for the smooth implementation of the cashless policy and digital banking. For instance, a good number of Nigeria’s population resides in rural areas without internet connectivity, bank presence and access to other relevant technologies required to key into the cashless policy. These important segments of Nigeria’s population contribute effectively to the Nigerian economy and depend on using cash for their daily businesses and transactions. While the debate about the cashless policy is still ongoing, the CBN has since maintained its stand on the issue, reaffirming its commitment to implementing the policy, including the bank withdrawal limits.
Implementing a cashless policy and migrating banking customers to digital banking often comes with many prospects, as outlined earlier. Still, it is accompanied by some challenges the citizens are now confronted with. Some of the concerns being expressed by many banking customers and the business community regarding the cashless policy and digital banking include timing, reliability and security of digital banking applications, especially as it relates to perennial network issues which often result in transaction failures, energy (power) problems, software failure, unnecessary deductions by banks and exploitation of the inherent digital security loopholes by Fraudsters to defraud customers remotely. Indeed, the transition to technology-based banking in Nigeria has further increased cyber-related crimes in the banking sector. Still, these shortcomings do not water down the numerous benefits of its adoption.
While I commend the good intentions of the Central Bank of Nigeria for the cashless policy and migration to digital banking, it is also important to highlight the need for government to ensure that banks improve the efficiency of their networks and the reliability of their digital banking applications to reduce the pains of customers. Government should also do more to enhance the quality of service provided by telecommunication networks and provide other supportive infrastructures needed for the successful implementation of the cashless policy, effective digital banking and the enhanced customer experience in Nigeria.
In conclusion, taking into account the problem of digital illiteracy, unequal access to Fintechs, especially in rural areas, and the current realities of the Nigerian banking environment and business communities, more time may be required by citizens and banks to fully adjust to the new banking policies and transition to digital banking in Nigeria. The cashless policy is good, and the digital migration of banking customers is a global trend which has come to stay; however, its full implementation should be gradual to accommodate all banking customers and to avoid unintentional hardship for the citizens.
