The Wild Adoption of Digital Banking in Nigeria

Every school boy knows that transacting with physical banks in the country has become quite one bad a limitation to all and sundry.  The stress accrued by customers in the process of either saving, sending or even making online payments has been on the increase.

Most users have come to this notion that making transactions with physical banks creates a kind of memory which seems as if we were still domiciled in the analogue age.

The central Bank of Nigeria’s ban on crypto currency hence issuing an embargo on banks that engage in crypto trading has also necessitated the search for money makers to find a platform that guarantees fast delivery of payment and at cheaper rate hence leading to the wild adoption of the digital banking platforms in Nigeria as we see it today.

The convenience cum the feeling that you are part of a digital age which digital banking offers has given Nigerians a ground to gravitate towards it.  Nigeria Inter-Bank Settlement System (NIBBS) pulled up a report which says that mobile transaction volume in the country skyrocketed from 128.4 percent to a whooping 153 million within a period of just four months (from January to April).  This number was about 67 million within same periods last year.

The big question is why the nation suddenly transcended from the traditional method of banking to the digital platforms? I believe this can be traced from the various shortcomings of the traditional banks.

Before we go squarely to the cause of adoption of digital banks and the various digital banking platforms, let’s see in what areas the traditional banks have some short of their earlier glory days;

In the recent past, consumers have railed complaints about the banking services they experience from traditional banks ranging from excess charges, Automatic Teller Machines (ATMs) issues, Point of Sale (PoS) and even the Bank Verification Number (BVN) related issue not forgetting bounce cheques and other fraud related occurrences.

In numbers, almost 200 complaints from the customers of various banks in the country were received in just six months in the second half of the year 2018 which indicates an increase of 173 complaints or 12.02 percent over the 1,439 received in the first half of 2018.

The Financial Stability Report (FSR) of the Central Bank of Nigeria (CBN) for December 2018, revealed that out of this number, 1,602 complaints or 99.38 per cent were against banks, while 10 complaints or 0.62 per cent were against Other Financial Institutions (OFIs). The complaints were in various categories, such as Excess/Unauthorized charges, Frauds, Guarantees, Dispense errors, Funds Transfers.

A total of 1,496 complaints were successfully resolved or closed in the period under review, compared with 4,723 in the first half of 2018, indicating a decrease of 3,227 or 215.71 per cent.

Total claims made by complainants during the period amounted to N7.995 billion and US$1.767 million, while the sums of N3.093 billion and US$1.724 million were refunded to customers, the CBN report stated.

Umar Ibrahim, managing director/CEO, Nigeria Deposit Insurance Corporation (NDIC), said as, at June 2019, the Corporation received a total number of 35 petitions/complaints from banks customers on various issues such as ATM frauds, unauthorized funds transfers, cheque related issues and much more.

Advancement in technology is providing convenient options and changing the way people live. As financial institutions adopt these new methods that make lives better, fraudsters are also keeping up with technology and finding new ways to exploit unsuspecting individuals, businesses and corporations by robbing them of their hard-earned money.

Access Bank plc said it is at the forefront of creating awareness and educating the public on how to protect themselves and their money from fraudsters.

Consequently, the bank has issued a guide to customers aimed at describing the most common methods used by fraudsters and how they can avoid being a victim.

Playing by the above odds which have not been in the favor of fellow countrymen here are the many digital banking platforms that have found a comfortable spot in the heart of Nigerians and why

1. Kuda Bank: The emergence of Kuda Bank and its acceptance really took so many unawares. The microfinance bank based in Lagos called Kuda branded itself as “Bank for the free”. To be frank it becomes a little bit hard to argue (please note this article is just for information dissemination and by no means recommending any of these platforms to our most esteemed readers). According to sources and our interaction with users. The digital bank platform has their services as being free form their account to their free Visa card  and as well as free ATM withdrawals, free bill pay, free cash deposits and up to 25 free transfers to other banks in a month. Still according to reliable sources and research, Kuda digital bank offers fixed term saving plans with interest up to 15% annual interest, automated save-as-you-spend, extensive budgeting and spending analysis features.They have plan for offering overdraft loans to frequent users. The whole of this and much more being available in their platform has made Kuda a resort for most bank users.

2. Fundall: The popular fintech company provided a wide array of financial services to private and business customers throughout the Nation, from the range of its basic bank account to savings account and loans.Though fundall itself is not a bank, rather its banking offering are known to be provided are known to be provided by the Providus Bank. The fundall issues the paid verve card and as a matter of fact, users are also entitled to virtual dollar MasterCard.The fundall platform is unique as it creates emphasis on the need for savings and investments, the users of the platform are also enabled to leverage an Artificial Intelligence financial Advisor, one has the opportunity to make safe investments on the platform and also take out life insurance.

3. Sparkle: sparkle is another digital bank that offers its users business accounts, in an effort to stand out amongst all other platforms, sparkle offers its users features which include management of invoice and payroll.
4. Rubies: The microfinance bank rubies took digital banking to altogether another level. Apart from other conventional services such as USSD code , physical and virtual cards, payment and saving account digital banks are known for, Rubies has much more to bring to the banking table.their digital bank platform has features which allow users to work independently as banker, you earn by commission. They have also included a setting that allows little children to learn how to manage their own money but under highly monitored environment.

5. VBank: The well established bank powered by VFD allows users to open free digital account. Their free V account has an inclusion of all the expected services offered by their digital competitors. As a user you have the privilege of accessing loans and interest accruing saving accounts, you also have potential advanced analytics and budgeting features.

The above listed digital banks and many more that couldn’t make it in my list have become the leaning edge for many Nigerians especially the younger generations who have found weariness in the numerous disappointments gotten from numerous traditional banks.

I deem it necessary that we list out the various characteristics of these digital banks that have been a pushing factor backing their wild adoption by fellow countrymen;

1. Strengthens privacy and security of customers: I think It is widely understandable that that one of the most potential reasons that played a crucial responsibility in the wild adoption of digital banking platforms is the sense of privacy experienced by customers when using these platforms. Nigerians have always been skeptical about leaving their financial details in the hands of traditional banks it feels secure on the digital platform. Secondly these platforms allow you the privacy of performing what I call micro transactions. You know as a Nigerian, imagine how uncomfortable it will be for you to walk into one of the banks wanting to perform a transaction of five hundred naira. The embarrassment is somewhat not saying but with digital platforms, no one knows what you’re doing as you can perform these micro or nano transactions comfortably.
2. Extends banking services to remote areas: This is another factor that has profoundly paved a way for digital banking platforms to the hearts of Nigerians. With digital banking, users can now conveniently make payments, shop or do anything anywhere in the world so long there is internet connection and fortunate enough it becomes very true to say that internet connection is almost in every nook and cranny of the country. The heart aching restriction posed by assessing traditional banks in remote locations have become a story for the stone ages, right now, even in the darkest of caves, you can reach out for your phone and make any payments you deem necessary; courtesy and thanks to the introduction of  digital banking platforms.
3. Facilitates online payments for online shopping etc: There has never been a time in the history of the nation when payments and shopping was as easy as it is at the present. Right at the comfort of your two meters couch, you can order your groceries from a shop and without leaving the humdrum of your room, you will have them delivered at your doorstep; this you did without walking into any of the banks and not any grocery shop. The thought that this could and is possible sends shrills to me. I once said it that this is best time of existentiality and it is right if we give digital tbanking accolades for making this age more interesting than we imagined.
4. Enables the set up of automatic payments: Digital banking platforms can function as managers, there are features installed which enables the platform to automatically settle the customers’ bills and make payments for the customers automatically as at when due. Farewell to the days when customers complain of forgetting to make certain important payments because in these times all you have to do is to make use of the awesome features provided by the digital banking platform to set up the days you need such payments to be made and at that time every day, week, month or year, the platform will automatically make and guarantee the payment for you.

Out of sincerity I speak, it is easier to speak of how great digital banking has become in the country but much more difficult to take an intelligent guess on what digital banking holds in store for all of us in the nearest future especially  in the country Nigeria.

Are we going to come to a time when major brands will have their own digital bank app, are we nearing to the rise of social media banking apps, will traditional banks in the future find a way to adapt of fade away just like historic creatures, will there be introduction of more digital banking super apps?

we only know in part and the remaining questions will be left for Mr. Future to give us answers to but till then we don’t have the option but to enjoy the limitless conveniences provided by the digital banking platforms.

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Please ; the above is just an article and by no means are we offering any financial advice or perchance recommending any of the above mentioned platforms, as we shouldn’t be held liable if you find any of them unsuitable.